Compact Body Styles, Hybrids, and Value-Driven Used Models Powered 2025 Automotive Demand, According to CarGurus

Rhea-AI Summary

CarGurus (NASDAQ:CARG) released its 2025 Recap and 2026 Outlook on Dec 11, 2025, saying affordability drove auto demand in 2025 and will shape 2026.

Key quantified findings: used vehicle total cost of ownership (TCO) rose 36% vs 2019 and new vehicle TCO rose 29%. New EV retail sales fell 66% in the two months after the EV tax credit expired; new hybrid inventory rose ~18% YoY and new hybrid retail sales grew 33%. Fast-selling new models averaged <20 days; many used models sold in 25–30 days vs typical 40+ days. The report flags possible 2026 MSRP/tariff effects and improved late-model used supply as key 2026 watch items.

Positive

• New hybrid retail sales up 33%
• New hybrid inventory increased ~18% YoY
• Several new models sold in <20 days, indicating strong demand

Negative

• New EV retail sales down 66% in two months after tax credit expiry
• Used vehicle TCO up 36% vs 2019, pressuring affordability
• Risk of higher 2026 MSRPs and tariff-driven price increases

Key Figures

Used TCO increase 36% Increase in total cost of ownership vs 2019 for used vehicles

New TCO increase 29% Increase in total cost of ownership vs 2019 for new vehicles

Fastest new turn time Under 20 days Fastest-selling new vehicles vs typical ~60 days

Typical new turn time More than 60 days Average time for typical new vehicle to sell

Fastest used turn time 25–30 days Fastest-selling used models vs ~40 days average

Typical used turn time About 40 days Average time for used vehicle to sell

Post-credit EV sales change Down 66% New EV retail sales in two months after EV tax credit expiration vs prior two months

Hybrid sales growth 33% YoY Growth in new hybrid retail sales year-over-year

Market Reality Check

$37.52 Last Close

Volume Volume 902,690 vs 20-day average 853,852 (relative volume 1.06x) shows only modest uptick ahead of this report. normal

Technical Shares at $37.12 are trading above the 200-day MA of $32.82, and about 10.19% below the $41.33 52-week high.

Peers on Argus

While CARG was flat over the prior 24 hours, several auto retail peers showed gains, including RUSHA (+6.42%), DRVN (+3.57%), ABG (+2.32%), KAR (+2.59%), and SAH (+1.88%). That points to stock-specific positioning around this macro demand update rather than a broad, synchronized sector move.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 09	Product launch (AI)	Positive	+4.8%	Launch of AI-powered PriceVantage pricing solution with strong early customer results.
Dec 03	Research report	Positive	+1.4%	Consumer insights study on AI and omnichannel car shopping behaviors and preferences.
Nov 06	Quarterly earnings	Positive	-2.7%	Q3 2025 results with revenue and profitability growth plus buybacks and guidance.
Oct 20	Earnings preview	Neutral	+0.7%	Announcement of Q3 2025 earnings release date and conference call logistics.
Oct 06	Market review report	Positive	-4.3%	Quarterly review highlighting strong auto demand and split between value and premium buyers.

Pattern Detected

Recent news often drew meaningful moves, with strong AI/insights updates seeing positive reactions, while seemingly solid fundamental or demand reports (earnings, quarterly review) sometimes coincided with negative price responses.

Recent Company History

Over the last few months, CarGurus released several data-driven and financial updates. AI-focused launches and studies in early December 2025 coincided with gains of 4.83% and 1.41%. Q3 2025 earnings on November 6 highlighted higher Marketplace revenue of $231.7M and GAAP net income of $44.7M, yet the stock fell 2.73%. An October quarterly market review showing strong value and EV trends preceded a 4.33% decline. Today’s affordability-and-demand recap fits this pattern of frequent, data-rich market commentary.

Market Pulse Summary

This announcement highlights 2025 automotive demand trends, emphasizing affordability, rising total cost of ownership—up 36% for used and 29% for new vehicles versus 2019—and the shift toward hybrids as EV tax credits expired and EV sales fell 66% post-deadline. For CarGurus, it extends a series of data-centric reports following Q3 2025 results with Marketplace revenue of $231.7M. Investors may watch future updates on hybrid demand, EV pricing, and late-model used supply as 2026 unfolds.

Key Terms

total cost of ownership technical

"Compared to 2019, the total cost of ownership (TCO) of a used vehicle..."

