The U.S. auto industry is facing a growing reality: many Americans can no longer afford to buy new vehicles, and experts say the market may not recover for years.

Automakers, including General Motors, Ford Motor Company, and Toyota, are preparing for flat or declining sales in 2026 as high interest rates, rising fuel prices, and persistent inflation continue to squeeze consumers. Industry analysts now expect annual U.S. vehicle sales to remain around 16 million or fewer this year, well below the roughly 17 million vehicles sold annually before the pandemic.

The average price of a new vehicle has climbed to about $50,000, while more models now carry price tags above $55,000. At the same time, the share of lower-cost vehicles under $25,000 has sharply declined.

Many consumers are responding by delaying purchases and holding onto older vehicles longer. According to S&P Global, the average vehicle on American roads is now about 13 years old, the highest on record.

Analysts say automakers have little incentive to slash prices because profits remain strong on larger trucks and SUVs, which dominate the market. Unlike previous downturns, manufacturers have largely avoided aggressive discounting.

Automakers also face rising costs tied to tariffs and scaled-back electric vehicle investments. Ford Motor Company reportedly absorbed roughly $2 billion in tariff-related costs last year alone.

Some companies are promising more affordable vehicles in the future. Stellantis said it plans several new models priced below $40,000, while Ford has discussed lower-cost electric pickups and a possible return to sedans.

Source: wsj