And because EVs cost about 25 per cent more than the average car, the shift to plug-ins is about to make the affordability crisis even worse. Add soaring interest rates to the mix, and new cars – like home ownership and a college education – are fast becoming the domain of the rich.

“The idea of a new car in every American’s driveway is not the world we live in,” said Charlie Chesbrough, a senior economist at Cox.

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For a decade, the average new-car payment in the US bumped along at roughly US$400 a month. That’s about as much as the typical American household can shell out and still meet other major expenses, said Jonathan Smoke, chief economist at Cox. But it crossed that mark in November 2019 and has been soaring ever since.

The average price for a new vehicle in the US has jumped to almost US$50,000, up 30 per cent since 2019, according to JPMorgan. Though prices have retreated somewhat in recent weeks as production recovers, the pullback isn’t enough for most consumers to comfortably buy a new car. The average price of a used car, meanwhile, now stands at about US$27,000, Cox data shows.

Manufacturers are reaping the benefits of selling fewer but more expensive cars. Last year, carmakers sold about 13 million vehicles in the US, down 8 per cent from 2021 and the lowest in a decade. But Ford’s gross profit rose 4.4 per cent in 2022 from a year earlier, while GM’s adjusted earnings grew by about US$200 million to reach US$14.5 billion. Margins for some manufacturers are expected to narrow this year amid global economic weakness.

In Europe, meanwhile, new-car prices are at all-time highs and still climbing, according to data from ING Research. Vehicle shortages drove used-car prices up in Japan through most of last year. China’s economic slump has kept prices at bay, but major cities are making it difficult to register internal-combustion vehicles amid a push towards EVs, which tend to be more expensive.

It’s a sea change from the business model that defined car manufacturing for decades: run plants at full tilt and then use deep discounts to move the metal. In the US, carmakers customarily carried 60 to 100 days of inventory. These days, manufacturers are targeting about half that much to lower overheads and keep prices high.

“We’ll never go back to the inventory levels that we were at in the past,” GM chief executive officer Mary Barra told investors last year.

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Dealers are sceptical that carmakers will keep inventories in check, said Rhett Ricart, whose Columbus, Ohio-based Ricart Automotive Group is a major dealer of Ford, Nissan and Chevrolet models.

“They all talk about 30 to 45 days’ supply of cars. They won’t do it,” Ricart said in an interview. “These chips aren’t a big issue any more. Car wars is back.”

But any recovery in supply is likely to happen in fits and starts. Barra and Jack Hollis, executive vice-president of sales for Toyota Motor North America, see the industry getting enough chips to sell 15 million vehicles in the US this year, which is about 12 per cent below where sales were three years ago. Hollis said there could be more than 4 million vehicles’ worth of pent-up demand from the chip shortage, keeping prices from falling fast.

“We will have another year with a supply-constrained sales number,” Hollis said. “Prices keep rising. It’s clear that demand is still outstripping supply.”

For used cars, Cox’s Smoke sees prices falling only 4 per cent this year, in part because carmakers have not been leasing as much. That translates to fewer recent-model cars coming back to market.

Sercy Sanders has been riding the bus in Pittsburgh ever since the transmission blew on his 2006 Acura TL in early January. When the cost of repairing it was more than the car was worth, Sanders got preapproved for a loan from his credit union and set out to find a 2016 Honda Accord for under US$17,000. But he found nothing for less than US$19,000 and now is looking at models that are over a decade old.

“That’s just the way it may have to be if I want to stay in my price range and not have too high a monthly car bill,” said Sanders, 48, a customer service representative and single dad of two high schoolers. “It’s very frustrating. I wanted a newer vehicle that I felt would be more reliable. With an older used car, you just never know what you’re going to get.”

And for those looking for a new car at a budget price, the options are limited. Domestic carmakers stopped building compact cars in the US because they couldn’t make money on them.

The dearth of cheaper models means more new cars are being snapped up by affluent consumers. Nearly 30 per cent of the market is from households with annual income of more than US$150,000, up from 22 per cent in 2016, said Mark Wakefield, managing director at consulting firm AlixPartners.

“You’ve seen a move to more wealthy people buying cars,” Wakefield said. “The bottom part of the market sort of fell out.”