Rising New-Car Prices Limit Access for Middle-Income Buyers as Wealthier Consumers Dominate Sales

The U.S. auto market is increasingly polarized, with affluent households accounting for a growing share of new-vehicle purchases while many middle- and lower-income consumers remain in the used-car segment. Industry data indicate that rising prices, higher borrowing costs, and elevated insurance premiums are reshaping who can afford a factory-fresh model, raising concerns about long-term demand.

Research firm Cox Automotive estimates that in 2020 buyers earning under $100,000 represented roughly half of all new-car customers. By 2025 that proportion had fallen to 37 percent, equivalent to several million fewer annual transactions. During the same period, households bringing in more than $200,000 expanded their share from 18 percent to 29 percent. Analysts say the shift reflects both higher vehicle pricing and a broader “K-shaped” economic pattern in which wealthier consumers experience faster income and asset growth than other groups.

The manufacturer’s suggested retail price (MSRP) for a new vehicle averaged about $51,000 last year, according to Cox. That figure does not include record insurance costs or the impact of general inflation on household budgets. Consumer sentiment surveys remain at levels normally associated with recessions, suggesting many potential buyers are reluctant to take on large new loans despite wage gains since 2020.

Overall light-vehicle sales reached 16.3 million units in 2025, below the pre-pandemic peak topping 17 million but still healthy in historical terms. Even so, automakers have trimmed several entry-level model lines, especially compact cars, in favor of higher-margin trucks, sport-utility vehicles, and premium trims. The strategy supports profitability but reduces lower-cost options, effectively pricing out a segment of the market.

Consulting firm Plante Moran notes that the industry now relies disproportionately on high-income buyers to sustain volume. Internal modeling by the firm projects that roughly one-third of the U.S. population cannot reasonably afford a new vehicle under current market conditions. Should pricing continue to outpace income growth, analysts warn that total sales could decline materially within the next few years.

The same study finds limited choice for households earning $65,000 or less. About 110 new models fall into an “affordable” category for that income bracket, compared with more than 250 models considered affordable for households making up to $105,000. The imbalance underscores how product portfolios are shifting upmarket at a pace exceeding wage gains for many consumers.

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Median U.S. household income reached $83,730 in 2024, up 24 percent from 2020, according to the U.S. Census Bureau. Over the same span, the average transaction price for a new vehicle climbed roughly 30 percent to around $50,000, Cox data show. Financing costs have also expanded: figures from CarMax’s Edmunds division indicate that 20 percent of fourth-quarter 2025 buyers agreed to monthly payments exceeding $1,000, the highest share on record.

Automaker executives are beginning to address the issue publicly. Earlier this month, Ford Motor Co. Chief Executive Jim Farley cautioned that an overreliance on large, expensive vehicles could shrink the overall market by pushing customers toward used models or delaying purchases entirely. Although larger vehicles typically carry higher profit margins, he said, declining affordability risks eroding demand across the industry.

Analysts will continue monitoring the intersection of pricing, income growth, and consumer confidence. If current trends persist, manufacturers may face increasing pressure to reintroduce lower-priced options or enhance incentives to maintain volume without sacrificing profitability.

Crédito da imagem: David Paul Morris / Bloomberg