California’s new-vehicle market had its first quarterly gain of the year in the third quarter, with registrations rising 4% year over year.

Year-to-date registrations through September reached 1,315,522 units, a 4% year-over-year decline, and, according to the California New Car Dealers Association, fleet sales outperformed retail sales. It projects statewide registrations to reach 1.75 million units for all of 2026, a nearly 3% decline compared to last year.

The association credited the affordability pressures weighing on the market to high transaction prices, rising interest rates, tariff pressure, and incomes that haven’t kept up with inflation.

Toyota was the state’s top-performing brand with 19% market share, followed by Honda and Tesla. With 55% of the midsize and large car segment, the Toyota Camry was the top-selling passenger car. But the Tesla Model Y was the top-selling model overall, capturing 58% of the luxury compact SUV segment. Compact and midsize pickups were led by the Toyota Tacoma, and the Ford F-Series led full-size pickups.

Hybrid electric vehicles continued their market share gain, accounting for 23% of new-vehicle market share. The powertrain captured more than 45% of all non-luxury passenger car sales.

Electric-vehicle registrations fell 26% year-to-date, but the quarterly progression suggests that sales are evening out. EV sales plummeted nationwide after the end of the federal tax credit last fall, skewing year-over-year comparisons due to consumers rushing to buy before the credit’s end. But California’s EV share so far this year, at 16%, was more than two times the national average of 6%.

Earlier this year, the state announced a new EV rebate program that provides a rebate for first-time EV buyers for new and used vehicles. Since it launched August 3, not covering the full third quarter, it’s market impact won’t be fully visible until the fourth quarter and beyond, the association said.