As highlighted by CNN
In 2024, American buyers were offered three models for under $20,000. Now there are no such options.
Spending data on vehicle purchases released on Monday show how the disappearance of cheaper models could hit consumers: the average price of a new car in December was $50,326, according to Kelley Blue Book, a brand of Cox Automotive. The Edmunds car portal also recorded a record-high average price – $49,466.
Both estimates indicate that many buyers are paying well over $50,000 and will continue to pay similarly.
Alongside high starting prices – not only because buyers desire larger and more expensive models – prices are rising also due to the disappearance of affordable options among new cars.
The most recent noticeable victim was the Nissan Versa, which appeared on the market nearly 20 years ago with an initial price of about $12,550. Versa production was halted in December.
The lack of cheap options could make car ownership unaffordable for many, another example of the affordability crisis hitting Americans. And the contrast with rising luxury-car sales underscores a K-shaped economy: the rich spend, while the less fortunate face financial hardship.
«When we strip away the availability of these basic cars that aren’t available, you could say that almost every new car on the road with dealer plates is a ‘luxury purchase’.
Early signs of auto affordability problems and their impact on the market appeared during the pandemic, when prices rose due to supply-chain disruptions.
«(The pandemic) dramatically changed the pricing dynamics,»
In 2025 the Nissan Versa, valued at around $18,000 in October, became the last model staying below the $20,000 mark, according to Ivan Drury, Edmunds.com’s director of insights.
The Mitsubishi Mirage, which was discontinued in August 2024, cost about $18,000; the Kia Forte, which effectively was replaced by the more expensive K4, was discontinued after the K4’s announcement in March 2024.
Most of these cars were manufactured overseas where workers’ wages are cheaper. The 25% tariff on imported cars and parts, implemented by the Trump administration, raised automakers’ costs, although many companies absorbed much of the additional costs, fearing that consumers would resist price increases and delay purchases, Drury noted. Such costs likely wiped out the cheapest models, which already had little margin.
The cheapest new car today is the 2026 Hyundai Venue, with a manufacturer-suggested price starting from $20,550, according to Edmunds.
Cheaper cars, like the Versa, may be dropped from manufacturers’ lineups, while other budget models stay on the market, Drury believes. Competitor automakers, such as Toyota, may lure customers who lean toward cheaper, entry-level models rather than brand loyalty.
Dealers worry that lower-income buyers lose access to the market, while wealthier shoppers sustain sales. For people who cannot afford a new car, the options are used cars or keeping their own vehicles longer, but affordability remains a challenge, especially in cities without reliable public transit.
According to Cox Automotive, households earning less than $75,000 a year accounted for 26% of sales last year, compared with 37% in 2019.
On the other hand, wealthier buyers who can afford new cars are now opting for premium, larger SUVs, and the share of new-car sales among those earning more than $150,000 exceeds 40% – compared with about 29% in 2019. This gap underscores an increasingly pronounced K-shaped U.S. economy.
Wealthy Americans have boosted their net worth thanks to a strong stock-market, income growth, and high housing values. Meanwhile, those with lower incomes face a slowing labor market, rising debt, and a prolonged impact of inflation on their expenses.
A key consumer takeaway is the monthly payment. Said Tyson Jominy, senior vice president of data and analytics at J.D. Power: a $500 monthly payment before the pandemic could have afforded a Toyota Highlander – now it would barely cover a compact Toyota Corolla. By 2026, an overall price decline of about $500 on average is expected, creating more comfortable conditions for consumers.
And while automakers battle for a smaller slice of the consumer market, they will offer more incentives on new cars to compete with one-year or two-year-old models, Drury said. When incentives accumulate for new cars, they eventually show up in the used-car market, so they hope the latter option helps consumers who are feeling the sting of postponing a purchase, he added.
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