The U.S. auto market is quietly drifting into two lanes. One is crowded with affluent buyers snapping up expensive new vehicles. The other is filled with lower-income consumers holding on to used cars for longer, often with no realistic path to buying new.
Auto executives and analysts are increasingly worried this divide reflects a broader “K-shaped” economy, where wealthier households continue to move ahead while everyone else falls behind.
“We have a different vehicle buyer today than we had just a few years ago,” said Charlie Chesbrough, senior economist at Cox Automotive, speaking at a recent auto analyst event. “The average buyer is much more affluent.”
New Cars Drift Out of Reach
The data backs that up. According to Cox Automotive, buyers earning under $100,000 made up half of all new-car purchases in 2020. By last year, that share had dropped to 37 percent, translating into millions of lost sales.
At the same time, households earning more than $200,000 now account for nearly three in ten new-car purchases, up from less than one in five just a few years ago.
Pricing is a major reason. Average sticker prices hit about $51,000 in 2025, while insurance costs and general inflation continue to rise. Consumer sentiment, meanwhile, sits at levels usually seen during recessions.
New vehicles have never been affordable for everyone, but automakers have accelerated the problem by pulling back on entry-level models, particularly small cars that once acted as a gateway to brand ownership.
A Structural Risk for Automakers
“We’re now relying on the extremely wealthy to generate the sales,” said Mark Barrott, a partner at Plante Moran. “That’s a structural problem from an affordability perspective.”
While U.S. new-car sales ended 2025 at a solid 16.3 million units, they remain below pre-2020 peaks. Barrott warned that if affordability pressures continue, the market could shrink further within the next two to three years, directly hurting automakers’ volume-driven businesses.
A modeling study by Plante Moran found that roughly one-third of Americans cannot afford a new vehicle at all. For households earning $65,000 or less, there are only about 110 relatively affordable models available. For those earning up to $105,000, the number jumps to more than 250.
Income Gains Lag Behind Prices
The median U.S. household income rose to $83,730 in 2024, according to the U.S. Census Bureau, a 24 percent increase since 2020. But new-vehicle transaction prices climbed even faster, rising about 30 percent over the same period.
Financing reflects the strain. Data from Edmunds shows a record 20 percent of new-car buyers are now committing to monthly payments above $1,000.
Industry Warnings Grow Louder
Even automakers are sounding cautious. Ford CEO Jim Farley recently warned that chasing higher margins through bigger, pricier vehicles risks pushing consumers away altogether.
“We should all be very careful about consumer demand,” Farley said during the Detroit Auto Show. “That’s really important.”
For now, the industry is holding steady. But the road ahead looks narrower and far less affordable for millions of American drivers.
