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Seniors are half of new car buyers
Who buys new cars now
Not so long ago, ordinary middle-class families would trade their cars in for the latest model with relative frequency. It just seemed normal. Most young and many middle-aged customers have since been priced out completely, and in total about one million annual car buyers have disappeared.
What automakers got
Automakers don't appear to mind. While the number of cars sold is way down, the average franchised dealership saw its revenue increase by 4.5% in 2025 alone. In the past, companies responded to flagging sales with discounts, promotions, and special offers, but incentives are down by nearly 40% from before the pandemic.
Used cars follow along
The used market has followed the new one up. In 2020, the average used car sold by a dealer cost $22,000. Today it costs $28,000, and over five years after the great used car shortage of 2021, prices really haven't come down all that much.
Why do older buyers dominate new car sales?
Wealth tends to rise with age, and households headed by older adults hold more net worth than younger ones, according to the Federal Reserve's Survey of Consumer Finances. Many older households have paid down mortgages and built up savings, which makes a large down payment or a cash purchase possible. Younger households are more likely to be paying rent and student debt while earning less. Households headed by people aged 55 and older hold the largest shares of net worth in that survey's recent editions.
How do dealerships profit from fewer sales?
Selling the car is only one source of income. Dealerships also earn from financing and insurance products, used car sales, and a service and parts department. The National Automobile Dealers Association has reported that service and parts account for a large share of dealership gross profit despite a much smaller share of revenue. Higher prices on each new car also lift the gross profit per sale.
Why do used prices follow new car prices up?
New and used cars are substitutes, so when new prices rise, some buyers shift to used and push those prices up. A pricier new car also raises the value of a trade-in, since dealers resell it at a higher price. Late-model used inventory comes largely from lease returns and trade-ins, so a drop in new sales a few years earlier shrinks the supply. Dealers' used car prices reflect all of these links at once.
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