ARCHIVED EDITION. This report reflects data available as of October 5, 2026 and is kept here for reference. Figures have since changed. For the current read, see the November 2026 Southern California market report.
The Fed delivered the 25 basis point hike markets priced last month, California gas averages $6.39, about five cents under the June 2022 state record, and the September selling rate came in at 16.4M. Buyers are still buying, but they are borrowing more per deal to do it, and the brands with hybrids are taking the share.
Published October 2026 by DigitalCLIQ. New and used vehicle sales, service and fixed operations, and parts, with 6 and 12 month outlooks for Southern California. Every figure below is sourced and dated.
The numbers at a glance
| Figure | What it measures | Source |
|---|---|---|
| 16.4M | September 2026 light-vehicle SAAR, a cooler pace into Q4 | Headlight.news, September and Q3 sales wrap, October 2026 |
| $6.39 | California average regular gas on October 5, about five cents under the June 14 2022 state record of $6.44 | AAA California gas prices, October 5 2026 |
| $787 | Average new-vehicle payment in Q3 2026, a record as of Edmunds' October 1 2026 release | Edmunds Q3 2026 financing release, October 2026 |
| 206.2 | Manheim index at mid-September, first year-over-year decline of 2026 | Cox Automotive, Manheim mid-September 2026 |
The throughline
Demand is holding, but it is being financed rather than earned: payments, amounts financed and loan terms all set records in Q3 2026 while rates rose and gas climbed. Southern California stores that win Q4 will sell efficiency, transparency under the new CARS Act, and service retention, not rate relief.
Key trends this month
- September SAAR came in at 16.4M, above the 16.1M to 16.3M J.D. Power and Cox forecasts made before the month closed; Cox raised its full-year 2026 forecast to 16.1M on September 24 2026.
- Asian brands and hybrids are taking the share: Honda Q3 +9.3%, Hyundai Motor Group +5.4%, Toyota electrified mix 57.4%, while GM fell 5.5% and Ford 6.6%.
- Wholesale turned: the mid-September Manheim index of 206.2 slipped 0.4% below a year ago as fuel prices hit truck and SUV values (Cox, September 18 2026).
- Repair labor, not parts, is driving service bills: maintenance and repair CPI rose 5.2% year over year in August 2026 against 0.9% for parts (BLS).
- California's CARS Act took effect October 1 2026: total price in every vehicle-specific ad and first written reply, optional add-ons in writing, a three-day used return right.
What is happening in new vehicle sales?
A cooler pace, a stretched buyer. September's 16.4M SAAR beat the pre-month forecasts from J.D. Power and Cox, and preliminary volume of about 1.32M units ran 4.4% ahead of last September on equal selling days. Prices moved back above $50,000 in August. The quarter's real story is the split: import brands with hybrids grew, the Detroit 3 shrank.
- Light-vehicle SAAR: 16.4M. September 2026 pace, above what Cox and J.D. Power expected going in (Headlight.news, October 2026).
- Sept volume, prelim.: 1.32M units. Preliminary, up 4.4% year over year on 25 selling days, with GM and Stellantis estimated (MarkLines, October 2026).
- Avg transaction price, Aug: $50.1K. $50,089 in August 2026, the latest published month; up 0.5% from July and 1.9% year over year (Kelley Blue Book, September 2026).
- Incentive spend, Aug: 6.5% of ATP. August 2026 data, unchanged from July as automakers held discounts steady (Kelley Blue Book, September 2026).
- Days' supply: 73 days. August 2026, down from 77 in July with 2.68M units on the ground, the leanest since April 2025 (Cox Automotive, September 2026).
- Full-year 2026 forecast: 16.1M. Cox raised its full-year forecast from 15.8M, carried by wealthier buyers and fleet (Cox Automotive, September 2026).
Southern California: CNCDA's Q2 2026 Auto Outlook (July 20 2026) is still the latest California read; the Q3 edition is due late October or November. Southern California new registrations fell 7.6% in the first half (statewide -7.7%), with Los Angeles and Orange counties down 9.0%. Hybrids reached 22.1% of California registrations, while ZEVs fell 24.8%. Gas at $6.42 in Los Angeles on October 5 pushes that hybrid shift further.
Outlook for new vehicle sales
Next 6 months. Expect a 15.8M to 16.3M pace through the winter as the September hike and any December move lift APRs. Import-brand and hybrid stores keep gaining; Jeep-heavy CDJR stores carry the heaviest incentive load into year end.
Next 12 months. Cox's 16.1M full-year 2026 forecast implies a flat 2027 base. Tariff stacking on Canadian-built vehicles and Section 232 pressure on MSRPs point to firmer prices and a narrower, wealthier buyer pool.
