Inexpensive new cars are becoming tougher and tougher to find

(CNN) — Car salesman Bob Kain recalls the first time he saw a luxury car with a $25,000 sticker price at his family dealership. It was 1989, and the car was a Ford Crown Victoria.

“I remember thinking, ‘My goodness gracious, this is going to be really hard to sell,’” he said.

Today, the cheapest car for sale at Kain Ford, a dealership just outside Lexington, Kentucky, is a small SUV —the Bronco Sport — which has a $36,000 to $40,000 sticker price. The average sticker price on his lot is $54,000.

Ford no longer makes sedans like the Crown Victoria, with the Mustang muscle car being the closest thing to a sedan still in its lineup. If it were still available, the Crown Victoria from 1989, adjusted for inflation, would be priced above $65,000. But that wouldn’t be the most expensive vehicle on Kain’s lot. It has Expedition SUVs and Super Duty pickups with sticker prices above $80,000.

“It’s amazing how people adapt to changing prices,” he said.

Just over a decade ago, most new American cars were sold for less than $30,000, according to data from auto research firm Edmunds, with nearly a third priced below $25,000. But that’s not the case today. During the first six months of this year, only 4% of US car sales were under $25,000, and only 10% were in the $25,000 to $30,000 range.

Those figures may be pricing a million car buyers out of the new car market, said Ivan Drury, director of insights at Edmunds. About 16 million new cars are sold on average per year, a dip from about 17 million in annual car sales the industry regularly reached a few years ago.

Automakers focus on upper end

Automakers in recent years have decided that the lower end of the market is no longer worth the investment. As consumer prices rise and auto tariffs raise production costs, car companies are giving up on some sales to concentrate on more expensive models that bring in higher profits. That includes larger trucks and SUVs with more expensive features, including driver-assist features to help avoid accidents, an extra row of seats in SUVs and pickups, and all other typical comforts.

“You might get a little more volume selling cars in the $20,000 to $25,000 range. But at the same time, it just doesn’t make sense when people are so willing to hand over so much money for cars with so much more content,” Drury said.

Inflation is partly to blame for the dearth of cars under $30,000. But car prices have risen 49% since 2015, according to Edmunds pricing data, outpacing overall inflation.

That’s because as cars get more expensive, Americans want more bang for their buck. Drury said those who decide to take the plunge for a new car often want one with features that were unavailable 10 years ago.

In fact, more cars today sell for more than $70,000 than for $25,000 to $30,000, according to Edmunds data.

Part of that is availability. Last year, there were only 10 models on the market — all from small, Asian automakers — with an average transaction price below $25,000, according to Edmunds. And one of the cheapest models, the Nissan Versa, is no longer available. The automaker ended production at the end of last year.

Tariffs on cars and auto parts have raised the cost of producing budget vehicles. Tariffs are also forcing automakers to stop importing some of the cheaper models, like the Versa, which was manufactured in Mexico, not Japan.

Americans seeking cheaper options would traditionally turn to the used car market. But experts say that’s a less appealing option these days, because even if used cars carry the same bells and whistles, buyers aren’t getting the same value for their money.

Used cars also have higher interest rates than new cars and have less or no warranty protection. And greater demand is overinflating prices. The average sales price for a new car in July was about $49,000, while for a newer used car — three years old or less — it was $32,000, according to Edmunds.

Fortunately for car buyers, median household income has also risen steadily, according to Federal Reserve data. But so have interest rates on car loans. The average car loan rate on a five-year loan was only 4.4% in August of 2015, according to Bankrate.com. The most recent reading for May of this year was just under 7%.

With the vast majority of car purchases being financed, the rise in car prices is causing more of an affordability problem beyond what the simple sticker price shock might suggest. A record share of Americans — more than 20% — agreed to pay more than $1,000 per month for a new car loan at the end of last year, according to Edmunds.

The hunger for cheap cars

Some upstart automakers are testing the lower-priced part of the market. Slate Auto, which expects to deliver its first vehicle — an electric pickup truck — late this year, will have a list price of only $24,950.

But Slate’s electric trucks won’t have features that consumers consider standard, such as power windows or a second row of seats in the truck’s cab. It won’t even be painted. The automaker, which was founded in 2022, estimates that not having a paint shop in its factory in Warsaw, Indiana, will save it hundreds of millions of dollars.

Slate’s affordability took something of a hit last year when the $7,000 federal EV tax credit was repealed. But the company has collected 180,000 refundable $100 deposits for its truck.

“We wanted to make sure that the truck would be affordable, with or without the (tax credit) incentive, and 180,000 reservations later, people agreed with us,” said company spokesperson Jeff Jablansky.

One of those buyers is Jonathan Snyder, who co-owns a furniture design studio in Los Angeles. Though Slate is too young to have a reputation, Snyder took a chance on the company’s trucks because of its low prices. He previously had to rent trucks when he needed to haul things to his studio because even used trucks cost too much to buy.

“The used car market is very expensive right now,” Snyder said. “As a small business owner, the price feels the most responsible for what is essentially a tool.”

Kain agrees there’s a significant number of buyers who want low-priced cars, and he’s hopeful about Ford’s plans to introduce a line of five more affordable models.

But those buyers may have to wait a while. There is no exact timeframe for Ford’s budget cars, only that they’re due before 2030. And the more affordable pricing is “below $40,000,” which would have been considered in the mid-market-to-luxury range not long ago. Stellantis — maker of Jeep, Ram, Dodge and Chrysler brands — has also announced plans for nine models under $40,000 and also by 2030.

Still, Kain said there’s a market for cars priced under even the $40,000 mark.

“We’ve already had a lot of interest from customers who want to be the first ones to get their orders in for those vehicles,” he said.

The-CNN-Wire
™ & © 2026 Cable News Network, Inc., a Warner Bros. Discovery Company. All rights reserved.