At first glance, the sticker price seems like the reason that new-car smell feels so out of reach. Yet according to a report from the Center for Automotive Research (CAR), buying a new vehicle takes fewer weeks of pay today than it did in 2022. Measured in today’s dollars, average spending per new vehicle has risen only about eight percent since 2002. Passenger cars also cost less than they did two decades ago.
The squeeze comes from everything else in the household budget. Rent, health care, and groceries have all risen faster than vehicle prices, while insurance premiums keep climbing for the vehicles people already drive. Those costs leave less money for a car payment, even as the vehicle itself becomes easier to afford.
Join AV Radio host Carl Anthony as he sorts through key data points from CAR’s Vehicle Affordability report, along with a few tips for lowering the cost of the vehicle you already have.
More Resources:
Vehicle Affordability: Defining, Diagnosing, and Understanding New Vehicle Affordability in the United States via the Center for Automotive Research, sponsored by the Alliance for Automotive Innovation: https://www.cargroup.org/publication/vehicle-affordability/
Kelley Blue Book September 2026 Average Transaction Price Report via Cox Automotive: https://tinyurl.com/2w9kpzy5
University of Michigan Surveys of Consumers (see Tables 37 and 38, Buying Conditions for Vehicles): https://tinyurl.com/mvza4rh2
Cost of Advanced Driver Assistance Systems (ADAS) Repairs via AAA: https://tinyurl.com/2a64ktfs
How Crash Avoidance Tech Simultaneously Raises and Slashes Repair Costs via IIHS-HLDI: https://tinyurl.com/yb2nhucb
Household Debt and Credit Report via the Federal Reserve Bank of New York: https://tinyurl.com/ymfmcvxm
Follow AV Radio on LinkedIn: https://tinyurl.com/49jyrd3b
AV Radio is a Detroit Deep Media Production: https://detroitdeepmedia.com/
[00:00:01] Michigan made, Iowa inspired, streaming worldwide. Automotive knowledge for the deciders, the drivers, and the dreamers. AutoVision News Radio with Carl Anthony in the Motor City. According to a Kelley Blue Book analysis, the average transaction price for a new vehicle in the United States rose for the fourth consecutive month in September 2026 to $50,562.
[00:00:26] Just $52 below the all-time record set in December 2025. Kelley Blue Book also found the average MSRP increased to $52,342 in September, up about $520 from August. Recently, about three in four people surveyed by the University of Michigan said the next 12 months will be a bad time to buy a new vehicle, citing high prices as the primary reason.
[00:00:55] A new report from the Center for Automotive Research, or CAR, in Ann Arbor, Michigan, examines whether the sticker price is the whole story. Its answer, no, not entirely. Join me for the next few minutes as we look at this research from CAR titled Vehicle Affordability – Defining, Diagnosing, and Understanding New Vehicle Affordability in the United States.
[00:01:20] Moving at the speed of mobility, this is Auto Vision News Radio with Carl Anthony in Detroit, Michigan. Using data from the U.S. Bureau of Economic Analysis, CAR measured the average amount buyers spent on each new vehicle across everything sold, from compact sedans to full-size pickups. Before adjusting for inflation, the figure rose 98.7% from January 2002 to its peak in May 2025, nearly doubling.
[00:01:49] More than half of that increase came in four years, from 2019 through 2022. As the pandemic eased, buyer demand recovered faster than automakers could build vehicles, with semiconductor and parts shortages limiting supply. Many buyers paid window sticker or above in 2021 and 2022, a far cry from the rebates and discounts shoppers once counted on.
[00:02:14] New vehicle prices also began rising faster than general inflation in 2021. To compare prices across the 23 years between 2002 and 2025, the Center for Automotive Research converted past spending into 2025 dollars using the Consumer Price Index. The adjustment measured prices by what a buyer's money could purchase at the time.
[00:02:38] On that basis, spending per new vehicle, counting everything from sedans to pickups, rose about 8% from 2002 to 2025. However, spending per passenger car, meaning sedans, coupes, and hatchbacks, fell 16%. In other words, a new passenger car takes a smaller share of a buyer's purchasing power today than it did in 2002.
[00:03:03] But if passenger cars cost less in real terms, why did the overall average still rise? Much of the answer comes down to what Americans actually buy. Pickups, SUVs, and vans made up about half of new vehicle sales in 2012. By 2025, they accounted for more than 80%.
