I’m not trying to be clever when I say that plenty of companies make affordable cars, but no one has figured out how to make cars affordable. The government? Nope. Dealers? Definitely not. Automakers? Nah. The Fed? Also, nope. It’s a solvable problem, but no one seems to be solving it.
I’ve long ago declared affordability to be the issue of 2026 for the car industry, and this will not be the last Morning Dump dedicated to the problem. I will also not solve the problem this morning, but I want to lay the groundwork for why it feels so intractable. This ongoing tension has helped create Carvana and, occasionally, destabilized it.
Not like anyone has it quite figured out anywhere. Both Tesla and BYD would like to be the biggest seller of electric vehicles, and both are floundering in various markets to start the year. The World Rally Championship has also struggled in the United States, but it sounds like it might be coming back.
Affordability Is A Symptom Of A Diseased System, Not The Disease Itself
It is simplistic to say that greed is at the center of all of life’s problems. That Late Capitalism is the main cause. Or politics. Or the existence of an independent central bank. Or free trade. Or the Internet. Or whatever you like.
All of those are fair targets, and if you are trying to win an election or get subscribers for your Substack, a polemic focused on any of the above is going to likely to be a success. The much harder argument to make, and the far less satisfying one, is that it’s more complicated than that. In fact, I’d say the complexity is the problem.
What do I mean? There are affordable cars for sale. A lot of them. I just drove a Nissan Sentra, and I’m currently driving a Chevy Trax (reviews coming), and both of those are reasonably-priced cars that you can find at dealerships. People don’t necessarily want a Trax or a Sentra. Both are only available as FWD, Chevy and Nissan may not exactly be the most desired brands, and many cheaper cars are small in a country that doesn’t love small cars. I think people are being shortsighted not to consider either of these two, but I understand how some people may have earned or inherited a reasonable prejudice against either.
Even if you like either, keeping them affordable, though, is a challenge. Why? As Cars.com points out, few of the affordable cars for sale in the United States are actually made in the United States:
Inventory of new vehicles priced under $30,000 — the most tariff-sensitive segment — averaged 13.6% share in the first half of 2025. This is down significantly from 2019, when entry-level vehicles made up 38% of the market and reflects the third consecutive month of declines. With 92% of these vehicles built outside of the U.S., tariffs are disproportionately affecting this entry-level tier, which relies almost entirely on foreign-built vehicles.
This starts to get complicated again, because while there are some affordable cars for sale, not every brand makes a lot of its cheapest cars readily available. This trend started during the pandemic, when automakers had to make hard choices about which cars they could build, and the answer was to mostly build higher trim levels of pricier cars. You might think that’s greedy, but it’s also logical.
Automakers are starting to offer lower trim models again, and that starts with Honda, which is one of two brands that make a sub-$30k car in the U.S. with the Civic (the other is Toyota with the Corolla). That’ll help, because these are almost universally popular brands.
Problem solved? Nope! Even if you can find a sub-$30k car you like for sale, the cost of buying the car is high if you don’t have a lot of cash to put down. Before you even get to insurance costs, just financing a car is expensive, and has led to more people taking out $1,000+ a month car loans than ever before. The Federal Reserve Bank declined to lower rates, and it’s complicated, but that means relief for borrowers is probably not in the cards anytime soon.
Should the Fed cut? That’s a conversation for another time, but I’m personally conflicted. I have a sense that we’re in a bit of an AI bubble, and allowing people to borrow more money, cheaply, while a bubble is going on, could have disastrous consequences.
Could politics solve this? I think politics, partially, is to blame. I can also make this bipartisan. The government, broadly construed, pushed electric cars. That money was supposed to eventually return a profit. For most automakers, it has not, and they’ve taken billions of dollars in losses. Would this have changed if an administration change hadn’t occurred and EVs were still given tax credits? I’m not sure that would have solved the demand problem. Either way, the reversal hurt, and then tariffs were added on top of that.
If you’re an automaker, what should you do? Stick with EV investments, knowing that the next White House could bring them back? Onshoring is happening, and was already happening before President Trump, but what if the Supreme Court cancels the tariffs? What if a new Congress does? What if, eventually, a new President does? Automakers are paying for both tariffs and EV investments, with no promise of how either will eventually turn out for them. It makes tossing a bunch of incentives on new cars that much harder, as well as investing in building a small car platform in, say, Cleveland.
What about the dealers? There’s understandably not a huge amount of sympathy for dealers, but they’re also stuck dealing with these forces. Automotive News polled a bunch of them, and the answer seems to be that they also have no clue:
Buyers who have an expiring three-year lease are finding a replacement vehicle carries payments hundreds of dollars more expensive than their last, said Andy Guelcher, chairman of the Chevrolet National Dealer Council and dealer principal of Mohawk Chevrolet in Ballston Spa, N.Y. But this isn’t sustainable.
