Core Viewpoint - The U.S. government is introducing a significant tax break for car buyers, aimed at making new vehicle purchases more affordable, particularly for U.S.-assembled vehicles [3][4]. Group 1: Tax Break Details - The new tax rule allows eligible taxpayers to deduct $10,000 per year in auto loan interest for cars purchased during Trump's second term [3]. - The tax deduction is designed to lower monthly costs and enhance car ownership affordability for families [4]. - The tax credit applies solely to vehicles assembled in the U.S., thereby supporting domestic manufacturing [4][5]. Group 2: Eligibility Criteria - Vehicles eligible for the $10,000 tax credit must be U.S.-assembled and purchased between 2025 and 2028 [5]. - Individual buyers earning over $100,000 and couples earning over $200,000 will see the benefits phase out [6]. - Eligible vehicles include new cars, SUVs, vans, pickup trucks, and motorcycles weighing under 14,000 pounds, purchased for personal use [9]. Group 3: Market Impact - The tax credit is expected to influence the sales of U.S. automakers, as it incentivizes the purchase of domestically assembled vehicles [4][8]. - Popular imported models, even if sold by U.S. automakers, will not qualify for the tax break, potentially affecting their sales [8].

Core Insights - The rising cost of new vehicles has led to increased monthly payments, prompting borrowers to extend auto loan terms to unprecedented lengths [1][4]. Group 1: Loan Trends - Borrowers are opting for longer auto loans, with terms stretching to 100 months or more, which can significantly reduce monthly payments [2][3]. - Approximately one-third of buyers are now taking loans lasting at least 72 months, with a growing number extending loans to 85, 96, or even 100 months [5]. Group 2: Financial Implications - The average price of a new car surpassed $50,000 in fall 2025, resulting in an average monthly payment reaching a record high of $758 [4]. - While longer loan terms lower monthly payments, they also lead to higher total interest costs over the life of the loan; for example, a $50,000 loan at 5% interest would cost about $6,600 in interest over five years, but extending it to 100 months increases total interest to around $10,000 [6][7].

The average monthly payment on a new vehicle in 2015 was $491. The average amount financed: $28,769. Now, some 10 years later, the average monthly payment in the fourth quarter of 2025 hit an all-time high of $772, with the typical amount financed also hitting a record $43,759, according to Edmunds. Longer loan terms, buyers paying $1,000 or more a month for a vehicle than ever before, and higher insurance costs — buying a new car may be reaching the limits of affordability, mirroring the other classic A ...

Describing an unsteady trajectory as a roller-coaster ride has become cliché, but there is genuinely no other way to describe auto sales in 2025. This year has been an anomaly for the car industry for many reasons, but the top issue has been tariffs and their impact on U.S. car buyers. U.S. 2025 new-vehicle sales forecast GM: 2.83 million vehicles (+5.1% year over year); 17.3% market share Toyota: 2.52 million vehicles (+8.4% YoY); 15.5% market share Ford: 2.18 million vehicles (+5.6% YoY); 13.4% mark ...

Car buyers, faced with the prospect of higher prices due to increased tariffs, flocked to dealership lots during the first half of the year to secure a purchase before the higher prices took effect. Car sellers, looking to capitalize on the increased demand, offered more incentives to buyers to keep them coming to dealership lots. U.S. 2025 new-vehicle sales forecast GM: 2.83 million vehicles (+5.1% year over year); 17.3% market share Toyota: 2.52 million vehicles (+8.4% YoY); 15.5% market share Ford ...

Core Insights - Buying a new vehicle may become more affordable by late 2026 due to expected easing of price increases, lower borrowing costs, and new tax benefits [1][5][7] Vehicle Pricing Trends - Car prices surged approximately 9% during the pandemic, with the average new vehicle costing about $49,800 in November, reflecting a 1% increase from the previous year [2][4] - Price inflation for 2026 model-year vehicles has been above historical standards, with these vehicles making up about 60% of the current new-vehicle supply [6] Consumer Sentiment and Market Dynamics - Despite improvements in affordability since 2023, consumer sentiment remains negative regarding the timing of vehicle purchases [3][6] - Households are projected to buy 2% to 3% fewer cars in 2026 compared to 2025 [2] Financial Implications - The new tax benefit may provide typical consumers with about $50 more per month, particularly benefiting those with annual incomes up to $100,000 [5][7] - The average monthly payment for a new vehicle currently accounts for 12.8% of median income, which may decrease to 12.3% by late 2026 [6] Market Segmentation - New tax breaks are expected to support sales among middle-income households, while low-income households will likely remain unable to afford new vehicles [7][8]

Millions of American car buyers will soon get some tax relief thanks to the One Big Beautiful Bill Act (OBBBA) signed by President Donald Trump on July 4. The tax break is taking effect starting from 2025 and running through the end of 2028 for auto loans on new car purchases. However, the deduction has income limitations, and not all vehicles qualify. At the same time, the OBBBA eliminated the federal tax credit on electric vehicles after September 30, 2025 (barring a few loophole EV purchases viable past ...

Core Insights - The Trump administration is rolling back Biden-era environmental standards for vehicles, which is expected to reduce the average cost of a new car by $1,000 [1] - The average cost of a new vehicle in the U.S. has surpassed $50,000 for the first time, marking an increase of over 25% from under $40,000 five years ago [2][3] - Consumer sentiment reflects frustration with inflated prices, leading many to delay new car purchases and hold onto their current vehicles longer [2] Pricing and Financing Trends - Approximately 80% of car sales are financed, with the average monthly payment rising to $748, and nearly 20% of buyers now paying $1,000 or more monthly [3][6][7] - Auto loan rates are currently high, with new vehicle rates at 6.56% and used car rates at 11.40% as of Q3 [4] - The average APR has remained at 7% for three consecutive quarters, contributing to affordability challenges for buyers [4] Affordability Crisis - The new-car market is experiencing an affordability crisis, with buyers making smaller down payments, financing more, and opting for longer loan terms to manage monthly costs [5] - Even if vehicle prices stabilize, rising interest costs continue to strain buyers' budgets [5]

Core Insights - Shoppers are becoming more selective about the prices they are willing to pay for new cars, leading to a shift towards used vehicles and longer car loans [1] - Consumers are increasingly holding out for better deals, indicating a change in purchasing behavior in the automotive market [1] Summary by Category - **Consumer Behavior** - Shoppers are drawing the line on new car prices, opting for used vehicles instead [1] - There is a trend of consumers taking on longer car loans to manage affordability [1] - Many consumers are waiting for deals before making a purchase, reflecting a cautious approach to spending [1]

Core Insights - The U.S. economy experienced a boost in spring and summer as consumers rushed to purchase new cars to avoid tariffs and take advantage of expiring tax breaks [1] - Currently, there is a noticeable decline in car shopping activity among consumers [1] Economic Impact - The rush to buy new cars was driven by the anticipation of U.S. tariffs and the expiration of certain tax incentives, indicating a temporary spike in consumer spending [1] - The shift in consumer behavior suggests a potential slowdown in the automotive sector, which could impact overall economic growth [1]