Much has been said about the death of the affordable new car. In July of 2023, only one new car in America actually sold for less than $20,000, and over the past few years, automakers have prioritized high-margin trim levels. Add in higher interest rates than many consumers are used to, and the new car dream is now out of reach for some.
And yet, people are still buying new vehicles in droves. Whether Toyota RAV4s or Ford F-150s, new car sales volumes are rebounding as prices stay high, and cars aren’t the only things getting expensive.
Real estate can be seriously expensive, whether renting or buying. The whole Consumer Price Index basket of goods rose dramatically in price over the past few years, compressing people’s disposable income. Sure, salaries have risen, but not everyone’s on salary, and those who are might still feel psychological effects of higher prices for everything.
At the same time, we need to look at how consumers buy cars for greater perspective on affordability. For those who lease, money factors and residuals matter far more than manufacturer suggested retail price. Confidence in financing terms can depend on how long a vehicle is within its factory warranty. Promotional subsidized interest rates also play a huge role for those who finance their vehicles. Oh, and that’s before we even get into running costs like insurance, fuel, and maintenance.
So, how would you define an affordable new car? Is it a compact crossover, a small sedan, something else entirely, or nothing at all? Make your voice heard in the comments below.
Photo credits: Mitsubishi; Honda
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