A recent report found that 1 million Americans are no longer interested in buying a new car. A Wall Street Journal report revealed that around 1 million prospective new-car buyers have disappeared from the U.S. market over the past five years. Before the pandemic, annual new-car sales were reaching 17 million. Today, it’s barely reaching 16 million.
The reason is not surprising if you live in the United States.
Why aren’t people buying new cars?
People aren’t buying cars simply because they can’t afford them. According to Kelley Blue Book, the average price of a new car has reached $50,000. When the average American earns about $60,000 to $65,000, a new car is often out of reach.
The issue with new cars is that the real price isn’t the sticker price — it’s the monthly payments. Edmunds found that buyers are financing cars more than ever, which makes sense since most Americans can’t buy a new car outright. It also found that the average monthly payment in early 2026 was $773, with one in five people paying over $1,000.
One reason for the rise? Buyers are putting less money down up front. The other issue? Interest rates are elevated, around 6.9% in Q1 2026.
“Q1 financing data shows that car buyers are getting creative just to keep their purchases within reach,” said Jessica Caldwell, Edmunds’ Head of Insights. “As loan amounts and monthly payments continue to climb to record levels, consumers are having to work harder to make the numbers fit — a clear sign of how strained affordability has become.”
Getting creative mostly means two things: stretching the loan and shrinking the down payment. A record 22.9% of new-car loans in Q1 2026 ran 84 months or longer, which is seven years of payments on a car that’s losing value the entire time. Meanwhile the average down payment slid to $6,206, one of the lowest first-quarter figures since 2022. Lower payment today, more interest tomorrow, and longer spent owing more than the car is worth. That’s the trade.
Why automakers aren’t panicking
Here’s the part that stings: the automakers know a million buyers walked, and they’re fine with it. The market has split along income lines. Wealthier households keep buying loaded trucks, SUVs and premium trims, while everyone else gets pushed toward used cars or no purchase at all. Fewer sales at fatter margins still adds up, so there’s no real pressure to chase that old 17-million-a-year crowd.
“I don’t want to say automakers are OK with this level of sales, but they kind of are,” Edmunds analyst Ivan Drury told the Wall Street Journal. And the math backs him up: a decade ago the average new car ran about $34,000, and now it’s near $50,000, while paychecks barely moved.
With Americans barely able to afford new cars, automakers are finally realizing that big, luxurious SUVs are not the way to go. For a while, it seemed like nobody wanted small, cheap cars, but that was because the average American couldn’t afford their rising prices. Meanwhile, wealthier Americans were continuing to buy the obnoxious SUVs, which skewed automakers’ perspective of the buying market.
This has left Americans in a tough spot. And watching other countries get the cheap $30,000 EVs from China is a bit rough. Meanwhile, we are getting Lucid and Rivian, which are nowhere near the “affordable” price range. Instead, drivers are just holding onto their cars longer. By 2025, the average age of vehicles in the U.S. reached nearly 13 years.
With trucks and SUVs having higher profit margins than cheaper, smaller cars, automakers are unlikely to pivot any time soon. Even with 1 million fewer buyers. So many automakers lost money over Trump’s tariffs and pulling out of EV plans in 2025 and 2026, they need all the profits they can get.
So the showroom keeps getting quieter, and nobody with the power to change it seems bothered. Affordability didn’t get fixed. It just got pushed down the road, 84 months at a time.
