- Wealthier buyers now dominate the American new car market.
- Average new car prices in the US recently crossed $50,000.
- More buyers stretch loans to seven years to afford monthly bills.
If you’ve been wondering how the auto industry keeps selling expensive cars while everyone seems to be complaining about affordability, the answer is surprisingly simple. Wealthy buyers are carrying the market. While many Americans struggle with rising costs, high earners are still signing papers at dealerships and keeping sales moving.
Economists say the modern car market looks a lot like the broader economy where one group is doing just fine while another is feeling the squeeze. Higher income households are powering many of the positive spending numbers while lower income buyers are getting hammered by inflation and experiencing lower wage growth, according to economists interviewed by Auto News.
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In some cases, lower income households are struggling to find any work at all. America’s rate of job creation has slowed dramatically and younger people are increasingly finding that the entry-level positions they would have traditionally applied for are now being scooped up by AI, or will be soon.
The difference shows up clearly in who’s buying cars. In 2020, about half of new vehicle buyers earned less than $100,000 a year, according to Cox Automotive data reported by Auto News. By 2025 that share had fallen to just 37 percent, while the portion earning more than $250,000 nearly doubled to 21 percent.
Priced Out
That shift is easier to understand when you look at how much more expensive cars are now. The average new vehicle price recently passed $50k for the first time, according to Kelley Blue Book figure, and monthly payments aren’t much friendlier.
Edmunds data shows the typical new car payment reached roughly $774 by late 2025. As Jessica Caldwell from Edmunds told the New York Times, “For a lot of people, that’s out of reach. It’s almost like having a second mortgage.”
Longer Loans
To cope, more buyers are stretching their loans. Over 20 percent of new vehicle loans now run for 84 months or longer, which means seven years of payments and a strong chance that the buyer will have to roll the remainder of the unpaid finance into their next car purchase.
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Ownership costs have also climbed in other ways. Insurance prices have jumped more than 50 percent since 2019 while repair costs are up roughly 46 percent. When fuel, insurance and maintenance are included, the total cost of owning a vehicle has surged nearly 50 percent in the past few years.
Even so, the industry isn’t collapsing. Dealers and analysts still expect about 16 million vehicles to sell in the United States this year. The catch is who’s buying them.
