New cars are increasingly a luxury amid K-shaped economy concerns
A General Motors Co. Chevrolet Blazer electric vehicle at a dealership in Colma, California, January 23, 2026.
David Paul Morris | Bloomberg | Getty Images
DETROIT — American consumers are at a crossroads when it comes to the U.S. auto industry. Wealthy buyers are purchasing new vehicles at increasingly higher prices, while lower-income buyers continue to use used models.
This trend is a growing concern for auto executives and fuels concerns that U.S. consumers face a “K-shaped” economy in which the wealthy continue to reap gains while lower-income earners struggle.
“We have a different type of vehicle buyer today than we did a few years ago,” Cox Automotive senior economist Charlie Chesbrough said during an auto analyst event Thursday. “The big takeaway here is that we see that the average buyer here is much wealthier.”
The share of new car buyers with incomes of less than $100,000 fell from 50% in 2020 to 37% last year, accounting for millions in lost sales, Cox reported. At the other end of the spectrum, the share of buyers with incomes of more than $200,000 increased from 18% to 29% during this time period.
This shift comes as the MSRP, or manufacturer’s suggested retail price, reaches an average of $51,000 by 2025, and buyers are also dealing with higher insurance costs and inflation, according to Cox. Meanwhile, consumer confidence remains at recessionary levels.
New car sales were at record levels of over 17 million before 2020, but there have been mixed results since then, ending 2025 with sales of 16.3 million. Brand new vehicles have never appealed to a majority of U.S. consumers, but automakers are increasingly pricing out millions of Americans, including cutting entry-level vehicle lines like small cars.
“We are now relying on the extremely wealthy to make sales,” Mark Barrott, partner at consulting firm Plante Moran, said during Thursday’s event. “This is a structural issue in terms of affordability.”
U.S. sales haven’t reached records, but are still pretty good compared to historical levels, Barrott said. He added that if market conditions tighten due to buyer pricing, automotive executives may start paying more attention.
“It’s unrealistic to think we can get to that level in the next two or three years, and then it really starts to hurt the economy.” [automakers]” he said.
A modeling study by Plante Moran found that one-third of the US population cannot afford new vehicles, and there are very limited options for those on the fence. According to the study, there are approximately 110 relatively “affordable” models for those with household incomes of $65,000 or less, while there are more than 250 “affordable” models for those with incomes up to $105,000.
According to the US Census Bureau, the median household income in the US was $83,730 in 2024. This is up 24% since 2020, when it was $67,521.
Meanwhile, average U.S. transaction prices for new vehicles were hovering around $50,000, up 30% toward the end of last year from less than $38,747 at the beginning of 2020, according to Cox Automotive.
CarMax This month, Edmunds reported that new car buyers are increasingly spending more per month to purchase a new vehicle, with a record 20% committing to an average monthly payment. more than $1,000 in the fourth quarter of last year.
ford CEO Jim Farley warned earlier this month that the U.S. auto industry must be wary of affordability concerns that could cause consumer pullback. While producing larger, more expensive vehicles may be more profitable for automakers, it can shrink the market and reduce sales.
“Everyone in the auto industry… we have to be very careful about consumer demand,” Farley said Jan. 13 during an event at the Detroit Auto Show. “This is really important.”
