California New Car Dealers Association Releases Q4 2025 Auto Outlook

Contact: Autumn Heacox, Director of Communications & Marketing: aheacox@cncda.org, (916) 441-2599 x105

Q4 2025 CA Auto Outlook: ZEV Registrations Fall for the First Time Since 2020

Overall New Vehicle Sales Finish 2025 on a High Note

SACRAMENTO, CA (January 22, 2026)—Today, the California New Car Dealers Association (CNCDA) released its Q4 2025 California Auto Outlook report, providing a full-year analysis of statewide new vehicle registration trends. All data in the report is sourced from Experian Automotive and must be cited when referencing these findings.

Key Takeaways
California’s new vehicle market closed 2025 on a solid footing, posting a 3.3 percent increase in registrations, despite rising transaction prices, incentive expirations, higher interest rates, and economic uncertainty. This increase marks another year of overall market stability, underscoring continued consumer demand across vehicle segments.

At the same time, electric vehicle momentum reversed course.

After several years of growth following the pandemic, ZEV (zero-emission vehicle) registrations declined in 2025 to 20.9 percent of the market, down from a peak of 22.0 percent in 2024. This marks the first year-over-year decline in ZEV registrations since 2020.

While cumulative ZEV totals continue to grow over time, registration data show that consumer adoption softened materially in late 2025, raising questions about the pace of future growth in California’s ZEV market.

The drop became especially pronounced in the last two months of the year. ZEV registrations in November and December fell below 13 percent, a sharp pullback following the third-quarter surge driven by the impending expiration of federal tax credits. Data confirms that the Q3 spike in registrations represented a pull-forward of demand rather than sustained growth. Total fourth-quarter ZEV market share was 20.1 percent.

California’s share of total U.S. ZEV registrations in 2025 was 28.5 percent.

Hybrids Gain Ground as Californians Seek Practical Options
While ZEV demand cooled, hybrid vehicles continued to gain traction, posting strong year-over-year growth in 2025. Hybrid registrations increased by more than 30 percent compared to last year and accounted for 19.4 percent of the market, just 1 point behind ZEV sales.

Notably, hybrid sales slightly outpaced ZEV sales in Q4 alone, capturing 20.4 percent of the market, reflecting sustained consumer interest in lower-emission options that do not require installation of charging infrastructure or major lifestyle changes.

Gas-powered vehicles remained the single largest segment of the market, accounting for more than half of all new vehicle registrations in 2025 (54 percent).

“California continues to lead the nation in vehicle sales and innovation because consumers trust their local dealers,” said Jessie Dosanjh, Owner of Stevens Creek Chevrolet, and CNCDA Chairman. “This trust is built over time. We help our customers navigate new technology, shifting incentives, and affordability concerns by offering electric, hybrid, and traditional vehicles that fit how Californians live and drive.”

Model Rankings Revisited
California’s year-end model rankings underscore continued demand for both affordable and established, high-volume vehicles across passenger car and light truck segments.

The Toyota Camry remained the top-selling passenger car in California, widening its lead in 2025, posting 62,324 registrations and capturing 50.0 percent of the midsize and large car segment. The Honda Accord followed with 30,455 registrations (24.4 percent). In the small car segment, the Honda Civic led the market with 53,085 registrations, representing 30.4 percent of sales.

Among light trucks, the Tesla Model Y remained California’s top-selling model overall with 110,120 registrations, accounting for 8.2 percent of total light truck share. The Toyota RAV4 followed with 65,604 registrations (4.9 percent), while the Honda CR-V recorded 52,311 registrations (3.9 percent).

Pickup demand remained strong. The Toyota Tacoma led compact and midsize pickups with 45,258 registrations (51.3 percent in that segment), while the Ford F-Series topped the full-size pickup segment with 39,502 registrations, followed by the Chevrolet Silverado at 33,634 registrations.

Brand Performance Highlights
Several established brands posted notable gains in 2025, particularly those expanding hybrid and diversified powertrain offerings.

Toyota finished 2025 as California’s top-selling brand, with 17.8 percent market share, further widening its lead over competitors. Honda closed the year in second place, capturing 10.8 percent of the market. By contrast, Tesla registrations declined 11.4 percent in 2025 with market share dropping from 11.6 percent in 2024 to 9.9 percent in 2025 as it slipped to third place in the state. This extends a two-year downward trend for Tesla despite the temporary boost from federal incentives.

Regional Markets
California’s new retail registrations increased 1.5 percent in 2025 to 1,582,031 vehicles, driven entirely by light truck growth. Note: This data does not include fleet purchases.

Northern California led the state, with registrations up 2.8 percent to 543,368 units. Light truck sales rose 4.3 percent, while passenger cars declined 1.6 percent. BEVs accounted for 24.6 percent of the Northern California market.

Southern California registrations increased 0.9 percent to 1,038,663 units. Passenger car sales fell 4.1 percent, while light trucks rose 2.9 percent. BEVs represented 21.8 percent of registrations.

Statewide Outlook
After rising 3.3 percent in 2025 to 1.81 million registrations, California’s new vehicle market is expected to soften in 2026, with registrations projected to dip 1.5 percent to just under 1.8 million units amid higher transaction prices, tariff pressure, and a cooling labor market. While affordability issues persist, record-high vehicle age, pent-up replacement demand, and a potential dip in interest rates are expected to help insulate from steep declines.

Click Here to Read the Q4 2025 California Auto Outlook.

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California Auto Outlook Quarterly is produced for CNCDA by Auto Outlook, Inc., an independent research company that analyzes statewide and regional automotive markets. When reporting these auto industry trends, please acknowledge the Data Source: Experian Automotive.

The report provides comprehensive information on California’s new vehicle market, including annual trends, a two-year perspective, vehicle powertrain dashboard, segment watch, the top five models in each segment, brand scoreboards, regional comparisons, and more. Visit www.cncda.org. 

About CNCDA

For over 100 years, the California New Car Dealers Association has represented California’s franchised new car and truck dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles and provide automotive products, parts, services, and repairs.

In 2024, California’s franchised new car dealers sold more than 1.85 million new and used cars and trucks, employed more than 138,478 people, paid $8.83 billion in sales tax, and donated $70.75 million to charitable and civic organizations. CNCDA is the Nation’s largest state association of franchised automotive dealers, with nearly 1,200 members, and provides legal compliance and legislative, regulatory, and legal advocacy.