Rising inflation has spared few consumer needs -- including new vehicle costs requiring a bigger chunk of Americans' budgets than ever.

In a country where the median household income reached $7,609 a month in June, the average U.S. monthly new car payment rose to an all-time high of $730 in the second quarter, according to data from Edmunds. That means typical Americans now spend about 10% of what they e𝓰arn every month to pay for their 🌄new rides.

New car payments have risen 28%💟 in just three years, accounting for a bigger chunk of monthly expenses.

Higher car payments, of course, directly correlate with higher new car prices and financing costs. Surging inflation contributed to the former; attempts to fight iꦏt have raised the latter.

The average price of a new car rose to $46,229 in June, a 31% increase from $35,189 three years ago. Meanwhile, the Federal Reserve's interest-rate hikes aimed at taming inflation pushed the average rate on 48-month car loans to 7.59%, the highest since 2007.

Household Budgets Take a Hit; New Car Sales Don't

With median monthly home mortgage payments up 19% in the past year to $2,605, the cost of owning a home and one new car now swallows about 45% of the typical American household budget.

At least for new cars, higher costs have not slowed sales. U.S. new vehicle sales rose to 1.3 million in July, up 21.5% from the same month last year. It marked the fourth straight month new car sales exhibited double-digit percentage growth.

Globally, J.D. Power estimated global car sales volume in July likely surpassed an annualized rate of 90 million for the second straight month. That's the first time since the onset of the Covid-19 pandemic sales have exceeded that amount in back-to-back months.

Despite surging sales and sales prices, dealers' average per-sale profit plunged 28% in July compared with a year ago. That's mostly because just 29% sold for higher than the manufacturer's suggested retail price, down from 49% last year.

Labor Strife Adds to Upward Price Pressure

As a result, consumers seeking relief from rising new car costs may not see it anytime soon—especially🎀 with large automakers encountering significant labor strife.

The United Auto Workers union has threatened to strike Sept. 14 if it cannot reach a new contract agreement with U.S. automakers. The UAW's latest demand includes a 46% wage increase, pension restoration, increased retirement benefits and a reduced work week to 32 hours from 40.

Those demands reportedly would boost automakers' labor costs to $150 per hour, a 134% increase from the $64 currently. Combined, the increase would cost automakers an additional $20 billion during the course of the next four-year contract.

That's an amount that would wipe out profits at large U.S. carmakers. General Motors, the largest U.S.-based auto seller, had a profit of $10.7 billion in 2022. A $20 billion increase in labor costs would have pushed its total expenses for the year to $154 billion, outstripping its revenue by $10 billion.

With dealers and automakers both facing threats to their current profitability, they're not likely to lower new car prices as long as sales remain robust. Meanwhile, financing costs likely won't fall soon as the Fed remains intent on pushing even lower.

For consumers, that means new cars likely will keep taking a bigger bite of their budget.