The Automotive Industry Shaken by Economic Downturn: Is a Monthly Loan of 110,000 Yen No Longer Feasible? The Day Americans Turn Away from New Cars

1. From "Unsold" to "Unavailable" Era

The American car enthusiast media, Jalopnik, featured a headline in its morning column "The Morning Shift" on December 2, 2025.
"A Crummy Economy Is Seriously Sinking Car Sales"—“A crummy economy” is sinking car sales.Jalopnik

According to the article, data compiled by Cox Automotive for November 2025 shows that new car sales in the U.S. fell by 1% compared to the previous month and by 7.8% compared to the same month last year. Meanwhile, JD Power's figures show a slightly smaller decline of 4.8%, but they agree on the point that the market is "losing momentum."Jalopnik

At the beginning of the year, Cox had envisioned a "modest growth scenario" where new car sales in 2025 would reach 16.3 million units, representing a 2-3% increase compared to 2024.Jalopnik

However, as the year-end approaches, that scenario is clearly falling apart. The problem is not "an oversupply of cars," but rather "a lack of household affordability."

2. The Reality of an Average Price of $50,000 and Loan Interest Rates in the 7% Range

In recent years, the price of new cars in America has been rising at a considerable speed, rather than gradually. According to data cited by Jalopnik,the average price of a new car has increased from about $38,000 five years ago to over $50,000 now.Jalopnik

At the same time, rising interest rates are adding to the burden. There are estimates that the average interest rate for a four-year loan, which was around 3.5% in early 2022, has jumped to around 7.7% by 2024.Northern Trust

While the overall growth in loan balances is only 2.8%, credit card balances have increased by more than 10%.Northern Trust

In other words, people are choosing to "get by with daily expenses on credit cards" rather than "buying a car with a long-term loan."

Jalopnik points out the current situation wheremonthly payments have reached an average of $766 (about 110,000 yen), and a seven-year loan is becoming the "standard" for new car purchases.Jalopnik

"Cars are supposed to be necessities, but now they've become 'luxury items' like high-end watches."

A driver in their 30s with a family laments on social media.
Rent, medical expenses, insurance premiums, tuition, and the rising prices of groceries and energy. New car purchases have become "the biggest expense that can be postponed" among them.

3. Tariffs and Policies as Another "Brake"

It's not just market factors that are driving up prices. According to estimates by J.P. Morgan, recent tariff policies have imposed atariff cost of about $41 billion annuallyon automakers, which is a factor in approximately 3% of price increases.Jalopnik

For example, the U.S. tariff rate on cars and parts from South Korea has been reduced from a "punitive" level of 25% to 15%, but it remains high.Jalopnik

Furthermore, there is ongoing tug-of-war between major countries such as the U.S., South Korea, Japan, and the EU over the potential for future security tariffs.Jalopnik

It's not just companies caught up in this "tariff game." Ultimately, it's the consumers signing the papers in showrooms who pay the added costs.
A dealer in Detroit shared this with an industry paper.

"The price tag on cars includes interest rates, insurance premiums, taxes, tariffs... everything is piled on. Customers feel like they're paying for the 'system' rather than the 'car.'"

4. The "Backlash" of the EV Boom and China's Counterattack

Another aspect not to be overlooked is the fluctuation in the EV (electric vehicle) market. In the U.S., EVs, which once drove the growth of new car sales, are now said to be losing momentum. Jalopnik's article points out that theexpiration of the $7,500 EV tax credithas become a brake on sales.Jalopnik

EVs, which were "barely affordable" with subsidies, become out of reach once the subsidies are gone. For the middle class already burdened with mortgages and student loans, there is not much room to make environmentally friendly choices.

Meanwhile, a completely different dynamic is at play in China. There are reports that the rapid shift to EVs has shrunk domestic demand for gasoline cars, leading to a massive export of surplus gasoline cars to emerging markets.Reuters

Chinese manufacturers are introducing these cars relatively cheaply to overseas markets, increasing their presence in Eastern Europe, the Middle East, and Africa.

Even within China, while EV giant BYD's sales have declined year-on-year for the past three months, Tesla is reportedly increasing its sales in the Chinese market, according to Jalopnik.Jalopnik

However, behind this are not only brand fatigue and price competition but also tightening by the Chinese government on the EV industry. As the review of excessive competition relying on subsidies progresses, the power dynamics in the global EV war may also change.

5. The "1.6 Billion Dollar Incident" That Shook Dealers

Jalopnik's article also covers another piece of grim news.
The U.S. President has commuted the sentence of a former investment fund CEO involved in an estimated $1.6 billion investment fraud case, which is equivalent to about 240 billion yen.Jalopnik

This fund had several car dealers under its umbrella and had significant ties to the automotive business world. Many of the victims are said to be ordinary investors who entrusted their future living expenses and pensions.Jalopnik

Of course, not all dealers and investment funds are engaged in fraud. However,
if more people feel like "they thought they were selling cars, but their very lives were being held as collateral,"
trust in the entire automotive business could waver.

6. The "Truth" About Cars and Household Budgets Flooding Social Media

How do ordinary people feel about this "car recession"? Looking at American social media, you find voices like these (all summarized and anonymized).

"Got a quote from the dealer, and it's $800 a month. With insurance, it's close to $1,000.
In that case, I'll keep driving my 10-year-old SUV for another three years."

"The average price of a new car is $50,000? That's half my annual income.
Cars have become 'stress' rather than 'status.'"

"I know EVs are good for the planet. But considering current electricity rates and loan interest,
I need to protect my wallet before the planet."

Posts from dealers also stand out, mixed with cries of despair.

"We have inventory, and we're offering discounts. Yet customers can't decide.
Everyone is genuinely worried about 'when they might lose their job.'"

As an economic indicator, there are predictions that the U.S. economy will continue to grow to some extent. For example, GlobalData expects global light vehicle sales in 2024 to grow by about 2% year-on-year, with a slightly positive growth outlook for 2025 sales as well.News Release Archive

However, from the household perspective, "fatigue not reflected in the numbers" is likely accumulating.

7. Not "Abandoning Cars" but "Unable to Afford"

When car sales decline, the cliché of "young people abandoning cars" immediately surfaces.
However, looking at the current situation in America, a more accurate term would be "unable to afford."

・Available money is not increasing; in fact, it's diminishing due to inflation
・Interest rates and insurance premiums are gradually taking their toll
・Vehicle prices are rising, with the average new car price exceeding $50,000
・Options like the used car market, car sharing, and ride-sharing are expanding

With these conditions in place, it's only natural to question, "Do I really need to switch to a new car right now?" In fact, in America,more people are choosing used cars, and there is a clear trend of switching to cheaper compact SUVs and small cars.AIADA

8. Ripples to Japan and the World

It's too soon to dismiss this as "just an American issue."
High interest rates, rising prices, and increasing car prices are happening worldwide, albeit to varying degrees.

Fitch Ratings has forecasted thatglobal passenger car sales in 2024 will maintain "barely positive