Quick Take
New car sales in Santa Cruz County dropped more than 15% in the first nine months of 2026. Between steep prices, expensive loans and pricey gas, a lot of people are just keeping the cars they have. Dealers say used cars and hybrids are still selling, but stricter auto lending is shutting some buyers out.
New car sales are heading to their lowest level in more than a decade in Santa Cruz County, a sign of economic friction in a wealthy part of the country.
Santa Cruz County’s new passenger vehicle registrations fell more than 15% in the first nine months of 2026, according to the California Energy Commission. Registrations include cars purchased outside the county, but the figures are a bellwether of local sales.
Several economic headwinds are challenging car sales, including elevated interest rates, poor consumer credit and high gas prices. Car prices have come down from last year, but have ticked up recently: A new car in Santa Cruz averaged $39,951 in September, according to Kelley Blue Book.
People aren’t feeling great about the economy, either. U.S. consumer confidence hit a more than 12-year low in September, according to research group The Conference Board, after prices soared largely because of wars hitting oil exports in the Middle East and Russia. Santa Cruz County’s average gas prices are among the highest in the nation at around $6.20 a gallon, according to AAA.
Economists say gas prices are eating into household budgets for big-ticket items like cars.
“High gas prices act like a recurring tax on U.S. households: every extra dollar at the pump leaves less room in the monthly budget for a down payment or car loan,” said Yelena Shulyatyeva, senior U.S. economist at The Conference Board. “For consumers already facing elevated vehicle prices and borrowing costs, that can be enough to postpone a major purchase.”
Alejandro Restrepo, general manager of Santa Cruz dealership North Bay Ford, agrees.
“High fuel prices, high interest rates are holding people back,” he said. “If fuel goes down, hopefully interest rates get under control, we’ll have a really good 2027.”
Restrepo said the dealership has seen lower new car sales this year, but used car sales have picked up. He said that suggests drivers aren’t looking to spend as much right now.
“The cost of buying a new car is expensive so people are choosing to keep their cars,” he said. “The average age of a car is pushing 12 years old. … People are choosing to repair their car and maintain it and then just keep it.”
Used car dealers have also run into problems.
More people are struggling to get loans approved this year, contributing to a decline in used car sales, said Travis Stengl, general manager and co-founder of dealership Santa Cruz Motors. He said nearly 30% of people are getting declined compared with 10% in years past.
“It’s a roller coaster,” Stengl said. “That’s hurt our business a little bit.”
Despite the financing challenges, Stengl said there’s strong demand for used cars.
“People need a car,” he said. “They got an accident or a car needs too many repairs. They don’t necessarily want a new used car, but they have to get a car to drive.”
EVs and hybrids
The downturn extends across the wider Bay Area, too. New car sales fell about 9% in the San Francisco Bay Area in the first nine months of 2026, compared with a 6% decline in Los Angeles, Orange County and San Diego County, according to the California New Car Dealers Association.
Slowing electric vehicle adoption is weighing more heavily on the Bay Area, CNCDA President Brian Maas said.
“Because those communities were early adopters, they’re naturally more exposed when demand for EVs slows,” he said. “While several factors are influencing today’s market, a cooling in EV purchases is likely having a greater impact in the Bay Area than in regions where adoption rates have historically been lower.”
In Santa Cruz County, zero-emission vehicles accounted for more than a quarter of new car registrations in 2023, according to the California Energy Commission, but the share fell to just over one-fifth in the first nine months of 2026. Incentives and rebates for EVs largely dried up in 2023.
There’s strong demand for used EVs, however. The U.S. saw record-high used EV sales in September, up around 12% from August and 21% from a year prior, according to research group Cox Automotive.
“They do really well,” Restrepo said.
Hybrids have been another bright spot in the market and are approaching a record share of new car sales in California, according to the California New Car Dealers Association.
“There’s a huge uptick in hybrid demand,” Stengl said. “It’s the best of both worlds: Good gas mileage, but you’re still able to put gas in your car so the range anxiety isn’t there like an EV would be.”
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