(NewsNation) — A new car will now set you back more than $50,000, a milestone that highlights America’s widening economic divide.
New car buyers paid an average of $50,080 in September, marking the first time that figure has crossed the $50,000 threshold, according to Cox Automotive’s Kelley Blue Book.
Last month’s record average transaction price was 3.6% higher than a year ago, with luxury buyers fueling much of the increase.
Americans owe more than ever on their underwater car loans
“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,” Cox Automotive executive analyst Erin Keating said in a statement.
Hefty tariffs and a surge of new electric vehicle buyers rushing to claim expiring tax credits also contributed to the rise. Last month, the average EV sold for $58,124, Kelley Blue Book said.
The new car data reflects a broader trend across the economy, with high earners making up a growing share of consumer spending. A recent report found that consumers in the top 10% of the income distribution are now behind 49.2% of total spending.
Meanwhile, many everyday Americans are struggling to find new cars they can afford.
Top 10% account for nearly half of all consumer spending
“The $20,000-vehicle is now mostly extinct, and many price-conscious buyers are sidelined or cruising in the used vehicle market,” Keating said.
Rising car prices aren’t new, but mounting evidence shows consumers are starting to feel the strain of auto debt.
Last quarter, 28% of trade-ins toward new car purchases were underwater, meaning the vehicles were worth less than what was owed on them, according to Edmunds. Borrowers with upside-down loans owed more than ever — an average of $6,905.
New-car shoppers are also taking on bigger loans — financing an average of $42,647 last quarter, while average down payments have plunged to the lowest level in nearly four years, Edmunds data shows.
More borrowers are also falling behind on their payments.
This year, the share of subprime auto loans that are 60 days or more overdue on their payments hit a record of more than 6%, according to Fitch Ratings.
Keating noted that the best-selling vehicle in the U.S. is a pickup truck from Ford that routinely costs north of $65,000 and said “it was only a matter of time” before the $50,000 barrier was broken.