The total cost of ownership is the full lifetime expense of acquiring and keeping an asset or product, not just its sticker price — it includes purchase, installation, operating, maintenance, financing and disposal costs. For investors, it reveals the real economic burden or savings of a purchase so they can judge profitability, cash flow and competitive strength; like comparing cars by adding fuel, insurance and repairs, not just the sale price.

tco technical

"Compared to 2019, the total cost of ownership (TCO) of a used vehicle..."

TCO (Total Cost of Ownership) is the full, long-term expense of acquiring, operating, maintaining and eventually disposing of an asset or system, not just the upfront purchase price. Investors care because TCO reveals hidden ongoing costs that affect profitability and returns — like buying a car where fuel, repairs and insurance can outweigh the sticker price — helping compare real value between options.

ev tax credit regulatory

"expiration of the EV tax credit accelerated this trend as shoppers pushed..."

A government electric vehicle (EV) tax credit is a policy that lets buyers reduce the amount of taxes they owe when they purchase or lease an eligible electric car, effectively lowering the vehicle’s out-of-pocket cost like a built-in coupon. Investors watch these credits because they can speed up consumer adoption, boost automaker sales and production plans, and shift demand among manufacturers and battery suppliers, affecting revenue and profitability across the auto and clean-energy supply chain.

hybrid technical

"This revealed clear areas where buyers saw value: hybrids; smaller, more affordable..."

A hybrid is a combination of two different things designed to work together, often to improve performance or offer new benefits. For investors, it can mean an asset or strategy that blends features from different types of investments, aiming to reduce risk or increase potential returns. This mix helps create a balanced approach, offering both stability and growth opportunities.

msrp financial

"Higher MSRPs on incoming 2026 models were partially offset this year..."

MSRP is the price a manufacturer recommends retailers charge for a product, like a suggested sticker price on a car or appliance. For investors it signals pricing strategy and potential profit margins: if retailers sell above it demand may be strong or supply tight, while deep discounts below it can indicate weak sales or margin pressure. Comparing MSPR to actual selling prices helps assess revenue realism and competitive dynamics.

AI-generated analysis. Not financial advice.

A heightened focus on affordability—driven by rising ownership costs, tariff concerns, and a late-model used supply crunch—defined the market in 2025, setting the stage for 2026

BOSTON, Dec. 11, 2025 (GLOBE NEWSWIRE) -- CarGurus, the No. 1 most visited automotive shopping site in the U.S.¹, today released its 2025 Recap and 2026 Outlook, highlighting the year’s top influences on the automotive market and expectations heading into the new year.

“If 2024 was defined by declining affordability, 2025 was the year consumers actively pursued it, shaping both shopping behavior and automotive supply trends,” said Kevin Roberts, Director of Economic and Market Intelligence at CarGurus. “Concerns over tariff costs and the expiration of the EV tax credit accelerated this trend as shoppers pushed to lock in pricing ahead of anticipated increases.

“This revealed clear areas where buyers saw value: hybrids; smaller, more affordable body styles; and budget-friendly older models. Looking to 2026, cost will remain a defining force. The used market is poised to continue meeting the needs of budget-conscious shoppers, while early signs of higher 2026 model-year prices will determine whether the year-long stability in the average new-car price starts to shift pricing and demand.”

Key themes for 2025 included:

• Rising vehicle ownership costs amplified the hunt for affordability: Although average list prices remained relatively stable year-over-year, rising insurance, loan payments, and maintenance costs are adding pressure on consumer wallets. Compared to 2019, the total cost of ownership (TCO) of a used vehicle increased 36%, while TCO for a new model increased 29%.
  
  
• Shoppers responded by adjusting expectations: The fastest-turning vehicles of 2025 show how consumers have adapted to the affordability challenge. New model demand centered on efficient powertrains and reliable brands. The fastest-selling new vehicles of 2025 were led by models like the Hyundai Palisade Hybrid and Toyota’s Grand Highlander Hybrid, Highlander Hybrid, and RAV4. Many sold in under 20 days on average, compared with more than 60 days for the typical new vehicle.
  
  When considering used vehicles, smaller sedans, compact crossovers, and efficient, clean models led the pack. Fastest-selling used models like the Buick LeSabre, Chevrolet Cobalt, Model Y, Model 3, and Lexus NX Hybrid sold in roughly 25 to 30 days compared with about 40 days for the average used vehicle.
  
  
• As EV tax credits expired, hybrids filled the gap: Shoppers rushed to complete EV purchases in Q3 before the September EV tax credit deadline, with Q4 then seeing a decline. New EV retail sales were down 66% in the two months following the credit expiration when compared to the two months leading up to it.
  
