Luxury Car Brands the Middle Class Can’t Afford Anymore
Rising vehicle prices, coupled with increasing maintenance expenses and insurance costs, are making some luxury car models increasingly unattainable for the middle class. This trend is particularly evident among certain high-end brands.
According to recent data, if you’re in the market for a high-end vehicle, there are a few key factors to consider.
Luxury Car Prices and Features
Data from Kelley Blue Book’s (KBB) Average Transaction Prices Report for September 2024 shows a significant price difference between entry-level and high-end luxury cars. While the average transaction price (ATP) for an entry-level luxury car was $56,408, the ATP for a high-end luxury model reached $117,557. This represents a price that’s 143% higher than the ATP for a new vehicle overall, which stood at $48,397.
As auto expert Chris Pyle, a virtual mechanic at JustAnswer, explained, luxury typically brings additional features.
“Luxury usually equates to a special paint job, nice wheels, chrome, wood grain, all the interior/exterior electronics, suspension upgrades, and nice seats,” Pyle said.
What’s Affordable for the Middle Class?
A Pew Research Center analysis, using recently available government data, revealed that 52% of U.S. adults were in middle-income households in 2022. Middle-income households, those earning between two-thirds and double the U.S. median household income, had incomes ranging from $56,600 to $169,800.
Financial experts generally advise spending no more than 20% of your post-tax monthly income on a car payment. The average new car payment during Q2 2024 was $734 per month, according to Experian.
Pyle added that the middle class usually targets vehicles in the $20,000 to $80,000 price range, ruling out the most extravagant luxury options.
Why the Shift?
The increasing unaffordability of certain luxury brands is primarily due to two key factors: maintenance costs and technological advancements. These points were highlighted by Alan Gelfand, the owner of German Car Depot in Hollywood, Florida.
Gelfand noted that brands like BMW and Porsche are using advanced infotainment systems and hybrid powertrains, which contributes to higher initial ownership costs. The sticker price isn’t the only concern.
“Maintenance expenses for these brands are also part of the issue,” Gelfand wrote. “Specialized parts are needed for proper servicing, and factory-trained experts are required to perform the repairs.”
Brands Increasingly Out of Reach
Experts have identified several car brands that are becoming increasingly unaffordable for the middle class.
- BMW: $72,122 ATP
- Porsche: $125,894 ATP
- Mercedes: $72,345 ATP
- Audi: $65,690 ATP
- Land Rover: $103,265 ATP