“We have to be creative,” he said. “We have to use the resources that are available to us to make it as consumer-friendly as possible and to make it as affordable as possible.”
The answer is not to extend loan terms to 8-10 years because then customers will have negative equity in their vehicles “forever,” and won’t be able to trade them in, said Don Hall, CEO of the Virginia Automobile Dealers Association.
“That means that production will slow down,” he said. “That means that dealerships will be less successful because they’re not [selling] more frequently.”
Dealers have to borrow money to keep cars on the lot, and fewer cars might mean a better margin for automakers, but it squeezes customers and dealerships alike. Too many cars can also be a problem for dealers and automakers, because it causes prices to drop too fast and inventory to build up. That’s good for consumers in the short term, but it can also cause the value of cars to drop, which in turn keeps people in negative equity longer.
Above are not even all the problems; they’re just the ones that are easiest to diagnose.
Carvana Exists Because Of This Complexity
One of the most fascinating companies in the automotive world over the last ten years may not be Tesla. I’d argue it’s Carvana, a company that’s either raking in tons of cash while also earning huge valuations, or being accused of being a house of cards by short sellers. Kinda like Tesla. Also, like Tesla, it’s not always great to bet against the company.
There’s a fantastic write-up on the company in Bloomberg Businessweek that touches on what this company represents, and I appreciate that it addresses both of the key aspects of the company: Efficient organization and a scary loan business.
Buying a car from Carvana is easy, and the model makes a lot of sense. Some of this is because the company is very good at buying, selling, fixing, and moving cars. As the article points out:
Workers on the floor with iPads track the progress of vehicles under repair using Carli, a production management system Carvana developed with Oracle Corp. The software can proactively order parts based on the condition of a vehicle and the model. (Some models are more likely to need certain repairs.) Carvana says Carli and other improvements have helped cut operations costs by $1,700 over three years. The company spends an average of $900 a vehicle compared with rival CarMax Inc., which spends about $1,200, according to JPMorgan analyst Rajat Gupta.
That’s a big deal. With affordability an issue, and the dealership experience often a mediocre one for customers, Carvana makes it easy to buy a car and processes those cars quickly and cheaply. That’s all good, but what’s the scary part of the business?
Carvana’s stock is perpetually vulnerable to aggressive short sellers. On Jan. 28 Gotham City Research LLC published a report accusing Carvana of inflating its valuation by overstating earnings and obscuring transactions between different Garcia family-owned businesses, sending shares plummeting 14% that day. Although the stock price has begun to recover, Carvana’s otherwise lofty valuation is driven by an expectation that its rapid sales growth will continue. If it doesn’t, the company will be carrying substantial expenses from its rampant expansions. But for the moment, selling auto loans is a good business if you can get it. Carvana, which makes most of its income by selling the loans it originates, has been steadily turning a profit for almost two years. It originated $9 billion in loans in the first nine months of 2025 and has had no trouble finding buyers for the debt.
This is a bit like Wile E. Coyote running off the cliff. So long as the economy stays up and one looks down, Carvana doesn’t come crashing down. That feels like a tough bet, but it’s one Carvana feels comfortable making.
Tesla And BYD Are Not Starting The Year Off Great
I’m reusing this photo we made back when Tesla v. BYD had Tesla on top in a race to the moon. Now it’s a race to stay out of the gutter. As Electrek writes, Tesla “can’t find the bottom in Europe.”
The first batch of January 2026 registration data is in from Europe, and Tesla’s freefall on the continent shows no sign of slowing down. Across five major markets that have reported so far, Tesla registrations are down a staggering 44% year-over-year, extending what is now more than two years of continuous decline.
The company sold just 661 cars in France and just 83 in Norway, the one market where it usually did well. That’s an 88% year-over-year drop. Oops. Not like BYD is having the best time, either, as the rolling back of subsidies in China resulted in a 30% year-over-year decline for the brand.
Will this be the year that someone like Geely takes a huge chunk out of both?
WRC Wants That American Money
If a mostly European brand like F1 can succeed in the United States, then why not the World Rally Championship? The series hasn’t had an event here since 1988, and that’s far too long, reports Automotive News:
“The United States represents one of the most important growth opportunities for the FIA World Rally Championship,” said Mohammed Ben Sulayem, president of the sanctioning body. “It is a nation where motor sport is part of the cultural DNA, with world-class domestic championships and a rapidly growing appetite for global competition.”
The trial event will be held this summer between Kentucky and Tennessee.
What I’m Listening To While Writing TMD
Hey, it’s the Talking Heads saying “Don’t Worry About The Government.” Is David Byrne being sincere here? That’s the question with basically every Talking Heads song.
The Big Question?
You’re asked to solve affordability. Where do you start?
Top graphic images: stock.adobe.com; DepositPhotos.com
You’re asked to solve affordability. Where do you start?
China.
Also killing any and all incentives for non commercial ownership of giant vehicles.
How to solve the affordability problem?
