DETROIT (AP) — As the average price of a new vehicle nears $50,000, American car buyers are facing significant financial strain. Young couples like Dana Eble and Tyler Marcus, seeking a second car, find their budgets stretched thin by sticker shock combined with persistent high inflation.
New car prices have surged 12.6% from a year ago, with the average transaction price now around $50,000—a 30% increase in six years. This has pushed the average monthly payment to $775. The proportion of vehicles listing under $30,000 has plummeted to about 13%, down from 40% five years ago.
To cope, buyers are extending loan terms, with over 12% now opting for 7-year loans. However, this leads to higher long-term interest costs. The affordability squeeze is pushing more buyers, especially those earning under $100,000, into the used car market, where prices have also risen sharply.
Automakers have shifted production toward more profitable trucks and SUVs, phasing out cheaper sedans. Advanced safety features and supply chain issues from the pandemic further add to costs. While some manufacturers promise more affordable models, immediate relief is scarce, forcing consumers to make difficult financial trade-offs.