Cheap cars are disappearing. Expensive cars are easy to find. If you haven’t gone car shopping in five years or so, you might be surprised at how much the new American auto market is targeting high-income buyers with good credit while everyone else is being squeezed out.
“Now there are only three subcompact cars available to American car buyers that cost less than $20,000.“
The end of the affordable car
Over the past five years, sales of new vehicles priced under $25,000 have fallen 78%.
A new analysis by the Cox Automotive Industry Insights team took a snapshot of total new vehicle sales in December 2017 and five years later in December 2022. It found that Americans who buy a new vehicle priced under $25,000 they have surprisingly fewer options these days. (Cox Automotive is the parent company of Kelley Blue Book.)
In December 2017, automakers produced 36 models priced at $25,000 or less. Five years later, only 10 were built.
Cars under $25,000 accounted for nearly 13% of new car sales at the end of 2017. Less than 4% of new cars sold last December fell into that price range.
Manufacturers have all but abandoned the cheap and cheerful market. The Chevy Spark, America’s least expensive new car for several years, went off the market in 2022. So did the Hyundai Accent.
The move leaves just three subcompact cars available to American car buyers: the Kia Rio 000270,
Nissan Versa NSANY,
and Mitsubishi Mirage MMTOF,
They are also the only three vehicles left on the market that cost less than $20,000 after delivery charges are added.
Related: This is now the cheapest new car in America and one of a dying breed
The end of the low-priced car is pushing low-income buyers out of the new car market and into the used car market. Those rebuilding their credit are also being squeezed. As of December 2022, buyers with subprime credit scores represented just 5.2% of the market. In 2017, subprime buyers were 13.9%.
See also: 2023 Chevrolet Bolt EUV review: Power hatch is best-rated EV under $30,000
Sales of more expensive cars increase
Meanwhile, sales of new cars priced above $60,000 have soared, rising 163% in the same period.
In December 2017, automakers offered 61 models for sale with sticker prices of $60,000 or more. Last December, they offered 90. Cars over $60,000 accounted for more than a quarter of sales in December 2022. Five years earlier, they accounted for less than 8%.
Many carry luxury badges. Last month, Americans bought a record number of luxury cars, nearly a fifth of all new car sales.
Others bear the badges of affordable automakers, but are hardly affordable to most Americans. America’s top three selling trucks, the Ford F,
The F-150, Chevrolet Silverado, and Ram 1500 all offer various trim levels with starting prices above the $60,000 line, and some can reach six figures with added options.
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Small signs of hope
Last month, the final selling price of the average new car fell slightly. The average cost of a new vehicle remains near an all-time high, ending January at $49,388.
Cars also became more affordable, as measured by how long Americans have to work to pay for a new car. Analysts believe the new car market could see prices fall for much of 2023 as carmakers recover from a global microchip shortage and find themselves able to produce so many cars that they have to discount – them to sell them.
But some have spoken publicly about keeping inventories lower than before the supply chain crisis to avoid having to offer major incentives.
Used car prices have also been falling, easing pressure on Americans forced out of the new car market by the industry’s shift toward high-income buyers.
This story was originally continued KBB.com.
