Recent data from Cox Automotive shows that the percentage of new-car buyers earning less than $100,000 annually has dropped significantly, from 50% in 2020 to just 37% in 2025. This sharp decline comes as new car prices continue to rise. The average transaction price for a new car reached over $50,000 in December 2025. With high prices, many lower-income buyers have been priced out of the market, and the situation is becoming increasingly difficult for the average consumer to afford a new vehicle.
The rise in car prices has also led to higher monthly payments. The average monthly payment for a new car is now nearly $750, with 20% of buyers paying $1,000 or more each month. This shift in the market has led to a stark contrast between high-income and lower-income buyers, with the former now making up a larger share of the market.
High-Income Consumers Are Driving Car Sales
As lower-income consumers move away from buying new cars, the share of buyers earning more than $200,000 annually has grown from 18% in 2020 to 29% in 2025. This shift in consumer demographics has not gone unnoticed by automakers, who are increasingly focusing on luxury and high-end models to cater to these wealthier consumers.
“We have a different vehicle buyer today than we had just a few years ago,” said Charlie Chesbrough, senior economist at Cox Automotive, reports CNBC. This change reflects a larger trend where manufacturers are prioritizing vehicles that appeal to affluent buyers, rather than producing affordable models for the mass market. As a result, automakers are scaling back the production of more affordable vehicles and putting more emphasis on luxury models like those from Mercedes-Benz, which target higher-income customers.
The Impact on Used Car Prices and Affordability
While new car prices are soaring, the used car market is not much more affordable. In December 2025, the average price of a used car was just over $26,000, reflecting a 3% increase from the previous year. This price increase is partially due to a shortage of available vehicles, which began during the COVID-19 pandemic when production slowed and demand surged.
The availability of cheap used cars is also shrinking. Cars priced under $20,000 made up nearly 50% of all used car listings in 2019, but by 2025, that number had dropped to just 12%. Instead, most used cars now fall within the $20,000 to $40,000 price range, making them far less affordable for the average consumer. The rising prices in both new and used car markets are leaving many people with fewer options, further pushing them out of the market.