  In the meantime, hybrid demand grew steadily, with new inventory rising nearly 18% year-over-year (YoY) and new retail sales growing 33%. Toyota led in hybrid interest this year across new and used. The most viewed new hybrids on the CarGurus platform were the Land Cruiser, Sequoia, Grand Highlander Hybrid, Sienna, Camry, and Prius. For used, shopper views gravitated toward the Prius, RAV4 Hybrid, Camry Hybrid, Sienna, and Lexus RX Hybrid.
  

What to watch in 2026:

• While tariffs had a limited impact on average prices in 2025, 2026 may be a different story: 2026 model year pricing is positioned to play a larger role in setting trends in average new car pricing. Higher MSRPs on incoming 2026 models were partially offset this year by softer pricing and more incentives on remaining 2025 options, which helped keep overall new-vehicle pricing stable. As 2025 models phase out, the post-tariff pricing picture will become clearer.
  
  
• Late-model used supply will give shoppers more “like-new” options: As the market moves further away from the chip shortage, late-model used supply could improve availability of 3- to 4-year-old vehicles, rebalancing the market and easing pressure on older models that have been doing the heavy lifting.
  
  
• 2026 will paint the clearest picture of EV demand: With tax credits gone, 2026 will provide the first clear look at the natural rate of EV demand without incentive-driven demand. With affordability expected to remain as a key consumer driver into 2026, cross-shopping across new, used, gas, EV, and hybrid options will remain heightened, with shoppers looking for the lowest all-in cost. Attractively priced EVs could benefit.
  

To learn about these trends and more, the CarGurus 2025 Recap & 2026 Outlook is available here.

About CarGurus, Inc.
CarGurus (Nasdaq: CARG) is the leading multinational automotive platform helping consumers and dealers confidently buy and sell vehicles. Founded in 2006 with a mission to bring more trust and transparency to car shopping, CarGurus is the No. 1 visited automotive shopping site in the U.S.¹ with the largest selection of inventory and network of dealers.² CarGurus’ unmatched selection, trusted automotive insights, and data-driven products and solutions support each shopper’s journey — from online research and shopping to in-dealership decisions — to empower them at every step. And, by translating data from billions of monthly site interactions, CarGurus provides dealers a personalized, predictive intelligence platform with software solutions that helps them run their businesses more efficiently and profitably at all stages of inventory acquisition and pricing, marketing, and conversion to sale.

CarGurus operates online marketplaces in the U.S., U.K., and Canada. The company’s network of brands includes PistonHeads, the largest online motoring community in the U.K.⁴, and Autolist, a U.S.- based online marketplace.

To learn more about CarGurus, visit www.cargurus.com.

¹Similarweb: Traffic and Engagement Report [Cars.com, Autotrader.com, TrueCar.com, CARFAX.com
Listings (defined as CARFAX.com Total Visits minus Vehicle History Reports)], Q3 2025, U.S.
²Compared to Autotrader.com (YipitData July/August 2025), Cars.com, TrueCar.com
(YipitData as of September 30, 2025), and CARFAX (Joreca as of September 30, 2025).
³Similarweb: Traffic Insights, Q3 2025, U.K.

Media Contact:
Maggie Meluzio
Director, Public Relations & External Communications
pr@cargurus.com

Investor Contact:
Kirndeep Singh
Vice President, Head of Investor Relations
investors@cargurus.com

FAQ

What did CarGurus report about vehicle ownership costs in 2025 for CARG?

CarGurus reported used vehicle TCO rose 36% and new vehicle TCO rose 29% versus 2019.

How did the EV tax credit expiration affect EV sales according to CarGurus (CARG)?

New EV retail sales fell by approximately 66% in the two months after the EV tax credit expired.

Which powertrains saw demand growth in 2025 per CarGurus' 2025 Recap & 2026 Outlook (CARG)?

Hybrids saw strong demand: new hybrid inventory +18% YoY and new hybrid retail sales +33%.

What selling-speed trends did CarGurus highlight for 2025 that could affect CARG users?

Many fast-selling new models moved in <20 days; fastest-selling used models sold in about 25–30 days versus ~40 days for average used vehicles.

What should investors watch about 2026 auto market trends in the CarGurus outlook (CARG)?

Watch potential higher 2026 MSRPs and tariff impacts, plus changes in late-model used supply that could alter pricing and demand.