Households now need 20% more of budget to buy a new car, compared to 1975
American vehicle sales, and corresponding sticker prices, have hit new highs.The average transaction price for a new vehicle in September, rose above $50,000 for the first time in history, with car dealerships generally asking customers for just above $52,000 to make their dream of new-car ownership a reality. Kelley Blue Book reported October 13 the breakthrough.
Electronic Vehicle sales have also been hot, with the battery-powered cars capturing their highest portion of the new vehicle market–11.6 percent–just before tax credits to buy them are set to expire. It appears Americans remain bullish on EVs, with Cox Automotive, a national automotive industry services firm, forecasting 410,000 of the battery-driven vehicles to be sold in the third quarter of 2025 alone. That would be a 20-percent increase over sales during the third quarter of 2024.
“The federal tax credit was a key catalyst for EV adoption, and its expiration marks a pivotal moment,” said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive. “This shift will test whether the electric vehicle market is mature enough to thrive on its own fundamentals or still needs support to expand further.”
Although vehicle sales in general are smashing through price records while retaining strong sales volumes, some in the industry see the market as “ripe for disruption,” as so many Americans can no longer reasonably include a high-priced vehicle purchase into their household budget.
“It is important to remember that the new-vehicle market is inflationary,” said Cox Automotive’s executive analyst Erin Keating. “Prices go up over time, and today’s market is certainly reminding us of that. The $20,000-vehicle is now mostly extinct, and many price-conscious buyers are sidelined or cruising in the used-vehicle market.”
The new car market is considered inflationary in general, with the usual year-over-year price increase being over 3 percent. But the record-breaking activity this third quarter is notable. There are 60 new vehicle models on the market priced at $75,000 or more, according to Kelley Blue Book, which make up 7.4 percent of total industry sales. Among the best selling cars and trucks are the Ford F-series pickup trucks, which often start at a sticker price of over $65,000.
“That’s today’s market, and it is ripe for disruption,” Keating stated. “Today’s auto market is being driven by wealthier households who have access to capital, good loan rates and are propping up the higher end of the market.”
Analysis, sourcing U.S. Bureau of Labor and Bureau of Economic Analysis statistics, indicates that the median (middle-income figure) of American households would have to pay 62 percent of their yearly income toward the purchase price to afford a new vehicle off the dealership lot. In the year 2000 that same household income percentage was 49.9 percent. In 1975, 41.9 percent of the median household income was required to buy a brand new vehicle.
As of now in 2025, GM had captured the largest portion of the market share, according to Cox data, with 17.4 percent of the market, followed by Toyota, Ford, and Hyundai respectively, which also had market shares in the double digits. But with tariffs likely raising prices in the near future, and the end of EV credits, new vehicle sales are anticipated to decline for the remainder of the year.
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