Can’t. That’d involve less profits for the shareholders and by God, that goes against everything we stand for as a nation.
Also, re: the “affordable car is a used car.” That usually works unless it’s a Toyota or a Honda. Many times, with financing deals, it really does make more sense to buy new than used with a lot of their models.
In the summer of 2022, we sold our 2019 Toyota Highlander to a dealership in Louisville, Kentucky for more than we paid for it new. Even though it was three-years-old and had 30,000+ miles.
I think used cars are the problem and the answer to affordability. Cars last longer and are more reliable than ever before. When a car will now easily last 10 years, probably 20, there’s just so much good used car inventory. At any price point below a certain amount it’s just too easy to say I’ll give up a couple of years of age for these features/size.
And what happens when that supply dries up?
It’s not the whole new car market that has been replaced (in my theory) by used cars that last longer, just the bottom of that market. Future used cars are still being sold.
They last longer but they are also becoming less DIY friendly, more expensive to repair professionally and less repairable overall. It seems we hit peak DIY about 10 years ago so what happens when those are gone?
The reason there are less affordable cars is that it’s a tiny market – very limited buyers. Look even at something like a full size pickup truck – a huge percentage of them are the higher trim levels (when you exclude companies who buy them as work trucks). The cheaper ones are there but people want the goodies so they spend more.
Stop the exports of used vehicles. Over 700,000 exported from USA in 2025. Scarcity increases prices.
Depending on where you look, it appears there are anywhere from 250M to 300M registered vehicles in the US. I’m not sure 0.23-0.28% being sold (all while something like 16M new vehicles are added each year) makes any difference at all.
Counterpoint – eliminate the 25 year rule and allow the import of good* used vehicles.
*Good meaning meet appropriate emissions and safety standards.
Consumers can’t buy base models because they aren’t on the lot. Base models aren’t on the lot because the manufacturers’ customers are the dealers, not the consumers, and dealers don’t want base models and don’t order base models because they make less money on them. Less simple net profit per unit sold, and less interest profit on every additional dollar the consumer would’ve borrowed from their juicy captive finance partners to buy a more expensive car. One force that could tilt the makeup of legacy brand dealer inventory is if something like the direct sale Slate (which would need to hold the line on price, I mean be really cheap) takes off in a big way. Legacy dealers would have to compete and they would yell at the manufacturers to give them something to sell.
You can find dealers that will order what you want if you visit a few of them. “On the lot” is more an issue with impatience, nobody wants to wait. So dealers leverage that and stock what they want to sell. Works pretty good for them too.
While I agree with Fleetwood, this is also true. I ordered my old 6-speed Crosstrek because no dealers within 100 miles had one on the lot back in 2020. It took a few months, but it was worth it to get exactly what I wanted. Not every dealer offers this, though.
I agree with Fleetwood too. Except the part that said they cant get a base model. It is more accirate to state they can get a base model but are just too impatient to wait.
Case in point…My FIL ordered a Colorado w/t with exactly what he needed. The dealer ordered it for him, then called him back 3 weeks later and was like “we got this really great z71 on the lot” My FIL bought it. He just couldn’t wait for the base colorado w/t he ordered. Cost about 25% more. 3 months was just too long to wait even though this was a 4th car.
That’s just foolish, but I guess that’s why we have FILs. Mine impregnated some woman in his home country two years ago and just asked me to donate money to help said woman’s children (she has a bunch)…
You’re correct, I meant dealers don’t like to order the cheap models for inventory. Many consumers are impatient and some face a situation in which they need a car now or very soon, so the lack of base cars on the lot moves them toward whatever’s in stock today. Then of course the manufacturers complain that they don’t make basic cars because “nobody buys them.”
I’d buy a Slate in a heartbeat – if it had a Toyota 3S-FE engine or something bulletproof like that.
Re affordability, two prongs. First: improved information for buyers, something like an average expected TCO on every Monroney window sticker. The same kind of different situations scenarios required for health plans every open enrollment period. More information should lead to competition driven by efficiently delivering value to society. Second prong is let the losers fail. I’m not saying no bailouts ever, but they can’t be so reliable they become expected. That kills the markets ability to focus capital on more efficient processes just as surely as the constant onslaught of misinformation from marketers. Sure, I’m innocent and naive. What else ever worked though?
There is no affordability crisis with new cars.
As is known and admitted here cheap cars exist and can be bought right now.
Americans don’t want cheap cars.
People want fully loaded cars and they are willing, and able-that’s the key- to drop big money on them.
In fact, the reality that so many people can roll in high end whips is a sign that affordability is not a concern of the average buyer.
If they get those cars repo’d that’s not about affordability, it’s about living beyond their means.
That’s the real issue.
So can we stop beating the dead horse false issue of affordability?
“If they get those cars repo’d that’s not about affordability, it’s about living beyond their means.
That’s the real issue.”
