What's Happening?
The automotive industry is increasingly catering to high-income consumers, with new data from Cox Automotive revealing that nearly 30% of new-car buyers earn over $200,000 annually. This shift comes as the average transaction price for new cars has surpassed $50,000, making it difficult for those earning less than $100,000 to afford new vehicles. In 2020, 50% of new-car buyers earned under $100,000, but this figure has now dropped to 37%. The trend is exacerbated by rising used car prices, which have increased due to a shortage of new vehicles following the COVID-19 pandemic. The average used car price was over $26,000 in December 2025, with monthly payments exceeding $500. The market for affordable used cars is shrinking, with vehicles under $20,000
making up less than 12% of listings, compared to nearly 50% in 2019.
Why It's Important?
This trend highlights a growing economic divide in the automotive market, where middle and lower-income consumers are increasingly priced out of both new and used car markets. The focus on affluent buyers could lead to a reduction in the availability of affordable vehicles, impacting those who rely on personal transportation for work and daily activities. This shift may also influence public policy and economic strategies, as transportation costs become a larger burden for average Americans. The reliance on high-income buyers could affect automakers' sales strategies and product offerings, potentially leading to a market that prioritizes luxury and high-end features over affordability and accessibility.
What's Next?
As automakers continue to target high-income consumers, there may be increased pressure on policymakers to address transportation affordability. This could involve incentives for producing affordable vehicles or investments in public transportation infrastructure. Additionally, consumer advocacy groups may push for greater transparency and fairness in pricing strategies. The automotive industry might also see a rise in alternative ownership models, such as car-sharing or subscription services, to cater to those unable to purchase vehicles outright.
