I suggest no more than 10% of your yearly income.
After all, there is the maintenance cost to think about. Car insurance, road tax, servicing etc. The thrill and joy of a new car fades after a few months while the repayments will continue for five years.
There is also the opportunity cost so instead of buying an expensive car how about funding your pension, buying shares or paying off your mortgage, all things which will improve your financial future while your car depreciates daily whilst sitting on the drive,
With a cheap car you won’t care about bumps or scrapes but in a new car will not want to park in any busy car parks.
Considering the median average pay in the UK is about £20,000, an average person will still have £2000 with which to buy a car. There are many secondhand cars on the market in this price range and your future financial self will thank you.