Car buyers in the United States are pulling back from new vehicle purchases as average prices approach $50,000 (£40,000), driven by inflation, tariffs, and the end of a federal electric vehicle tax credit. Many are turning to used cars or longer loan terms to manage costs.
Robert Peltier, a car dealer in East Texas, told the Wall Street Journal that customers are increasingly asking how they can afford new cars. While sales remain steady, they have slowed, with buyers gravitating towards cheaper models like the Chevrolet Trax.
The industry had anticipated strong growth in 2025 due to deregulation and tax cuts, but forecasts now predict minimal or no growth in 2026. The Trump administration's decision to end the $7,500 EV tax credit has further dampened sales, potentially eliminating hundreds of thousands of purchases. General Motors and Ford reported their slowest selling rates in over a year in October, following the credit's expiration.
Analysts do not expect significant price cuts or a sales crash, as even used cars remain expensive. However, repair costs have also risen, leaving little relief for consumers. “You can’t really find relief,” said Ivan Drury of Edmunds.com.
Erin Keating of Cox Automotive noted that the market now relies on the top 20% of households, with wealthy individuals still buying while others tighten spending. This reflects a “K-shaped” economy, where the affluent benefit from stock market gains and home values, while lower-income households struggle with rising prices.
