From the January issue of UCD
As 2026 begins, affordability remains the top issue in the used vehicle market.
In December, the average price of a used vehicle was listed at $25,730, according to Cox Automotive’s vAuto data. That was roughly half the price of the average new vehicle.
Increasing costs are leading many consumers to consider both new and used models when shopping for a vehicle. It presents both challenges and opportunities for dealerships.
In today’s affordability-driven market, Elizabeth Stegall, Senior Director of Retention with Autotrader, stressed that dealers must rethink how they engage, acquire, and convert customers, especially if they are looking to gain more profitability.
“You have to start with understanding there is, in fact, an affordability crisis,” Stegall said. “We hit an all-time high in what a used car costs, and the average new car just surpassed $50,000. Another big piece of the puzzle is negative equity. When consumers overpaid for inventory at COVID and with increasing interest rates, that just means more money they pay every month goes toward the inflation of the car or the interest they pay.”
A twenty-five-year veteran at Autotrader and Cox Automotive, Stegall has worked with thousands of dealers. Through consulting, she has developed five simple truths that can help relieve the automotive affordability pinch and unlock dealer profitability.
“[Independent] dealers have a great opportunity here because they tend to be more conducive for affordability shopping,” Stegall said.
Profitability through personalization
Personalization is aligning the right car with the right buyer, at the right time, to bring higher margins and lifetime value.
“Personalization pays. I cannot emphasize this enough,” Stegall said. “If you match the right car to the right buyer at the right price, then you will be able to turn inventory quickly.”
And consumers have more options than ever before. Dealers are not just competing with the dealership down the street. Consumers can purchase from a number of online dealers. AutoTrader research shows that before COVID, consumers bought within 50 miles of their home, and now it’s 161.
“Consumers want to do business the way they want to transact,” Stegall said. “The days of you hoping they will do things the way you want as an operator, it doesn’t happen anymore. They have the ability to buy from somebody else other than you, if you don’t align with how they want to buy.”
Dealers must go the extra mile to articulate the options available in vehicle advertising and include quality pictures. She compares it to selling apples in the farmer’s market.
“Your job as a dealer is to make your apple the best-looking apple in a big basket of apples,” Stegall said.
Trust sells cars
People buy cars from people they trust. Consistent transparency and customer service create loyalty and drive repeat business.
“Trust sells cars, period. You know, you’ve heard it for a million years,” Stegall said. “A car is traditionally the second most expensive thing somebody buys. And trust is what will guide whether that person wants to do business with you and if they believe what you say is true or not.”
Transparency gives you an opportunity to share information with the consumer and removes rocks from the road of a customer’s car purchasing journey.
Omnichannel isn’t optional
In addition to vehicle options, consumers today want choices in shopping. Most shopping journeys start online and carry on through the purchase. This means connecting online and in-store experiences to meet the “click-to-close” expectations of today’s buyers.
“Omnichannel is the only way you should be thinking about your business in 2026,” Stegall said.
Smarten up acquisition and trade-in strategies
Dealers must be creative with limited inventory, although it has improved slightly in recent months. vAuto estimated the used vehicle inventory at 2.31 million at the start of December, representing a 50-day supply. That is a 6 percent increase from December 2024.
Dealers must use all their options for inventory, shopping the auctions and going online. AI-powered tools can help source high-quality inventory and figure out what a car is worth as well.
“If you have a tool that’s going to effectively tell you the condition of the car outside and you walk the consumer through that, then they have a better understanding of why you are offering them what you’re offering them for their car, which means you’re probably going to be much closer to what that car is actually worth,” Stegall said.
Use AI to amplify—not replace—your team
AI can significantly enhance the efforts of your team by reducing manual work, personalizing communication, and improving close rates by up to 26 percent.
“Before you start just adding on product and adding on expense, figure out what’s being integrated right now,” Stegall said.
In 2026, opportunities are available for dealers who are willing to address as many of the five simple truths as possible. “Every parking spot on your lot that is a retail parking spot is a profitability center. Figuring out how to make each of those parking spots for a piece of inventory effectively make you money efficiently is how you will win in 2026,” Stegall said. “You can get better at operating, figuring out how to align with the customer and matching their journey, being transparent and evoking trust, and getting those parking spots to move.”
