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New Cars Out of Reach for Many Americans
2 Dec, 2025
Summary
- Consumers face high prices and inflation, shifting to used cars.
- EV tax credit termination significantly impacted sales figures.
- The economy shows a 'K-shaped' trend, benefiting the wealthy.
The automotive market is experiencing a significant downturn as new car prices, exacerbated by inflation, push consumers toward more affordable used vehicles and extended financing options. Dealership owners report a noticeable slowdown in new car sales, with customers increasingly opting for less expensive models.
Industry predictions for robust sales in the coming years have been revised downward due to tariffs, ongoing inflation, and a challenging job market. A key factor contributing to this decline is the cessation of the $7,500 EV tax credit, which has been linked to a sharp drop in sales for major manufacturers like General Motors and Ford following its expiration.
Analysts suggest that notable price cuts are unlikely, as used car prices remain elevated. The current market is sustained primarily by high-income earners, while the broader consumer base faces financial strain. This economic divergence illustrates a 'K-shaped' economy, where the wealthy prosper, and others are forced to curtail spending due to rising costs.
