Edmunds just revealed the affordable new car is rapidly
becoming an endangered species, leaving millions of Americans priced out
of the new vehicle market just as household budgets are already
stretched by higher housing, insurance, food, and borrowing costs. Its
new analysis shows the once-common $20,000 new vehicle has nearly
vanished from dealership lots, highlighting a fundamental shift in the
auto industry that extends far beyond inflation. Automakers have
steadily eliminated low-margin entry-level models, trimmed base
configurations, and pushed consumers toward higher-priced vehicles,
fundamentally changing what “affordable transportation” looks like in
America.
With the average new vehicle now approaching $50,000, buyers are
increasingly finding that the entry-level cars they once counted on have
either disappeared entirely or quietly evolved into significantly more
expensive models. As affordability reaches a breaking point, consumers
are asking a new question: If a new car is no longer realistically
affordable, what’s the smartest way to buy a vehicle in today’s market?
Automotive Retail Analyst Ray Shefska is available is available to
explain what’s driving this affordability crisis, why many shoppers are
unknowingly overbuying, and the strategies consumers should consider
before signing their next purchase contract. Among the topics Ray can
discuss topics that include, but are not limited to:
- Why the disappearance of the $20,000 new car signals a permanent shift in the marketplace, not a temporary pricing cycle
- Why “trimflation” has quietly become one of the biggest drivers of higher vehicle prices
- How automakers increasingly prioritize profitability over affordability
- Whether consumers really stopped buying affordable cars or simply ran out of affordable choices
- Why the traditional “buy new” advice no longer makes financial sense for many households
- When leasing, Certified Pre-Owned vehicles, or buying used may offer significantly better value
- Why dependable sedans like the Toyota Corolla and Toyota Camry continue to outperform expectations despite the SUV boom
- The biggest mistakes budget-conscious buyers are making in today’s market
- How shoppers can avoid paying thousands more than necessary despite rising prices and limited inventory
Ray says:
Many factors have led to the near extinction of new vehicles priced at
$20,000 or below. Part of the reason could be inflation as the cost of
goods continues to rise, another is mandated government safety
technologies that continue to add costs but the most important reason in
my opinion is that automakers have chosen to produce
higher-profit-margin vehicles as a way to earn more even though they are
selling fewer units. Did consumers abandon entry level cars or were they
forced to accept larger, better-equipped vehicles because automakers
decided that was what they wanted? This exemplifies automakers telling
their customers what they want rather than actually asking their
customers what they want. This is a classic example of the “if they
build it, they will come” mentality.
I don’t think that the consumer’s definition of an “affordable” new
vehicle has changed over the last 5 or 6 years, I think automakers are
the ones who have tried to artificially change it. We have experienced
trimflation over the past few years, where base model vehicles were no
longer offered, causing the first step-up trim level to become the new
base trim at a much higher price point.
Budget-conscious shoppers face tough choices, and ultimately buying used
is probably the best bet. Yes, finding quality used vehicles in the
$20,000 to $25,000 range is difficult but they do exist and numerous
online tools can help people find them. A 2 or 3-year-old manufacturer
Certified Pre-Owned vehicle that includes extra warranty coverage
probably presents the best value for those with a limited budget. The
combination of savings from the original MSRP and the enhanced
manufacturer warranty coverage would be the ideal sweet spot for many
buyers.
*** Access an online Car Loan Calculator HERE [2] (no sign-up or
personal info required)l which is offered along with a few other
calculators for depreciation, cost to own, leases, etc. These tools
bring transparency to car buying, financing and ownership by simplifying
budgeting by accounting for hidden costs, financing terms, and long-term
vehicle devaluation.