What is happening in used vehicle sales?
Wholesale turns, retail still pricey. Wholesale values turned down in September while retail prices stayed near their highest since 2022, as of Cox's September 11 2026 report. The mid-September Manheim index fell 1.0% from August to 206.2, its first year-over-year decline of 2026, led by pickups and SUVs as fuel prices rose. Retail listings averaged $27,239 in August, and the sub-$15,000 shelf is down a quarter from a year ago. Dealers can now buy better at auction than they could all summer.
- Manheim Index: 206.2. Mid-September reading, down 1.0% from August's 208.2 and 0.4% below a year ago; the full-month print is due October 7 (Cox Automotive, September 2026).
- Avg used listing price, Aug: $27.2K. $27,239 in August 2026, up 7% year over year and the highest since 2022 as of Cox's September 11 report (Cox Automotive, September 2026).
- Retail days' supply, Aug: 44 days. August 2026 on 2.13M units, down from 46 days in July (Cox Automotive, September 2026).
- Sub-$15K supply, Aug: 29 days. August 2026; that inventory is down 25.9% year over year and only 15.1% of the shelf (Cox Automotive, September 2026).
- CPO sales, Aug: 227,432. August 2026, up 2.3% from July but down 5.4% year over year; 15.2% of used retail (Cox Automotive, September 2026).
- Used prime APR, Aug: 12.4%. August 2026 Dealertrack data, against 10.1% for new prime and 6.9% for used super prime (Cox Automotive, September 2026).
Southern California: Statewide, California used registrations rose 0.8% in the first half while new fell 7.7%, and late-model units three years old or newer jumped 7.4% (CNCDA, July 2026). Shoppers priced out of new are trading down to late-model used and CPO, which is where Southern California stores should point used budget.
Outlook for used vehicle sales
Next 6 months. Seasonal softening plus fuel-driven truck and SUV weakness should keep wholesale flat to down into winter, while the thin sub-$15,000 supply holds entry-level retail prices up. Cox projects the Manheim index ending 2026 about 0.8% above last year.
Next 12 months. Rising off-lease EV and late-model returns should improve supply in 2027. Higher subprime delinquency means more repossessions feeding auctions, and tighter approvals push buyers toward CPO.
What is happening in service and fixed operations?
Labor, not parts, is driving the repair bill. Fixed ops produced 52.8% of the average dealership's gross profit in Q2 2026, and gross growth accelerated to 5.2%. But dealers still capture only 29% of service visits, and customer-pay hours per repair order are slipping. Price, not volume, is carrying the department.
- Fixed ops share of gross: 52.8%. Q2 2026, up from 50.1% a year earlier (Presidio Group, July 2026).
- Fixed ops gross growth: +5.2%. Q2 2026 year over year, up from 1.4% in Q1 (Presidio Group, July 2026).
- Dealer share of visits: 29%. Down from 33% in 2018; under-two-year-old vehicles fell from 68% to 55% (Cox Automotive, April 2026).
- Repair CPI, Aug: +5.2%. August 2026 year over year; maintenance and servicing alone rose 7.9% (BLS, September 2026).
- Service and parts sales: $82.99B. First half 2026 on 136M repair orders; fixed ops rose to 13.6% of dealership sales dollars (NADA, September 2026).
- Spend per visit: $261 vs $275. Dealers average less per visit than general repair shops, yet are seen as pricier (Cox Automotive, April 2026).
EV owners are the dealer's most loyal service customers: they take 67% of visits to a dealer against 28% for gas owners and 50% for hybrid owners (Cox, April 2026). Lithia credited part of its 5.4% Q2 warranty gross growth to a more diverse propulsion mix. With California hybrid share at 22.1%, hybrid-capable service capacity is the nearer-term priority.
The pipeline covers only 59% of annual technician demand, about 20,780 short each year (TechForce, May 2026). Dealers pay a $59,920 median against $50,620 across all employers (BLS, September 2026), and NADA counts 272,624 technicians at franchised stores, about 16 per rooftop. Every open bay caps how much of the 5.2% price growth turns into gross.
Outlook for service and fixed operations
Next 6 months. Labor-led price gains continue through winter, but Presidio flags fewer customer-pay hours per repair order. Expect warranty to keep outpacing customer pay, as it did at Lithia (+5.4% vs +2.6%) in Q2 2026.
Next 12 months. An aging fleet and longer loans keep owners in older vehicles, which grows the service pool. Stores that close the price-perception gap and book first service at delivery recapture visits now going to general repair.
What is happening in parts?