[00:03:24] The report estimates the average new vehicle would cost about $4,600 less if buyers still split their purchases between passenger cars and trucks the way they did in 2002. Carr also looked at vehicle cost and household income. Assuming 10% down and a 72-month loan, the most common term, Carr determined how many weeks of median household income it takes to buy a vehicle at the average transaction price.
[00:03:53] At the end of 2022, it took 40.3 weeks. By the second quarter of 2026, 34.4 weeks. Vehicle prices have continued to rise since 2022, but household income has grown faster than the combined cost of buying and financing a vehicle.
[00:04:13] Even so, that improved data point of 34.4 weeks must be balanced against other household costs, since the weeks of pay figure covers only the vehicle purchase. Since 2002, housing, healthcare, tuition, groceries, and other bills have risen faster than vehicle prices, and those costs, according to Carr, are likely crowding out new vehicle purchases, limiting who can buy.
[00:04:40] Carr also noted that monthly payments and other ownership costs are a growing burden for people who already have a vehicle. According to the Federal Reserve Bank of New York, the share of auto loan balances 90 or more days past due reached a 15-year high in 2025. For every income group except the top 20%, new vehicles now make up a smaller share of household spending than in 2002.
[00:05:08] Using data from the Bureau of Labor Statistics Consumer Expenditure Survey, Carr found the highest-earning 20% of households accounted for 42% of new vehicle spending in 2019. By 2024, that share reached 55%, the highest on record going back to 1984.
[00:05:28] From 2019 to 2024, the middle 60% of households saw their share of new vehicle spending fall from 52% to 38%. Carr counted how many new models each income group could afford, capping the payment at 10% of pre-tax income. In 2019, a median income household could afford 55% of the new models on the market at base price.
[00:05:56] By 2024, that figure had fallen to 29%. In 2024, under Carr's formula, a household earning $35,000 to $50,000 a year could afford a base price up to about $24,500, of which 17 models fit that budget. Households earning $50,000 to $65,000 could afford a base price of just over $32,000, a budget that covered 70 different models.
[00:06:24] But even though lower-priced options exist, they're not all that popular. In 2025, nine models had an average transaction price under $25,000. But together, they made up less than 2% of new vehicle sales, trailing even the ones that were selling for more than $95,000. Such a low share indicates limited demand for those models despite their lower price.
[00:06:51] In addition to the window sticker, the cost of owning a vehicle continues to increase. Everything from fuel and maintenance to insurance and registration. Using Bureau of Transportation statistics data, Carr found that operating a vehicle rose from about $0.50 a mile in 2002 to $0.84 in 2025.
[00:07:12] At 15,000 miles a year, that's an annual cost increase from $7,500 to nearly $12,600. Meanwhile, the cameras and sensors in today's vehicles have made insurance claims more expensive. According to AAA, the parts and labor to replace and calibrate advanced driver assistance systems add an average of about 38% to the repair bill. ADAS innovations can prevent collisions, which means fewer claims.
[00:07:42] But the report notes that each claim now costs more because of the sensor technology involved, which is pushing up monthly insurance premiums. So with all of that said, are new vehicles affordable? Is there an affordability crisis in the automotive industry? According to Carr, it depends on multiple factors. Adjusted for inflation, new vehicle prices have only risen modestly since 2002.
[00:08:07] But for many families, the current cost of everyday life leaves less room in the budget for a new vehicle. If a new vehicle isn't in the cards right now, you can lower the cost of the one you have. For example, if you haven't compared insurance rates in a while, get quotes from a few different providers asking about bundle discounts for home, life, renters, and even pet insurance.
[00:08:30] If you have a side hustle, try putting some of that extra cash toward your vehicle loan as a principal-only payment. If your lender accepts extra payments to the principal, it can make a real dent in how much interest you pay over the life of the loan. Staying on top of routine maintenance like filters and fluids can help your vehicle last longer, while smooth acceleration and gentle braking can stretch that tank of gas just a little further.
[00:08:57] For more information on the car report, see the links in the show notes. AutoVision News Radio is a Detroit Deep Media production available on all major podcast platforms. In Detroit, I'm Carl Anthony, AutoVision News Radio.