Bingo. The number of people I know who are rocking ~$1,000-a-month car payments is staggering. In my neighborhood of modest ranches and bi-level homes, it feels like every other house has at least one full-size $60k truck or SUV parked in the driveway. It’s wild how many people seem willing to saddle themselves with massive payments just to drive the biggest, newest vehicles.
When I was 14 years old, I accompanied my father to the Dodge dealership so that he could take delivery of his brand, new 1972 Dodge Dart 4 door sedan. He handed over a check from the bank for 2600.00 and change. It was basic and had no A/C At that time, Japanese cars were considered 2nd tier and brand new cars were available for under 2000.00. Some dealers were giving away a cheap Japanese car with the sale of an American car.
So, let’s fast forward. I was in the Grocery parking lot 2 days ago. This tiny woman was strapping in her toddler in the rear seat of a brand new Chevy Tahoe. The Tahoe dwarfed this woman. I am not sure if she uses it to transport a soccer team to practice on weekends or has a bunch of teenagers at home. However, it’s not unusual to see tiny people coming out of gigantic monstor Trucks and SUVs.
About 2 decades ago, American automakers, and later the Japanese, figured out that selling these gigantic vehicles with every option available in the Universe brought in huge margins on sales. They also perpetuated the myth that large vehicles were safer. Ergo, tiny people in monster trucks. All vehicles, small medium and large, are subjected to torturous safety testing by the Nationl Highway Safety Administration and the privately Insurance funded Automotive Safety Institute. Very advanced design technology goes into modern cars, whether they are small or large. Of course, at 100 mph nobody is safe. At that speed the laws of physics take over and they are unforgiving.
The Corolla and the Civic are wonderful vehicles. Dependable, economical and cheap to maintain. However, the domestic manufacturers have marketed large Trucks and SUVs to gullible consumers as cradles for their egos and a false narrative of bigger is safer.If a consumer is stupid enough to plunk down 80K on a loaded SUV and then winds up with a 7 year loan paying 1000.00 a month, then that is just poor decision making. My first house 37 years ago had an all inclusive monthly mortgage payment of 1050.00. My house was an appreciating asset. A car, truck or SUV is a depreciating asset and at the end of that 7 year loan will be worth very little at trade-in time. If they trade it in and fold the negative equitiy into the new car loan, thei payments will be even higher.
Someone once told me a long time ago that buying a car can be an emotional experience. I’ve seen it first hand. During a self-imposed sabbatical many years ago, I tried to sell new cars at a dealership. It is an art and car buyers are very wishy washy. If they leave the showroom without buying a car, you will never see them again. I watched the best salespeople cajole and manipulate the ego of a prospective car buyer. They were very succesful in selling cars.I’ve watched people who wanted to spend 25K on a basic car leave the dealerhip with a loaded, premium trim vehicle that cost 35K. This was 20 years ago. I just saw a commercial yesterday where a new Ram truck was discounted to 72K after rebates and discounts. What the heck was the list price?
Yes. I have a 2016 Mazda6. A midsize sedan here. A large car overseas. Have had it since I bought it new in October 2015. We have taken it to the beach in Florida (from our Kentucky home) three or four times, two of those times being with two kids. It regularly transports myself, my wife, and the two kids around town even though we also have a van (because we sometimes don’t want to start the van and drive it for a short trip if I’m picking them up after work and I’m already out and about in the car).
I’ve lost count of how many fellow Americans can’t comprehend how we “fit two kids in that” when referring to the car, as if it might as well be an MG Midget or an NA Miata.
America = bigger is better when it comes to vehicles. I know lots of folks with 1 or 2 small children and a 7 or 8 passenger 3-ton SUV to tote them around in.
I’ve amazed and astounded people, even here on the Autopian with my wild claims of fitting a week’s worth of groceries in the teensy, tiny space behind the third row in my Mazda 5. How do I do this amazing feat? I open the hatch, put the groceries in and close the hatch.
Ta Da!
“No One Knows How To Make Cars Affordable”
Try asking the Chinese.
Slave, or nearly slave labor, lower standards, and no actual need to make a profit will do that.
Poor working conditions don’t equal inexpensive products (see supply chains for smartphones, gaming consoles and many cars already sold here). Profits go upward.
Billions of taxpayer money gets dumped into our failing automakers, we might as well get something back. If it takes a government-backed price war to get the ATP down to 25k, I really don’t care.
There aren’t enough people who WANT $25K cars for that to ever happen.
Are you saying that if a 40k car were brought down to 25k, people would refuse to buy it on principle? No! They’d buy two!
I’d argue that if the hefty subsidies given to US automakers went towards halving the price on just two existing mid-range models per brand, we’d have a better short-term solution than 84 month loans. Higher priced cars will naturally come down to compete.
People can still throw their money away on flex culture but commuters have an option. And automakers don’t have to bang their head against a wall creating a Versa that will sell like a CRV with the margins of an Escalade.
