Covering the Co$t: The Necessity and Luxury of Buying a Car
With car costs on the rise, economists point to median vehicle prices, wages, and few domestic low-cost models
WASHINGTON (Gray DC) - With affordability a main issue ahead of the 2026 midterm elections, politicians and economists alike are weighing the factors leading to the high cost of living. One often-overlooked piece is the cost of transportation.
Cars, once considered a luxury, are now described as a necessity. Most Americans need a vehicle of some kind to get from point A to point B, at a typical cost of thousands of dollars.
The price of buying a new vehicle continues to rise. Dr. David Bieri, an economist at Virginia Tech, said the average cost is now around $50,000.
“In terms of median income, that’s close to about eight months’ worth of pay,” Bieri said.
Bieri said new car sales remain healthy, but the cost and method of purchasing a vehicle point to a complicated market, with increasing insurance premiums, inflation, and lingering tariffs adding to the mix. He also said “pay as you go” payment plans are becoming more popular: a sometimes dangerous method that could lead some buyers to shop outside their purchasing power.
Bieri said one of the biggest issues is a lack of affordable vehicle options built domestically.
“We don’t really have any domestic low end entry points,” Bieri said.
Total vehicle costs including payments, gas, and maintenance take up anywhere from 10% to 20% or more of Americans’ monthly income, making it one of the most important purchases someone will make.
Bieri said spending, though, is only one half of the affordability puzzle.
“It’s also the problem of wages not growing fast enough for certain segments,” Bieri said, pointing out that a general increase in wages could make a massive dent in the overall affordability crisis.
The last time the federal minimum wage was raised in the U.S. was 2009.
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