The End of the Cheap New Car Is Nigh

Photo: Mitsubishi

There are only three new cars for sale in America that are available for less than $20,000. It’s generally hard to sell small cars at a healthy profit in the U.S., and automakers prefer to make a healthy profit when they sell cars. So, most of them ignore people who (ew!) don’t have a lot of money to spend on a car, leaving those people to scrounge the depths of Facebook Marketplace for used cars that are also, currently somewhat unaffordable.

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As Gary Gastelu pointed out in a recent post, the average price of a new car is down about $500, to $48,008, a truly unfathomable expenditure for a lot of people, especially as the cost to borrow continues to rise.

But, don’t despair, there are still a tiny handful of affordable options out there. Let’s list them:

Mitsubishi Mirage — $17,65

Illustration: Mitsubishi

Kia Rio/Rio5 — $17,875

Photo: Kia

Nissan Versa — $16,925

Photo: Nissan

That’s it. That’s all of the cheap cars. It’s been a while since I’ve driven any of them, but if memory serves, none of them are terrible, they’ve even had their defenders, but we’re a long way from the era when the US market was positively awash with interesting, fun, thoughtful cars for frugal people.

In theory, higher interest rates and stubbornly high used car prices could push some new buyers to seek out the lowest possible payment and increase demands for cars like this. But I just don’t see it. None of these are selling particularly well, they’re all down significantly from last year, and none of them deliver huge margins to the companies that make them. Plus, rent, transportation and food costs continue to work their way up while wages are mostly stagnant. It’s hard to imagine a future for cheap subcompact cars like these in America.