Shelf prices flat, pressure building upstream. Retail parts prices barely moved in the year to August, up 0.9%, but producer prices for parts manufacturing rose about 3.3%, so more pass-through is likely by early 2027. The aftermarket is growing through commercial and pro customers, not do-it-yourself. Tariffs remain the wild card, with Section 232 at a 25% baseline and a new 50% Section 338 layer on Canadian vehicles.
- Parts CPI, Aug: +0.9%. Motor vehicle parts and equipment, year to August 2026; parts other than tires +1.7% (BLS, September 2026).
- Parts PPI: +3.3%. Parts manufacturing producer prices, August 2026 year over year, computed from the index (BLS via FRED, September 2026).
- AutoZone commercial: +8.6%. Commercial sales in the quarter ended August 29 2026; same-store sales +1.5% (AutoZone, September 2026).
- Auto care growth forecast: +5.4%. Total industry forecast for 2026, to $599.7B (Auto Care Association, June 2026).
- Average fleet age: 12.9 years. Average US light vehicle age, the oldest on record as of the June 11 2026 Factbook (Auto Care Association, June 2026).
- OEM parts inflation: OEM +4.21%. 2025 collision OEM parts versus +3.89% aftermarket; the gap widened from 2024 (Enlyte, June 2026).
OEM parts rose faster than aftermarket in 2025 (+4.21% vs +3.89%, Enlyte). Aftermarket retail is splitting: AutoZone commercial grew 8.6% while domestic DIY slipped 0.6%, and O'Reilly posted a 6.0% Q2 comp. Shop-installed work is winning, which puts dealer service lanes in direct competition with independents supplied by AutoZone and O'Reilly.
EVs were 4.0% of repairable collision claims in 2025, up from 2.8%, even as EV sales dipped (CCC). EV repairs lean on OEM parts with few aftermarket alternatives and need more scans and calibrations; ADAS calibration appeared on 34.7% of 2025 estimates at an average $688 (Enlyte). That favors the franchised parts counter.
Outlook for parts
Next 6 months. Expect upstream cost pressure to reach the counter by Q1 2027, and watch the October 2026 Section 232 inclusions window for newly tariffed parts. One-time IEEPA tariff refunds lifted AutoZone and Advance margins in their latest quarters and will not repeat.
Next 12 months. An older fleet keeps demand steady, while calibration-heavy and EV repairs favor OEM parts. Unresolved USMCA talks and the Canadian tariff layer keep sourcing costs volatile through 2027.
What should a dealer do about it?
Next 6 months
- Lead with payment, not price. Edmunds put the Q3 2026 average payment at $787; pair CARS Act total-price ads with clearly disclosed payment and lease offers.
- Sell fuel economy now. Los Angeles gas was $6.42 on October 5 2026; push hybrid and efficient trims with fuel-savings creative in search and social.
- Use honest rate urgency. Markets price about 87% odds of another hike by December; tie Q4 campaigns to OEM subvented APRs.
- Get CARS Act clean. Audit every ad, VDP and first-reply template before holiday campaigns launch; the law took effect October 1 2026.
Next 12 months
- Plan 2027 on a flat base. Cox's 16.1M 2026 forecast leans on wealthier buyers and fleet; weight budget to conquest of higher-income households and to service retention.
- Build hybrid share into inventory and creative. Hybrids are 22.1% of California registrations; with gas near the state record they are the strongest demand lever into 2027.
Risks to monitor
- More tightening: the target range is 3.75% to 4.00% after the September 16 2026 hike, and a December hike is priced at about 87% odds as of October 5 2026.
- A weak consumer: Michigan sentiment fell to 48.1 in September 2026, the second-lowest reading on record as of September 25 2026, and September payrolls rose only 29,000 (BLS, October 2 2026).
- Credit stress: Fitch's subprime 60-plus day delinquency rose to 6.13% in July 2026, up from 5.80% in June.
- Trade escalation: a 50% Section 338 tariff on Canadian vehicles took effect August 22 2026 on top of the 25% Section 232 baseline.
Opportunities to pursue
- Fuel-savings conquest with hybrid, efficient and discounted EV inventory while Los Angeles gas sits at $6.42 (AAA, October 5 2026).
- Transparency as a trust message: stores that run clean CARS Act total-price ads early can market it while competitors scramble.
- Equity mining and service retention: 25.5% of Q3 2026 loans ran 84 months or longer, keeping owners in cars and in the service lane.
- Import-brand momentum: Nissan retail grew 7.8% in Q3 and Asian brands held more than half of the market in Cox's Q3 2026 forecast.
Frequently asked questions
How is the Southern California automotive market performing in October 2026?
