Affordability, inventory mix, and financing dominated dealer conversations this year. But one of the most consequential shifts in the auto industry came from regulation, and notably, not from Washington.
The details: 2025 opened with what many in the industry viewed as a win.
The federal CARS Rule never moved forward, easing fears around a single, sweeping compliance regime that would have been difficult to implement across the board.
However, as Brooke Conkle, partner at Troutman Pepper Locke, explained, that relief didn’t last long.
What they’re saying: “The fallout from that victory, though, has been the states kind of filling that void,” Conkle said. “We see state laws that are mirroring the federal CARS Rule, and suddenly folks in the industry are faced with this patchwork of state regulatory initiatives.”
As a result, instead of one federal standard, dealers spent 2025 navigating a growing mix of state-level laws, regulators, and enforcement priorities.
That dynamic defined much of 2025.
And according to Chris Capurso, associate at Troutman Pepper Locke, it’s unlikely to fade in 2026.
“We haven’t seen the aftershock yet,” Capurso said. “But I think it’s just a matter of time.”
What’s building underneath: Capurso added that one of the quieter forces heading into 2026 sits at the intersection of longer loan terms and easing interest rates.
As he explained, contracts have stretched. Rates have started to come down.
And that combination puts refinancing back on the table for many consumers, and introduces a different set of compliance requirements for finance companies.
“It’s no longer a sales credit transaction,” he said. “You’re now in a loan transaction, and that’s a different process.”
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Worth noting: Longer contracts also increase the likelihood of delinquencies and repossessions, which pushes another issue into focus: complaints.
“If it’s easier for your customers to get in touch with a regulator than it is to get in touch with you,” Conkle noted, “that’s a problem.”
Why it matters: Even when regulation technically targets lenders, the impact rarely stays contained.
Complaints bleed into dealerships.
Repossession experiences shape brand perception.
And financing partners’ behavior reflects on the dealer who originated the deal.
Another area both flagged heading into 2026 is increased reliance on state-level unfair and deceptive acts and practices laws.
These standards exist in every state, give attorneys general wide latitude, and are often tied directly to advertising and sales practices.
“That’s a squishy standard,” Capurso said. “It’s whatever the attorney general thinks it is.”
Looking ahead: As states continue to step in, there’s no such thing as too much clean documentation, lender due diligence, consumer communication, and complaint management systems.
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