Overview
For many Americans, buying a new car has become an exercise in compromise. The industry-wide move toward bigger, better-equipped vehicles has driven up what buyers actually pay at the dealership, leaving fewer genuinely budget-priced options on the lot. That market-driven rebalancing of product portfolios has pushed the average U.S. transaction price to roughly $47,000 and concentrated new-vehicle purchases among more affluent households.
How product mix changed pricing
Automakers have increasingly filled showrooms with trucks, SUVs and higher-trim vehicles, while phasing out or shrinking smaller, lower-margin cars. Research from J.D. Power shows the average transaction price rose about 40% from December 2018 through December of last year, landing at around $47,000. That rise in what buyers actually spend reflects both a shift in the types of vehicles they choose and more feature-rich configurations.
"We’re buying more expensive vehicles. We’re buying more trucks and SUVs. We’re buying more loaded vehicles," said Tyson Jominy, a senior vice president at J.D. Power, describing the mix effect that has lifted average payments.
Looking at model-price availability over time underscores the change. In 2010, 96 models carried sticker prices at or above a $40,000 threshold. Adjusted for inflation and changes in the model set, last year that category expanded to 156 models - a level the analysis translates to roughly $60,000 in current-dollar terms. Conversely, entry-level offerings have become scarcer. Where roughly 25 models were priced around $20,000 or less in 2010, the comparable set last year shrank to about 20 models at an equivalent cost today - roughly $30,000.
Who is buying new cars
The product mix shift has altered the income profile of new-vehicle buyers. Vehicle-registration data from S&P Global Mobility shows the share of new-vehicle purchases from households earning $100,000 or less hovered between 50% and 60% for several years until early this decade. Last year, that group made up 36% of new-vehicle sales, a sharp decline in representation.
"It’s truly a K economy for us," said Brad Sowers, a dealer in the St. Louis area who operates franchises for General Motors, Stellantis-brand Jeep and Kia. His observation echoes the bifurcation in demand: more affluent customers account for a rising share of new-vehicle transactions while middle- and lower-income buyers are increasingly absent from the new-car market.
Consequences for consumers
The sparse availability of lower-priced new models has practical consequences. Delaware resident Sarah Merriman, approaching the end of her lease on a Ford Mustang Mach-E electric sport-utility vehicle, described difficulty finding an affordable replacement. "I’m stressing out, because I’m already in a $700 car payment right now," she said, illustrating how higher average prices can create acute strain for some households.
That strain can push pragmatic buyers toward the used-car market, where price points are more accessible. The result is a two-tier experience in which new-vehicle showrooms cater to buyers willing or able to purchase larger, better-equipped models, while others turn to pre-owned options.
Profit incentives and corporate strategy
The move upmarket has supported higher profitability for automakers even as new-vehicle volumes have softened. Automakers have surrendered many lower-margin small cars in favor of trucks and SUVs, product types that often carry healthier margins. Former executives point to core profit margins on large SUVs and pickup trucks that can exceed 20%.
General Motors illustrates the profit leverage from that strategy. In 2024, GM recorded an operating profit of about $4,200 per vehicle sold in North America, up from about $3,000 in 2018. GM executives stress they still aim to offer entry-level models, pointing to small SUVs such as the Chevrolet Trax and Buick Envista as examples of accessible, popular offerings.
"We’ve been able to create a portfolio where we can make money top to bottom," GM Chief Financial Officer Paul Jacobson said at a recent event, highlighting a portfolio approach that balances higher-margin trucks and SUVs with compact crossovers intended to serve the lower end of the market.
Ford has announced commitments to restore some lower-priced offerings as well, saying it will have five models priced under $40,000 available by the end of the decade - including at least one electric model targeted around a $30,000 price point.
Jeep and Stellantis: pricing, value and market share
Jeep, the iconic SUV brand within Stellantis, offers a vivid example of the pricing shift. About a decade ago, Jeep’s U.S. lineup comprised roughly a half-dozen nameplates with starting prices from approximately $17,000 to $30,000. Today, starting prices for Jeep models cluster between roughly $30,000 and $65,000, with the upscale Grand Wagoneer starting near $65,000 and configured examples running over $100,000.
That pricing shift helped improve profitability for the brand but coincided with a notable decline in U.S. market share. Stellantis CEO Antonio Filosa, who took the helm last year, has said making vehicles more affordable is a priority to win back customers. As part of that effort, Jeep has restructured add-ons - making features like LED lighting and heated steering wheels complimentary or less expensive - and combined that with broader price adjustments that the company says can represent up to about $4,000 of added value on certain models.
"I need to unlock some of the things that you love about Jeep, make them more affordable," Jeep brand CEO Bob Broderdorf said in December, characterizing the brand’s effort to reconcile premium positioning with broader accessibility.
Strategic vulnerability
Industry observers warn the market tilt also creates competitive risk. John Casesa, a senior managing director at Guggenheim Partners and a former Ford executive, framed the issue as a potential vulnerability for traditional automakers: by underserving less affluent consumers, legacy manufacturers could leave room for lower-cost entrants to capture share if they choose to enter the U.S. market.
That scenario underscores why affordability has become a focal point in policy debates and among some automakers’ strategic discussions. Policymakers, dealers and company executives are all wrestling with the same reality: the product-mix dynamics that have elevated average selling prices are reshaping who buys new vehicles and how automakers balance margin and volume.
Implications
For consumers, the current mix favors buyers who value or can afford larger, feature-rich vehicles. For automakers, the strategy has lifted per-vehicle profitability but strained the industry’s ability to serve lower-income buyers. Dealers, especially those with multi-brand portfolios, are witnessing a bifurcated market. And for investors, shifts in mix and margin are influencing operating results and market-share dynamics.
How companies respond - by restoring more genuinely affordable new offerings, restructuring options and packages, or maintaining a higher-margin portfolio focus - will affect future pricing, sales demographics and competitive dynamics in the U.S. market.