If the loan and repo business wasn’t so lucrative, we might actually get help from the people in charge.
If wishes were horses, dreamers could ride. Keep right on dreaming.
When you can open a knot with your hands, you don’t have to open it with your teeth.
We have slaves too. And lots of robots.
Not really in the realm of automaking. And robots are expensive. And as Musk found out, only useful to a point.
Not really in the realm of automaking.
No really:
https://www.prisonlegalnews.org/news/2025/jul/15/hyundai-parts-supplier-stops-using-prison-slave-labor-alabama/
And robots are expensive.
And yet there’s like a million of them:
https://industrialmachinerydigest.com/robotics/one-million-robots-work-in-car-industry-worldwide-new-record/
And as Musk found out, only useful to a point.
Perhaps, although some might also question the usefulness of an American auto union worker. Not me though, My American built Honda is amazing. Although I’m pretty sure there were a lot of robots as well as humans on that line.
Prison labor is Constitutionally excepted from being slaves. 🙂 If you can’t do the time, don’t do the crime. Zero sympathy.
The problem is that American unions do generally suck because they seem incapable of having a cooperative role with management (which also sucks, making a veritable black hole of suck). European Unions are much smarter about the whole thing.
Robots are great at the single-minded tasks that they do well. But they can’t do everything, and even Elon found out that humans are just better at many tasks. And making human-shaped robots is unlikely to change that. You won’t see a fully automated car factory anytime soon.
If you can’t do the time, don’t do the crime.
Pretty sure that mantra is plastered all over those Chinese “reeducation” camps too.
Elon found out that humans are just better at many tasks.
And they are FAR worse at others. For example space exploration, another one of Elon’s pet projects. And driving. Headlines aside humans are worse than robots at that task.
I just our Justice System far more than that of the Chinese even under these trying times. Particularly at the state and local level, which is the vast majority of it.
Robots can drive just fine within their training parameters Outside of them they are massively worse than humans. Human can drive adequately under any conditions if they know what they are doing. Big if, but that is also a training problem.
I just our Justice System far more than that of the Chinese even under these trying times. Particularly at the state and local level, which is the vast majority of it.
Which is probably the same answer you’d get from a Han majority in China and perhaps not the answer you’d get from the ethnic groups here in the good ol’ USA whom are overrepresented in the US prison population.
Robots can drive just fine within their training parameters Outside of them they are massively worse than humans. Human can drive adequately under any conditions if they know what they are doing.
Which is fine, robots can take the wheel for boring day to day city and freeway driving while humans can tackle the fun twisty and off road stuff.
I’m a member of one of those “overrepresented” in the US prison population ethnic groups. However, having interned on BOTH sides of the criminal justice system, they are there for a reason. Staying out of prison is actually incredibly easy in the US, you just have to not break the law. Something so simple the vast majority of children can do it. <shrug>
I’ve said that I would be interested in a self-driving car that can handle Interstate-only driving while I take a nap or read a book. I am not holding my breath on when I will be able to buy that at an affordable price – and my definition of “affordable” is likely a LOT higher than that of most of the basement dwellers around here pining away for brand-new sub $20K hairshirts on wheels.
China has far fewer people locked up per capita than we do:
https://capwolf.com/china-leads-world-in-total-prison-population-over-us/
https://worldpopulationreview.com/country-rankings/incarceration-rates-by-country
So by that metric it’s a lot easier to stay out of jail there than here or lots of other places. And a LOT easer everywhere if you are female.
(If you’ve got numbers that say differently by all means post links)
Largely meaningless statistic. The Chinese are by and large a very “rules following” culture in a way that Americans simply are not.
The drug war, whether you agree with it or not is ultimately the reason we have a HUGE number of people in prison, and yes, drug laws ARE biased against minorities, with crack being treated differently from crystal cocaine being prima facie evidence of that. I have no idea if the Chinese don’t have a drug problem or simply don’t prosecute drug crimes the way we do (or did). They probably just execute drug dealers rather than imprisoning them, with or without trials. But still – it’s REALLY easy to not be put in prison for a drug crime – don’t do or sell illegal drugs. I have never put an illegal substance in my body in my near 57 years. I didn’t even DRINK until I was old enough to do so legally. First drink I ever had other than communion wine was on my 21st birthday at the Hard Rock in DC.
I think the whole drug war thing was stupid, but that is the reality of the situation. Personally, I think all drugs should be legalized and there should be free bowls of pure fentanyl on every street corner as a bit of chlorine in the gene pool. If you want to play stupid games with that shit, you should have the opportunity to easily win stupid prizes.
It’s hardly meaningless if it shows China is less prone to locking people up for no good reason. Follow the rules and you don’t go to jail, that’s how its SUPPOSED to work, right?
And when you factor in the whole for profit prison industrial complex coupled with the 13th amendment you have strong motivations for the US to lock people up for no good reasons other than profits and politics.
