Americans haven’t stopped buying cars, even with gasoline prices rising and vehicle affordability remaining out of reach.
Gas prices surged above $4.50 a gallon in May, interest rates are still high, and owning a vehicle is a far bigger financial commitment than it was before the crisis. But Americans are still showing up at dealers.
That resilience is good news for automakers such as Ford Motor (F), which relies heavily on North American vehicle demand. But new data from the Bank of America Institute suggests there’s a significant weakness hiding beneath the headline sales numbers: Higher-income Americans are increasingly carrying the market.
Car sales hold up despite pressure on consumers
U.S. auto sales were at a seasonally adjusted annual rate of 16.3 million in July, Bank of America said. That’s down a tick from 16.5 million in June, but above the 2025 average.
The National Automobile Dealers Association reported another report confirming the July sales pace of 16.3 million, down 1.4% from the year-ago level.
That’s significant because prices at the pump were above $4.50 a gallon in May, according to Bank of America.
One reason drivers haven’t hit the brakes is that today’s automobiles consume substantially less fuel. The average new light-duty car today achieves close to 30 miles per gallon, compared with about 20 mpg in the 1980s, Bank of America said.
Hybrids are also gaining market share. Hybrid sales rose 19.6% year over year in July and accounted for 15.4% of new vehicles sold in the first seven months of 2026, NADA noted.
But sales have held up for another reason: It’s Americans with the money to pay higher prices who are doing most of the shopping.
Wealthier Americans are keeping the auto market moving
Since the pandemic, the surge in originations of new and used cars has been leaning more toward higher-income consumers, according to internal auto-loan statistics from Bank of America.
A more noticeable signal comes from substantial payments to auto firms and vehicle-finance providers.
Among Bank of America customers making qualifying payments of more than $2,000 from May through July, higher-income households made up for more than 40% of transactions. Lower-income households account for less than 20%.
In that analysis, Bank of America defines higher-income customers as those who make more than $125,000 a year and lower-income customers as those who earn less than $50,000.
That helps explain an apparent contradiction in today’s economy: Car sales can look pretty solid, even while affordability feels punitive for millions of households.
And the affordability crisis isn’t going away.
The average new-vehicle transaction price was $49,855 in July, up 1.9% from a year ago and the highest level of 2026, Kelley Blue Book confirmed. Buyers have increasingly moved toward cheaper segments such as tiny vehicles and smaller SUVs.
Financing adds another layer. NADA, citing J.D. Power estimates, put the average monthly payment on a new-vehicle finance contract at $808 in July, up 3.3% year over year and a record for the month.
Car affordability by the numbers
- 16.3 million: July’s annualized new-vehicle sales pace
- $49,855: Average new-vehicle transaction price in July
- $808: Estimated average monthly payment on a new vehicle in July
- More than 40%: Higher-income households’ share of Bank of America’s large auto-payment proxy
- Less than 20%: Lower-income households’ share
- About 25%: Median monthly auto-loan payment relative to median deposits for Bank of America’s lower-income customers
The final figure explains why a boost elsewhere in consumer spending may not instantly convert into a car-buying boom.
Bank of America sees one car-buying obstacle that won’t disappear quickly
Bank of America says after-tax pay growth has risen. This has recently fueled spending growth among lower-income households, such that they’re catching up with wealthier customers.
That, in principle, may eventually bring more purchasers to the showrooms.
But a car is significantly different than an extra restaurant meal or retail buy.
For many lower-income households, Bank of America says buying a vehicle is likely their largest financial commitment outside housing. Its findings also indicate that more consumers across all income brackets are carrying auto payments of more than $1,000 per month.
The industry’s price data just underscore the problem. The average new-car price remained near $50,000 in July as shoppers turned to lower-priced models.
That has left carmakers with a strange marketplace. Demand has remained stable, but the customers propping it up are concentrated in certain areas of the economy.
Bank of America said the “K” separating higher- and lower-income auto demand may shrink eventually as lower-income finances improve.
Just don’t expect it to happen fast.
For carmakers and dealers, the next leg of development might depend less on whether Americans want another car and more on how many can ultimately afford one.
Related: The Car Insurance Gap That Could Cost College Parents Thousands
