February 2026 Labor Market Update: Key Trends for Automotive Dealership Success

January Sets Record for Used Car Sales: What This Means for Dealers

Update A Strong Start to 2026: A Look at Used Car Sales The used car market has kicked off 2026 on a high note, demonstrating resilience and sustained buyer activity. According to recent reports from JD Power, January 2026 marked the best January for used car sales since 2021, with nearly 493,000 retail units sold—a 17.7% increase from the previous year. Despite a typical seasonal drop of 5.4% from December, the overall sales figures indicate robust consumer interest as buyers view used vehicles as a practical choice in the current economic climate. Inventory Dynamics: A Balancing Act Interestingly, the tightening inventory levels played a key role in shaping the early-year landscape. A report by Cox Automotive highlighted that used-vehicle inventory fell to 2.18 million units in January, signaling conditions that motivated consumers to act quickly. The days’ supply dropped to 48, nearly three days lower than December, emphasizing a consistent demand that’s keeping dealers on their toes. Improvements in credit availability and the gap between used and new vehicle prices continue to drive these dynamics. Pricing Trends: A Mixed Bag As demand grows, pricing trends reveal a complex picture. The average used vehicle price decreased by 4.4% from December to around $25,533, though this still represents an increase of over 1% year-over-year. Notably, the shift in pricing trends signifies a “pronounced post-holiday reset,” as stated by JD Power. The most significant declines were observed in the luxury segment, while affordable options, particularly cars priced below $15,000, were reported as scarce, further complicating the market for budget-conscious buyers. The Importance of Timing: Striking While the Iron is Hot Economists and industry analysts are pointing to January as an opportune buying window. The seasonal dip in prices is characteristic of early-year trends and it often precedes a spring surge as consumers utilize tax refunds. CARFAX noted how the traditional mid-winter lull could represent a strategic moment for buyers, and those looking to purchase in the coming weeks may see some favorable pricing before the demand rises sharply. Consumer Sentiment: Navigating the Market For dealership owners and general managers, understanding current consumer sentiment is vital. Buyers are likely to face elevated prices compared to previous years, raising potential sticker shock for both new and used vehicles. Davis King, of JD Power, indicated that 31.5% of used-car trade-ins might carry negative equity, a notable increase compared to the previous year. This highlights the careful navigation required when merging consumers' choices with dealership strategies. It's essential for dealerships to offer solutions that not only attract buyers but also ensure smoother transactions to build trust and long-term relationships. Looking Ahead: Future Market Trends As the year progresses, a few predictions for the used car market emerge. Sustained interest in used cars is expected, especially as consumer credit situations improve and prices stabilize. With potential buyer hesitance fading, a continuous flow of inventory could pave the way for an active, engaging sales environment. For dealerships, the key will lie in adapting operational strategies to leverage these insights effectively, appealing to both traditional and digital-savvy customers. Stay informed about future trends and strategies by subscribing to DealerSuccessPlaybook.com, where actionable insights and techniques for dealership growth are delivered daily.