WASHINGTON, D.C.: The rising cost of new vehicles in the United States is increasingly pushing many buyers out of the market, as automakers focus on larger and more expensive models instead of budget options.

The shift has helped drive the average price of a new vehicle to around US$47,000, according to industry data, creating affordability challenges that analysts say could leave traditional automakers exposed to cheaper competitors.

Politicians have framed the issue along partisan lines. U.S. President Donald Trump and other Republicans blame environmental and safety regulations for raising costs, while Democrats argue Trump's tariffs are a key factor.

But a Reuters review of industry sales data points to a more fundamental market trend: automakers have steadily reduced the number of lower-cost vehicles while filling dealerships with bigger trucks, SUVs, and higher-end models.

The change reflects a broader divide in the U.S. economy, where wealthier consumers account for a growing share of spending while middle- and lower-income households struggle with rising costs.

As a result, the demographic profile of new-car buyers has shifted toward higher-income households, while many others have turned to the used-car market.

That narrowing pool of affordable options has frustrated buyers such as Sarah Merriman, a Delaware resident who is nearing the end of the lease on her Ford Mustang Mach-E electric SUV and searching for a replacement.

"I'm stressing out, because I'm already in a $700 car payment right now," Merriman said.

Analysts warn that the lack of entry-level vehicles could create risks for U.S. automakers if new lower-priced competitors eventually enter the market.

"It's a risk that they underserve less affluent consumers, and new entrants come in and steal that business," said John Casesa, senior managing director at Guggenheim Partners and a former Ford Motor executive.

Inside the auto industry, the debate over affordability often centers on the average transaction price, the typical amount buyers pay across all new models.

That figure climbed about 40 percent between December 2018 and December last year, reaching roughly $47,000, according to research from J.D. Power.

"We're buying more expensive vehicles. We're buying more trucks and SUVs. We're buying more loaded vehicles," said Tyson Jominy, a senior vice president at J.D. Power.

The number of high-priced models available to consumers has increased significantly. In 2010, 96 vehicle models had sticker prices of $40,000 or more. By last year, that number had risen to 156 models priced at roughly the equivalent of $60,000 today.

Meanwhile, entry-level options remain limited. In 2010, there were 25 models priced at or below $20,000. Last year, there were just 20 models available at the equivalent price today, roughly $30,000.

The shift has changed the income profile of car buyers. Households earning $100,000 or less once accounted for between 50 percent and 60 percent of U.S. new vehicle purchases, according to registration data from S&P Global Mobility. Last year, they made up only 36 percent of buyers.

"It's truly a K economy for us," said Brad Sowers, a car dealer in the St. Louis area who operates dealerships for General Motors, Jeep-maker Stellantis, and Kia.

For automakers, the move toward larger vehicles has brought financial benefits. Detroit's traditional carmakers — General Motors, Ford, and Stellantis — have phased out many smaller entry-level cars in favor of trucks and SUVs, which tend to generate significantly higher profit margins.

Large SUVs and pickup trucks can deliver margins exceeding 20 percent, former industry executives say. General Motors reported operating profits of about $4,200 per vehicle sold in North America in 2024, compared with roughly $3,000 per vehicle in 2018.

"We've been able to create a portfolio where we can make money top to bottom," GM Chief Financial Officer Paul Jacobson said at an event last month.

Some automakers say they are now trying to address affordability concerns. Ford said in February it plans to offer five models priced under $40,000 by the end of the decade, including at least one electric vehicle around $30,000.

At Stellantis, executives say they are also trying to make vehicles more accessible. Jeep brand CEO Bob Broderdorf said the company has reduced the cost of some add-ons and increased value on certain models.

"I need to unlock some of the things that you love about Jeep, make them more affordable," Broderdorf told Reuters in December.