North American sales and production outlook
US EV demand down since tax credit removal while geopolitical tensions increase supply chain risk and tariffs reshape auto production
At the Finished Vehicle Logistics North America 2026 conference, NADA's chief economist shared insights into trends in the region's automotive market today with vehicle sales and production figures in North America for the next decade. He explored everything from the Iran war impact to declining EV demand and production shifts.
From fluctuations in EV demand to the geopolitical conflict disrupting supply chain operations to the impact of tariff changes, the automotive sector in 2026 has had to come to terms with market volatility – whether that be in vehicle demand, parts/materials supply, energy prices, logistics costs, import duties or access to trade routes.
Amidst all this volatility, Patrick Manzi, chief economist at the National Automobile Dealers Association (NADA), provided delegates at Automotive Logistics' recent Finished Vehicle Logistics North America 2026 conference with up-to-date data and insights illustrating industry trends and looking ahead at what the future might have in store for the automotive sector.
Automotive supply chains at risk as Iran war continues
One topic that is impossible to avoid when it comes to discussing automotive supply chains at the moment is how the US and Iran's war with Iran is disrupting supply chain operations. Manzi noted that most of the headlines around the economic impact of this conflict have focused on energy prices, which he acknowledges are a significant concern for the industry.
"That is a big deal," he said. "It has pushed up energy prices around the globe. Potential shortages in resources like jet fuel in Europe have prompted concerns that there might not be enough jet fuel to fly this summer."
However, he emphasised that the issue of oil and gas byproduct availability, which is often overlooked, is also cause for concern. Helium, for example – a byproduct of liquefied natural gas (LNG) production – is essential in the fabrication of semiconductor chips. Helium prices spiked by around 40% in early March after Qatar's LNG infrastructure was damaged by Iranian missile strikes.
With semiconductor supply already something the industry is keeping a close eye on as the Nexperia crisis shows no signs of being resolved, further tightening of supply could severely impact production plans.
He also drew attention to other resources like aluminium, which could be under threat as the war continues. Automakers in the US would be particularly exposed to any aluminium shortages having already seen a fire at aluminium supplier Novelis' Oswego hot mill substantially impact the availability of rolled aluminium in the region.
EV demand down, hybrid demand growing
Omdia data shows a 4.4% year decrease in US ICE vehicle sales for the year-to-date in 2026. With, as Figure 1 shows, EV and PHEV sales down 22.6% and 52.8% respectively (and total vehicle sales down 5.3%), the increase in hybrid vehicle sales is all the more significant.
While the end of consumer tax credits for EVs will have undoubtedly harmed sales in the electric segment, hybrid vehicles appear to have increased in popularity with both consumers and OEMs.
"Hybrids are up 7.8% so far year to date and they were up 22% last year," Manzi remarked. "They gained a point and a half of market share year-over-year, and I largely expect that is going to be a really big trend in the industry – more and more hybridisation."
The past few months have seen several major OEMs shift focus from EVs to a broader powertrain mix and more hybrid vehicles: Ford scrapped the electric F-150 Lightning in favour of an extended-range hybrid in December 2025; GM scaled back EV production in January 2026; and Honda cancelled the development of three EV models that had been planned for production in North America in March 2026.
"I think by and large we're going to see a lot fewer new EV announcements but a lot of the ones that are already baked in the pipeline are still going to come out, and that is despite the cancellations," said Manzi.
| March 2026 YTD (Units) | March 2025 YTD (Units) | % Change YoY | |
|---|---|---|---|
| Internal Combustion Engine | 2,920,340 | 3,054,252 | -4.4% |
| Hybrid | 513,860 | 476,649 | 7.8% |
| Plug-in Hybrid | 38,872 | 82,340 | -52.8% |
| Electric | 232,801 | 300,898 | -22.6% |
| Fuel Cell | 84 | 69 | 21.7% |
| Total | 3,705,957 | 3,914,208 | -5.3% |
Source: Omdia
North American light vehicle production to grow over next decade
Manzi shared that, according to Omdia data, light vehicle production in North America is forecast to increase by 1.9% year-over-year in 2026, reaching 15.39 million units by the end of the year.
While production in Mexico is expected to fall slightly between now and 2034 and production in Canada is predicted to remain around the same for this period, it is estimated US vehicle production will grow from around 10 million units in 2026 to almost 12 million in 2034.
"We're talking right now we're around 10 million units per year when it comes to production here in the US and within the next seven or eight years, we're going to have an additional 1-2 million units per year of production," Manzi said. "But that doesn't mean everything is going to come back to the US – some models are still going to be built in Mexico and Canada."
He explained that one of the consequences of the US' tariffs is that some of the models at the lower-priced end of the market are simply no longer cost competitive. "OEMs are going to have to make some tough decisions," he stated, outlining the questions they must now ask themselves. "Do we cancel those models, do we have to figure out ways to decontent even further at the bottom end, or do we just have to charge more to the customer?"
According to Cox Automotive, the 25% tariff on vehicles and auto parts introduced by US president Donald Trump on what he referred to as 'Liberation Day' in April 2025 added an average of around $3,600 per car in tariff cost.
OEMs favouring leaner inventory management post-pandemic
OEMs are maintaining leaner inventory strategies post-pandemic, with vehicle stock well below historical levels – declining slightly from 2.75 million units in early 2025 to around 2.69 million in 2026. While days’ supply has edged up to 48 days industry-wide, it remains comfortably below the pre-pandemic norm of around 65 days, indicating continued production discipline rather than oversupply.
However, affordability pressures are shifting consumers toward lower-priced vehicles, creating uneven sales rates across segments and brands. For logistics, this results in a system that is lean overall but increasingly fragmented, with strong turnover in high-demand segments alongside ageing inventory in weaker ones, driving greater complexity in distribution and transport planning.
