Car predictions for 2026: price rises, Chinese oversaturation, carbon taxes

The Australian car market is heading into one of its most disruptive years yet, with potential brand exits, an over proliferation of Chinese metal, rising new car prices and looming technology breakthroughs – all of which are tipped to reshape what Australians buy and drive in 2026 and beyond.

There’s no denying that 2025 was a big year.

Australia witnessed record-breaking annual new car sales for the third year running, but we’re tipping sales in 2026 will plateau – and we’ve got plenty more predictions to mull over.

First, we’ll start with the “if it bleeds, it leads” postulation, to focus on Jeep, which has seen Australian sales fall by more than 30 per cent year on year.

Jeep’s struggles echo the fate of Citroen, which exited Australia in 2024 after prolonged sales declines.

The axing of the Jeep Grand Cherokee locally – once a cornerstone of the brand – in early 2025 marked a significant turning point and its reputation for poor reliability and frequent recalls have proven difficult to shake, even with improved warranties and parts availability.

Jeep’s parent company Stellantis has boosted confidence with a three-year promise… but if sales keep sliding, it’s only delaying the inevitable.

Beyond Jeep, the rise of Chinese brands is accelerating at an unprecedented pace.

China is now Australia’s second-largest vehicle supplier, with brands such as BYD and Chery posting triple digit growth in 2025.

The issue, however, is scale: an ever-growing list of new and unfamiliar marques is flooding the market, often with near-identical SUVs that are competing on price and infotainment screen size – but not much else.

While established Chinese brands appear well positioned, smaller players – particularly those represented by independent importers rather than factory-backed operations – may struggle to survive long term.

Another major pressure point is pricing.

On January 1, 2025, the federal government’s New Vehicle Efficiency Standard (NVES) introduced fleet-wide CO2 targets for car-makers, with financial penalties for non-compliance.

It leaves diesel-heavy brands selling utes and large SUVs particularly exposed.

With utes and pick-up trucks accounting for nearly one in five new vehicles sold in Australia, manufacturers such as Ford, Toyota and Isuzu are expected to pass compliance costs directly onto buyers.

The result is effectively a ‘carbon levy’ embedded in the price of popular models like the Ranger and HiLux, potentially making new cars noticeably more expensive in 2026.

Finally, there is cautious optimism around battery technology.

Will solid-state batteries finally be commercialised in 2026?

Well, Estonian brand Verge is promising the world’s first solid-state EV in the form of the TS Pro electric motorcycle in the first quarter of this year.

Solid-state batteries promise longer range, faster charging and improved safety over current lithium-ion units.

And we reckon one of the world’s biggest brands – potentially Toyota - will announce a major milestone in 2026, even if full production vehicles remain further away.

Chinese manufacturers are also investing heavily in the advanced (but expensive) battery tech, raising the possibility that a Chinese brand could beat traditional giants to market with viable solid-state technology.

Taken together, these trends suggest 2026 could be a defining year for Australian motorists.

Brand loyalty may matter less than value and stability in 2026 as consumers seek to spend less and with prices likely to climb on popular utes and SUVs, it could see family favourites dwindle in popularity.

Whether all of these predictions come true remains to be seen, but one thing is clear: the Australian car market is entering a period of rapid and unpredictable change.

Stay tuned to carsales for all the latest data and car buying trends in 2026.

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