How Inequality Killed the Affordable American Car

Let’s talk cars. In particular, their prices.

As thousands of sticker-shocked Americans can attest, and as economist Clifford Winston has documented in The New York Times, the average sale price for a new car today is roughly $50,000. Only four cars on the new-car market can be purchased for $25,000 or less. That’s doubly true for American EVs, despite the fact that they are cheaper to run and maintain. Even the revived small hatchback Chevy Bolt starts at more than $28,000—and production is apparently only going to continue for a year or so.

For middle-class and working-class Americans, most new cars and homes—two foundations of what we’ve long regarded as a middle-class life—are now out of reach.

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Ironically, the American auto industry has historically played a key role in scaling supply to demand and was the first in which pricing its products to the financial capabilities of consumers was infused with mathematical precision. Initially, Henry Ford’s Model Ts came in one size, one color, and sold at one price. During the 1920s, however, General Motors, under the leadership of Alfred P. Sloan, started making a variety of brands, each scaled to the consuming capabilities of different portions of the public. Sloan decreed that GM would make “a car for every purse and every purpose.” Its cheapest car was the Chevrolet; then, in ascending order of price, came the Pontiac, the Oldsmobile, the Buick, and, for the wealthiest buyers, the Cadillac. By 1929, GM was selling more Chevys than Ford was selling Model Ts, and factoring in its other brands, was outselling Ford (not to mention Chrysler and all other U.S. companies) by a wide margin—a lead it has maintained to this day.

While the uniformity of Ford’s product enabled the company to centralize production in just a few massive plants, GM opened plants all around the country (a strategy it doubled down on after the autoworkers’ 1937 sit-down strike in a few key factories halted production of most of GM’s models). Its brands were never as differentiated as they appeared to be: By making slight modifications, many of its factories could turn out, for instance, both Chevys and Pontiacs, or Buicks and Oldsmobiles. But the very existence of the brands, and the cosmetic changes made to the brands every year (another Sloan marketing ploy), brilliantly built on, and fostered, Americans’ status anxieties.

Until the coming of the New Deal, Sloan’s economists and researchers probably had a better grasp of Americans’ finances than the federal government had. And while that advantage has long since dissipated—today, every big corporation and bank, not to mention big government, too, has economists, many now aided by AI, making long-term and short-term economic projections—GM today is surely even more able than it was in Sloan’s time to assess Americans’ finances so that it can maximize its profits.

Which is precisely why it now sells new cars that only upper-middle-class or wealthy Americans can afford to buy. As I’ve noted in a previous piece:

According to a Moody’s Analytics survey of Federal Reserve data, 30 years ago, the 10 percent of Americans with the highest incomes were responsible for 36 percent of all consumer spending, while the bottom 80 percent was responsible for 48 percent. Today, that high-income 10 percent is responsible for 49 percent of all consumer spending, while the share of consumer spending done by the bottom 80 percent has sunk to just 37 percent. Airlines understand this; they’re reshaping their cabins to provide more room for first-class and business travelers, and reducing the space for coach (which coach travelers might think is both physically and mathematically impossible) as fewer non-rich Americans can afford to fly.

Looking at the particular numbers for car payments, the monthly payment on a $50,000 new car, assuming a 60-month car loan and an average down payment, would come to roughly $975. A median-income American household (with a yearly income in 2025 of approximately $84,000) could afford a monthly payment of just $750.

So much for buying the average new car, unless you’re in the richest 10 or 15 percent of our fellow Americans. And the buying power of those Americans is less a function of their income from work, and more a function of their stock ownership at a time when shareholder income and wealth have grown way in excess of other sources of income (wages most particularly). Data from the Federal Reserve in 2024 shows that the wealthiest 10 percent of Americans own 93 percent (measured by value) of the publicly traded stocks held by U.S. households.

If anything, economist Thomas Piketty’s master rule for a capitalist economy, r > g (that is, the growth of returns on rents and investment is almost always greater than the growth of the overall economy), understates the fundamental nature of the current American economy. The economists at GM and virtually every corporation clearly believe that Piketty’s equation is spot-on. It’s clear to them that focusing on selling more costly goods and services to the investment-enriched sector of the public will net their companies more money than the kind of “product for every purse” marketing that thrived in that long-ago postwar economy characterized by broadly shared prosperity. Moreover, the money that shareholder-enriched consumers pay to such companies for their purchases now bounces back to them more than it once did through share buybacks and dividends. Through such back-and-forth flows, shareholder capitalism becomes both a self-sustaining system and a closed circle, difficult to enter absent significant shareholding.

Decades ago, Prospect co-founder Robert Reich began to document what he called the secession of the rich. In our current economy, that secession is growing bigger every day; like the expanding universe, the gaps between the wealthy and everyone else are widening and accelerating.

Wealth taxes, anyone?

How Inequality Killed the Affordable American Car

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