a job
“The affordability of transportation is still there. The question is: What do you get for your money?”
An unsold 2026 Cooper S hardtop, built with a slow shutter speed and zoom lens, is seen at a Mini dealership on Friday, Oct. 24, 2025, in Highlands Ranch, Colorado. (AP Photo/David Zalubowski, File) AP
DETROIT (AP) — After a few years of sharing a 2019 Chevrolet Trax, Dana Ebel and Tyler Markus are finally looking for a second car. But when they entered the market, the young couple wasn’t sure what they could afford.
“I constantly see that a lot of different aspects of life are becoming more expensive, becoming more difficult,” said Ebel, an account manager at a public relations agency.
Car ownership has long been an integral part of the American dream. But as automakers cut production of cheap models to cater to customers who can afford full-size pickup trucks and sport utility vehicles, buyers are finding themselves facing sticker shock at the same time they are already feeling frustrated by the lingering effects of high inflation.
Consumer prices rise 3.3% The Labor Department reported on Friday that new car prices rose 12.6% compared to last year, the largest annual increase since May 2024.
New cars now sell for an average of nearly $50,000, an increase of 30% in six years, and average monthly payments – based on a 10% down payment and a 6-year bond – recently reached $775. Looking for something on the cheap end? The share of cars listed for less than $30,000 is about 13%, down from 40% five years ago, according to car review site CarGurus.
To counter this, buyers spread their payments over a longer period. Consumers opting for 7-year loans account for more than 12% of total sales, up from about 8% a year ago, according to auto buying source J.D. Power. Such contracts end up costing more in the long run due to interest payments.
“The affordability of transportation is still there. The question is: What do you get for your money?” Charlie Chesbrough, chief economist at Cox Automotive, said:
The high cost of cars contributes to this Increased concerns about affordability Throughout American life. consumers, Especially young peoplesay they feel that daily needs such as housing, food, utilities and child care are becoming more expensive and that wages are not keeping up.
It’s a weak position for Republicans going forward Midterm elections this yearespecially as The Iran war has caused gas prices to rise Which makes getting behind the wheel more expensive.
Size, technology, and “must-have” features add to the costs
Sticker prices have risen since automakers discovered that Americans are willing to pay more for larger, more expensive SUVs and pickup trucks that bring companies more profits from each sale. They have largely phased out smaller, cheaper sedans.
This is especially true for domestic automakers. Average selling prices for many vehicles from Ford Motor Co., General Motors Co. and Jeep maker Stellantis have generally trended higher than those of Asian companies Honda, Hyundai, Mazda and Subaru.
Car companies are also smart about putting desirable options in more expensive trim levels that can lure consumers into a car that costs more than they planned, said David Underkofler, head of consumer insights at CarGurus.
Advanced safety technology—lane-keeping assist, automatic emergency braking, blind-spot monitoring, collision warnings, and more—all add to the cost of the vehicle. Federal industry rules require automakers to add certain features, such as rearview cameras.
The COVID-19 pandemic has led to higher vehicle prices due to lower production, impacting the new and used markets. Although production has recovered, other supply chain disruptions have occurred Definitions It affected prices. Meanwhile, government data shows that car insurance rates are up 55% compared to six years ago, or just before the pandemic, leading to a surge in car insurance companies. Americans go without. Car repairs, on average, are 48% more expensive.
The share of new car buyers with incomes under $100,000 fell to 37% last year, down from 50% in 2020, according to Cox Automotive.
Some automakers have acknowledged affordability concerns. In February, Ford said Many vehicles will be priced under $40,000 by the end of the decade. GM pointed to vehicles from Buick and Chevrolet, including the Trax, as cheaper options.
Look to the used market for relief
Chesbrough believes that consumers are sometimes unrealistic in their desires.
“There are cars out there for under $30,000,” Chesbrough said. “What everyone wants is a midsize SUV with leather seats and a sunroof for $25,000, and that’s not available.”
These buyers are being pushed into the used market, he said.
But as these buyers turn to used cars, they’re finding fewer affordable options there, too. The share of used cars priced under $30,000 fell from 78% in 2021 to 69% in February, according to CarGurus. The average price of a used car sold was about $25,000 in February, and the average monthly used payment was $560.
Used car inventory is affected by two trends. One is that consumers keen to avoid big expenses are holding on to their cars longer – nearly 13 years on average now, 18 months longer than a decade ago, according to a report published by the British newspaper “Daily Mail”. Bureau of Transportation Statistics. The declining popularity of leasing means fewer two- and three-year-old cars are hitting the market after leases expire.
J.D. Power estimates that consumers may spend up to $140 less on a lease payment than the average financial commitment, which is an especially good option for drivers whose annual mileage is predictable. But experts say there is still an affordability challenge.
What buyers can do
Sam Dykhuis, 27, of Chicago, needed to buy her first car recently when she started a new job as a scheduling coordinator at United Airlines. I looked for something used for under $20,000, and ended up paying a little more than that for a 2021 Mazda CX-5. To keep the cost down, I used the savings to buy the car outright. She pays for insurance six months at a time to save a few bucks, too.
However, “My salary has decreased and my expenses have increased,” Dykhuis said. “Sure, I should be more in control than I was before.”
Ebel, 30, and Marcus, 31, say they appreciate cool cars but don’t consider themselves “car people” and hope their search will be easier as a result. However, finding something in their budget of $20,000 to $30,000 may not be as easy as it used to be.
They’re considering cars like the newer Trax or Mazda or maybe Electric vehicle. New electric cars typically cost more up front, but consumers can save in the long run. The used EV market will also soon be flooded with two- or three-year-old EVs that were leased at a time when federal appropriations were generous.
Like Dykhuis, they say they might also buy their new flight outright to avoid a new monthly payment.
“It feels like if anything happens that is outside of our control…it just seems a lot more difficult to figure out how to direct our finances,” Ebel said.
Alexa St. John is a climate reporter for The Associated Press. Follow her on X: @alexa_stjohn. Accessed at [email protected].