“No good reason” is a judgement call. We have laws in this country, and those people broke them. They were not rounded up off the street because the cops didn’t like the look of them. In many cases, the cops are the same color they are, especially in Chicago where I interned.
The whole “prison industrial complex” thing is wildly overblown. Judges and juries convict people, not prisons.
“They were not rounded up off the street because the cops didn’t like the look of them”
Yes they are:
https://www.latimes.com/opinion/story/2025-11-19/ice-citizens-immigration-enforcement-constitution
ICE are not cops, the are Federal thugs. Two different thing, and not normal law enforcement. Also all but completely outside the regular justice system, immigration courts being their own separate system.
The definition of “police”:
the department of government concerned primarily with maintenance of public order, safety, and health and enforcement of laws and possessing executive, judicial, and legislative powers
the department of government charged with prevention, detection, and prosecution of public nuisances and crimes
https://www.merriam-webster.com/dictionary/police
ICE is an official agency of the United States government tasked with “enforcing federal laws governing border control, customs, trade, and immigration.”
https://www.usa.gov/agencies/u-s-immigration-and-customs-enforcement
You don’t like that, I don’t like that but that doesn’t change the fact that by definition they ARE a type of police and therefore are a type of cop with the blessings of the federal government to do what they do.
They are a special purpose enforcement agency that operates outside of the traditional law enforcement regime and court system (for the most part). If you want to lump them in with the rest, you do you.
You can’t make cheap cars that meet modern expectations, whether those expectations be government regulation or consumer. And the reality is that even the relatively cheap cars that are on offer today BARELY sell in handfuls. And it’s not that there isn’t sufficient supply – it’s that there is insufficient demand. Actual new car buyers generally can afford something nicer, or they realize that there is simply more value in a nicer used car than a new shitbox for the same price.
The ONLY reason I bought a new base (+ tech pkg) KIA Soul for my mother is that since it’s new, ANY issues with it are KIA’s problem, not mine. I would never in a million years pay $20K+ for something like that for myself. I would buy a $20K used example of a nice car. But while I am more than happy to deal with my OWN car’s dilemmas, I don’t have the mental bandwidth to deal with my mother when she has car dilemmas, so she got the cheap car she liked the best. That said, it is fine for what it is, if completely and utterly uninspiring in most every way. I need some inspiration in my wheels, she doesn’t anymore.
Porsche said it perfectly “the entry level car is a used car”. THAT is how you solve the “affordability” problem. Or people’s expectations as to safety, emissions, and equipment need to get dialed back a whole bunch of notches.
Related to “the entry level car is a used car”–an interesting study I saw talking about housing affordability in California examined how it won’t even really matter if we build a ton of new housing now, and rate-controlled housing really doesn’t impact the market either because it’s not really on the market. What needs to happen is that housing needed to be built 30 years ago. Because the affordable housing is actually the old stock housing and if you fail to keep building you end up with a crunch because a specific type of housing stock at a price doesn’t exist. It is now a difficult thing to work out of.
Absolutely. I feel this keenly as one who is currently building a new-build house. The reality is that it costs so much for materials and labor where I am (and also due to justifiably much higher hurricane standards) that for what it is costing me to build a relatively small 2bd/2ba new home (albeit with a large garage that is increasing the cost by a good 25-30%), I could buy a MUCH larger 30yo 4bd/3ba home. You can buy somewhat “affordable” homes new from the big production builders here, but they are complete and utter crap built to the absolute minimum standard that will pass county inspection. Which to be fair, are a HELL of a lot more stringent than in a lot of the country due to the hurricane threat. But they will still be built to the minimum, which my new house definitely is NOT.
It only gets worse in place like SoCal where just the LAND to build costs a fortune – luckily here in God’s Waiting Room, FL land is (relatively) cheap – I only paid $50K for a 1/2 acre double lot in my neighborhood right next door to my current house. Where my summer place is in Maine, a 1/2 acre lot is $200K+. And I shudder to think what it would be is say, La Jolla, CA (if there even are any that don’t have a house you have to tear down first).
I love Talking Heads. Good choice.
Affordability is really not the manufacturer’s problem. Manufacturers are in business and they build and sell cars to make money. If people stop buying their cars because they’re too expensive then I bet they’ll figure out how to lower the price. Currently, this is not the case.
I was always taught (as a middle class dude) to buy a good used car. It’s less expensive to buy and own. The one new car I bought became a used car pretty damn quick after hauling a dog around and eating who knows what in it.
Be realistic, stay within your means and there are countless car options.
