American consumers are dividing into affluent buyers purchasing new cars at higher prices and lower-income buyers sticking with used models. This trend raises concerns about a “K-shaped” economy where the wealthy thrive while others struggle. New car prices hit an average of $51,000 in 2025, leading to record levels of 16.3 million sales last year.

The shift in consumer demographics shows a drop in new car buyers with incomes under $100,000 and a rise in buyers with incomes over $200,000. This change has left automakers relying on the extremely wealthy for sales. Affordability concerns are growing as the median household income rose to $83,730 in 2024.

A Plante Moran study found that a third of the U.S. population cannot afford new vehicles, with limited options for those on the fence. U.S. average transaction prices for new vehicles have increased to around $50,000, up 30% from less than $38,747 in 2020. Some new car buyers are committing to monthly payments of over $1,000.

Ford CEO Jim Farley warns that the automotive industry needs to be wary of affordability concerns leading to consumer pullback. While larger, more expensive vehicles can be profitable for automakers, it may shrink the market and lower sales. Farley emphasizes the importance of being mindful of consumer demand to sustain the industry.

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