The Fed delivered the 25 basis point hike markets priced last month, California gas averages $6.39, about five cents under the June 2022 state record, and the September selling rate came in at 16.4M. Buyers are still buying, but they are borrowing more per deal to do it, and the brands with hybrids are taking the share.
What is the single biggest factor driving the market right now?
Demand is holding, but it is being financed rather than earned: payments, amounts financed and loan terms all set records in Q3 2026 while rates rose and gas climbed. Southern California stores that win Q4 will sell efficiency, transparency under the new CARS Act, and service retention, not rate relief.
What is the 12-month outlook for new vehicle sales?
Cox's 16.1M full-year 2026 forecast implies a flat 2027 base. Tariff stacking on Canadian-built vehicles and Section 232 pressure on MSRPs point to firmer prices and a narrower, wealthier buyer pool.
What is the outlook for dealership service and fixed operations?
Labor-led price gains continue through winter, but Presidio flags fewer customer-pay hours per repair order. Expect warranty to keep outpacing customer pay, as it did at Lithia (+5.4% vs +2.6%) in Q2 2026.
What are the biggest risks for dealers to monitor?
More tightening: the target range is 3.75% to 4.00% after the September 16 2026 hike, and a December hike is priced at about 87% odds as of October 5 2026. A weak consumer: Michigan sentiment fell to 48.1 in September 2026, the second-lowest reading on record as of September 25 2026, and September payrolls rose only 29,000 (BLS, October 2 2026). Credit stress: Fitch's subprime 60-plus day delinquency rose to 6.13% in July 2026, up from 5.80% in June.
Sources
- Federal Reserve, FOMC statement (via Federal Reserve Bank of Atlanta), September 16 2026
- CME FedWatch, via Phemex News, October 5 2026
- Headlight.news, September and Q3 auto sales wrap, October 2 2026
- MarkLines, US September 2026 sales flash, October 2 2026
- Kelley Blue Book, August 2026 average transaction price report, September 10 2026
- Cox Automotive, August 2026 New-Vehicle Inventory, September 12 2026
- Cox Automotive, Q3/September 2026 sales forecast, September 24 2026
- Cox Automotive, Q3 2026 Sales Forecast Update transcript, September 24 2026
- CNCDA, California Auto Outlook Q2 2026, July 20 2026
- Toyota, Honda, Ford, Stellantis, BMW, Nissan, Hyundai, Kia, Subaru, Mazda and GM Q3 2026 sales releases, October 1-2 2026
- Cox Automotive, Manheim Used Vehicle Value Index mid-September 2026, September 18 2026
- Cox Automotive, Used-Vehicle Inventory August 2026, September 11 2026
- Cox Automotive, EV Market Monitor August 2026, September 15 2026
- The Presidio Group, Q2 2026 Presidio-NCM Benchmark, July 23 2026
- Cox Automotive, 2026 Fixed Ops and Ownership Study, April 9 2026
- U.S. Bureau of Labor Statistics, CPI August 2026, September 11 2026
- NADA Data Midyear 2026, via Autobody News, September 28 2026
- U.S. Bureau of Labor Statistics, Occupational Outlook Handbook, September 14 2026
- TechForce Foundation, Technician Supply and Demand Report 2026, May 28 2026
- Lithia Motors, Q2 2026 earnings call, July 29 2026
- BLS via FRED, PPI Motor Vehicle Parts Manufacturing, September 10 2026
- AutoZone, Q4 FY2026 results, September 22 2026
- O'Reilly Automotive, Q2 2026 results, July 29 2026
- Auto Care Association, 2027 Auto Care Factbook, June 11 2026
- Enlyte, 2026 Envision Trends Report, via Autobody News, June 8 2026
- CCC Intelligent Solutions, Crash Course, via Aftermarket Matters, March 18 2026
- AAA, California and national gas price averages, October 5 2026
- Edmunds, Q3 2026 new-vehicle financing release, October 1 2026
- University of Michigan Surveys of Consumers, September 2026 final, via Quartz, September 25 2026
- Fitch Ratings, subprime auto ABS indices, via CU Collector, September 21 2026
- Reed Smith, Trump 2.0 Tariff Tracker, September 10 2026
- CBT News, California CARS Act rules effective October 1, September 2026
- CNBC, Fed rate hike odds after the September jobs report, October 2 2026
- Advance Auto Parts, Q2 2026 results, August 20 2026
Get the full report. The complete October 2026 Southern California market report is available as a designed PDF. Download it here.
DigitalCLIQ is a Southern California digital marketing agency built for automotive retail. We pair strategy with execution across paid media, SEO, reputation, analytics, and creative. Talk to us.