I think the fact that most people have figured out used cars are a better bargain, especially now that so many cars can easily make it to 200,000 miles, is actually part of the problem. High end spec cars are more proitable but vastly more complex and more expensive to work on.This is no problem for the first or second owner. But as the car moves down to the 3rd, 4th, or even 5th owner, these complexities make a used high spec car likely to be a money pit, regardless of if it is a “good brand”. So even a responsible person at the bottom of the economic ladder is at the mercy of good luck to find that cheap 200K car that will get them to work every day. This is compared to a few decades ago when you could get a cheap beater tercel as the second or third owner, and be confident that while you aren’t impressing anyone, you were going to make it to work on time so you could save for a better tomorrow.
You’re asked to solve affordability. Where do you start?
OK, there’s a lot of factors, but if we were to stick to just cars, finding one set of unified safety and emissions standards could help. But not in a big way. But that’s about the only thing right now that could help at least keep prices from going up as badly on a truly international level. Otherwise you’re going to dig really deep into politically sensitive issues about wage, wage theft, tariffs, trade agreements, things way bigger than the automotive industry.
Yeah they can; they just don’t want to.
We can sign on to the UNECE standards or at least accept them (like Mexico does, accepting both US and ECE standards). Europe has plenty of cars priced in the teens.
Remove the stupid Trump tariffs and the ones we had before that, especially the 25% truck tax.
It really seems where ever there is an affordablity problem there is some kind of corp or PE sucking money in the middle. PE has taken over a lot of suppliers. That might be part of it. We know vertical integration can make production cheaper. But the stable genius have been outsourcing for decades. Ironically building up the people they set out to exploit. Those people want more resources now and can afford them. BYD looks to stand the best change for a globally affordable car. The slate has promise as do the possibilities of kei but they used to be about $10k now they are about $20k. So even those have gone up. It really seems to be cheap it needs to be a smaller bev.
There is very, very little money in new cars themselves at the dealer level. Being a new car dealer simply enables the actually profitable parts of the business – add on sales, service, and “certified” used car sales. Mainstream dealers generally only about break even on new car sales. But they may make as much or more on a warranty package as on the car itself.
The Talking Heads have long been one of my very favorite bands, and I was lucky to see them many times over the years I lived in Manhattan (1979-2014). Early on I’d be on the same subway as David Byrne.
When I got out from under my salad days I was lucky to score a co-op at an incredible price in a building called London Terrace in the Chelsea neighborhood. I sang this song to myself regularly the 24 years I lived there.
I still can’t believe how lucky I was. I don’t miss NYC, and I’m very happy where we are now, but I do miss this fabulous building. It had every convenience!
https://londonterracestories.com/
https://www.fancypantshomes.com/wp-content/uploads/2025/09/london-terrace-towers-exterior.jpg
I heard “Psycho Killer” by the Talking Heads in, of all places, a McDonald’s bathroom earlier today.
We bought our 2024 Trax LS for $22,900 in 2024. We saved up for it and paid cash. We bought it because of fears of car prices climbing by the time we retired in 2025. We did splurge on a few options like the Driver Confidence and LS convenience packages, along with a block heater and the active grille shutters for the cold weather.
I was looking at a Maverick hybrid, but that went from $20K to $25K to almost $30K in just a few years.
And now with these goofy tariffs, (25% on Korea this past week) we’re glad we bought our Trax when we did.
Looking forward to reading Matt’s review of the Trax. Hopefully he got a lower-tier model instead of the Activ models everybody else seemed to have reviewed already. We love ours for road-trips. It’s been averaging 33 mpg, which isn’t bad for a small wagon that’s not a hybrid.
We also like that it has silver painted aluminum wheels and a keyed ignition instead of push-button start and analog-looking gauges instead of the screens that the higher-trim levels have.
I don’t see how cheap cars will be able to take off in the US.
Let’s take some examples:
Maybe the Slate will be the savior of the cheap vehicles. It’s found a hole with “cheap EV pickup” and the customization might give it legs to sell. But … The announced price was before a certain government got rid of a $7500 rebate and I think there are better options on the used market if you don’t fall into the have to have an EV have to have a truck slot.
Also, you could get a brand new Mirage under 10k (actual selling price, not MSRP) while the other cars still existed (Spark, Yaris, Fit, Rio, etc)
Mirage prices practically doubled as the competition disappeared.
Fun fact: Nissan sold the Micra in Canada for 10k Canadian, while the cheapest car in the US at the time was 13k US dollars.
The problem with cheap cars is that you have to make it up in volume.
The Rav4 is the best selling non Pickup in America. nearly 480k units in 2025. I’ve driven that generation Rav4. I don’t get it. It’s nothing special. Maybe it’s the Toyota Reputation.
Thing is that if you want a meh SUV with a Toyota Badge, the CorollaCross is available. It’s not much smaller than the Rav4 and it’s 20+% cheaper. So it should sell well… oh, under 100k units in 2025.
Why? Maybe the Corollacross is a steaming pile of dog crap? The reviews say it’s boring but ok. Basically, same reviews as the Rav4.
So why isn’t it selling as well? No idea. But Americans don’t want the cheapest car, they want something a level or two higher.
