New-vehicle affordability has deteriorated sharply as entry-level models disappear and average prices have climbed more than $11,000 since 2019.
Buyers are increasingly relying on record-long 84-month auto loans to keep monthly payments manageable, creating new challenges for dealers.
Analysts say the shrinking supply of lower-priced vehicles is reshaping the market, pushing consumers toward used cars and forcing dealerships to rely more heavily on financing and insurance products.
Housing affordability is a real issue. Increasingly, so is car affordability.
Buying a new vehicle has become significantly more difficult for budget-conscious consumers, and as a result, dealers are selling fewer new cars and trucks.
Data from automotive research firm Edmunds shows the average transaction price of a new vehicle reached $48,402 in 2025, up from $37,310 in 2019. That represents an increase of more than $11,000, or roughly 30%, reflecting both inflation and a shift toward more expensive vehicles.
The biggest change has occurred at the lower end of the market.
Vehicles priced at $20,000 or less have all but vanished, accounting for just 0.2% of new-vehicle sales in 2025. Models selling for $25,000 or less made up only 4.7% of sales, down from nearly 21% six years earlier. Meanwhile, vehicles priced below $30,000 now represent just 15% of the market, compared with 40% in 2019.
Many of the affordable subcompact cars that once served as entry points for first-time buyers have been discontinued, including the Mitsubishi Mirage, Honda Fit, Toyota Yaris, and in most markets, the Nissan Versa.
Big jump in seven years
At the opposite end of the market, high-priced vehicles have become increasingly common. Nearly 95% of large SUVs now sell for more than $60,000, compared with about 59% in 2019. Among full-size pickup trucks, nearly half now exceed the $60,000 mark, versus just 8% six years ago.
To cope with rising prices, consumers are stretching loan terms to record lengths. Edmunds found that loans lasting 84 months or longer accounted for 22.9% of financed new-vehicle purchases during the first quarter of 2026, the highest level on record.
Longer loan terms reduce monthly payments but also increase the total interest paid over the life of the loan and can leave buyers owing more than their vehicles are worth for extended periods.
Problem for dealers
For dealerships, the affordability squeeze presents a mixed picture. Higher vehicle prices can increase revenue per sale, but they also reduce the pool of qualified buyers. As a result, dealers are placing greater emphasis on finance and insurance products to help customers structure affordable payments while maintaining dealership profitability.
The affordability challenge comes as Cox Automotive has reported growing concern among dealers about broader economic conditions. In its second-quarter Dealer Sentiment Index, dealer expectations for the next three months fell below the threshold indicating optimism, with many citing high interest rates, tight credit conditions, and economic uncertainty as obstacles to stronger sales.
The result is an increasingly bifurcated auto market: higher-income buyers continue purchasing expensive trucks and SUVs, while many middle- and lower-income consumers are being priced out of new vehicles altogether, turning instead to used cars or delaying purchases.