Key Points
- New car buyers are increasingly wealthy, while lower-income shoppers buy used.
- The share of buyers earning under $100,000 has dropped significantly since 2020.
- The average price of a new car has reached $51,000. One-third of the U.S. population currently cannot afford a new vehicle.
- 20% of new car buyers now have monthly payments over $1,000.
The American car market is splitting into two. Wealthy drivers are snapping up expensive new models, while almost everyone else is stuck driving older used cars. This growing divide is worrying auto executives because it points to a “K-shaped” economy where the rich get what they want while lower-income families struggle to keep up.
Charlie Chesbrough, a senior economist at Cox Automotive, says the average new car buyer today is much wealthier than just a few years ago. The numbers back him up. In 2020, half of all new car buyers made less than $100,000 a year. Last year, that number dropped to just 37%. Meanwhile, the share of buyers making over $200,000 jumped from 18% to 29%.
The main reason for this shift is price. The average sticker price for a new vehicle has climbed to a staggering $51,000. When you add in rising insurance costs and general inflation, many families simply can’t afford to walk into a dealership anymore. In fact, a recent study found that one-third of the U.S. population cannot afford a new vehicle at all.
Automakers helped create this problem by cutting cheaper, entry-level small cars to build bigger, more profitable trucks and SUVs. Now, the industry relies almost entirely on the wealthy to keep sales moving.
Mark Barrott, a partner at a consulting firm, warns this is a “structural problem.” He believes sales could shrink significantly if automakers run out of rich customers to sell to.
For the people who do manage to buy a new car, the costs are painful. A record 20% of buyers now commit to monthly payments of over $1,000.
Even Ford CEO Jim Farley is sounding the alarm. He recently warned that the industry needs to be very careful about affordability, or they risk crushing consumer demand entirely. As the gap widens, the new car smell is becoming a scent only the rich can enjoy.
