The U.S. auto affordability crisis: why new cars are getting pricier

The U.S. auto market is grappling with a persistent affordability issue, as the average price of a new car has climbed to $47,000, pushing more middle-income buyers toward used vehicles. A Reuters analysis reveals that the cause isn't just tariffs and regulations—it's a strategic shift by automakers. Budget-friendly options have nearly vanished from the market, while dealerships are stocked with large crossovers and premium trims that boost profit margins.

Since 2010, the number of models priced around $20,000 has dropped from 25 to 20, whereas vehicles costing $40,000 or more have surged to 156. At the same time, the buyer profile has shifted: the share of families earning under $100,000 who purchase new cars has fallen from 50–60% to 36%. This illustrates a "K-shaped economy," where a growing group of affluent consumers drives core demand, while the middle class migrates to the used-car segment.

Manufacturers—GM, Ford, and Stellantis—have deliberately phased out low-margin compact models in favor of more profitable SUVs and pickups. Margins on such vehicles exceed 20%, so even with lower sales volumes, profits rise. For instance, GM earned about $4,200 in operating profit per vehicle sold in 2024.

However, this strategy carries risks. Experts warn that neglecting the budget segment could open the door for Chinese companies, which are poised to offer more affordable cars. Amid rising competition and political pressure, automakers promise to bring back accessible models, but the market has already shifted toward the premium zone.