I’ll bet that a Corollacross is the same cost to build as a Rav4, maybe more, just because the more you make of something, the cheaper per unit it gets. So, why should Toyota still mess around with the Corollacross? Why not convert those factories to make Rav4s?
And I’ll also bet that someone at Toyota is asking that question.
Now different markets have different buyers. Small cheap cars will sell well outside of the US. But in the US, they are a losing idea and I don’t see anything in the market that would break that trend.
Yeah, people don’t think it’s cool to buy a cheap car. Tata had the same problem selling the Nano, because everyone knew it was the cheapest car. You need an image to sell a cheap car in America.
The only times recently that cheap cars have sold well is when they are fads. Like I remember when the PT Cruiser came out, there was a couple months that everyone wanted one. The New Bettle sold well for a while. There were mini fads for Fiat 500 and Smartcars too.
The problem with fad cars is that all fads fade away. Spoken as a guy that remembers how big Disco was when I was a kid.
If you get an inexpensive vehicle that becomes a fad, that fad has to last long enough to pay for all the development costs so that you can keep the selling the vehicle at a low price after the fad fades away.
Asking car makers to fix the car affordability problem is like asking General Mills to fix the health insurance crisis.
The problem isn’t with the car makers. Cars are about the same price now as they were in 1980 once you adjust for inflation, but many more people could afford to buy a new car back then because “trickle down economics” was just getting started and hadn’t had any impact yet, so we still had a robust middle class.
Today, we’ve funneled most of the country’s wealth upward with none of it “trickling down,” so the system is working as intended and most people can’t afford a new car without taking out shit loans bearing idiotic terms and rates.
If you want to make new cars affordable again, there’s really only one solution – claw the money that was stolen from the poor and middle class for the last 50 years back from the elites who stole it, and give it back to the people they stole it from.
Anything less than that, and it doesn’t matter how many corners automakers cut to lower the price of a car.
I was just about to post essentially the same argument. You beat me to it.
Regarding the shit terms for the auto loans, I’d argue leasing is basically the car manufacturers’ version of predatory lending. It traps you on a treadmill that’s very difficult for many to jump off of.
Like you said, this isn’t an issue to be solved on the manufacturing side. It’s the household income side that’s the problem for most people.
Did you know that before it was called “trickle down economics”, it was called the “Horse and Sparrow Theory”; if you gave the horse enough oats, eventually there will be some left over in the horseshit for the birds to eat…
Yes, and George Bush Sr. called it “voodoo economics” before endorsing it because Reagan told him to.
So some sort of even newer deal? We may have to criminalize SCOTUS corruption and actually enforce it. Some kind of progressive taxation that actually increases the rate as income (regardless of how it’s structured) increases instead of magically peaking at upper middle class and then gliding down to zero? As long as free speech and other rights are distributed by the dollar rather than human, I don’t know that this …. dramatic change in societal direction, some sort of circular reversal in path… There’s a word… Well, it won’t be bloodless and it won’t be televised.
cars may be the same price from the 80s but ownership certainly is not. it is a lot more expensive to insure, maintain, fix, and park now than it was in the 80s.
Not really on the maintain/fix part, when you factor in how frequently you replaced cars back then. I still remember my dad having to prove his car had 100,000 miles on it by showing them the odometer. That would have been somewhere between 1979 and 1982ish. Today, the biggest pile of crap you can buy will easily make it 100,000 miles even if you don’t bother maintaining it much at all.
They are more expensive to insure, but that’s also because they’re a lot more resistant to killing the passengers in a wreck. Fixing a crumple zone, air bags, etc is a lot more expensive if you even bother to do it than it was to fix the hunks of solid steel we had back then, but if you got into a wreck back then and survived, your medical bills were probably going to be a lot higher than they are today.
Exactly this!
Wages simply have not kept up with cost of everything else for decades now, the rich truly have gotten exponentially richer, the poor have gotten poorer, and the ever shrinking numbers of us in the middle continue to get squeezed tighter and tighter to pay for it all.
Everything new is either promoted as either “luxury” and “upscale” or “poverty spec”. Not just cars, but houses, education, clothes, food, you name it.
Economics have become as polarized as everything else. We are expected to fall into one extreme end or the other, there is little to no more middle ground where the majority of Americans used to live, work, etc.
Admittedly, some of this we have brought upon ourselves by our aspiring to bigger, better, shinier things, no matter the cost.
At the same time though, take a look at the individuals, corporations, and politicians who promote it and ask yourself: who has actually profited the most in terms of monetary gain, political power and social influence?
My solution to affordability is to go watch a WRC rally in Kentucky instead of Greece.
As a Kentuckian, I’m here for it.
I’m just over the Ohio in southern Indiana so works great for me too!
Whaaaat? I’m on the Ohio River shoreline, basically, in Kentucky. Can see it now as I sit at work from my desk lol.
Ha awesome! We live just a couple blocks off the river!
Easiest and fastest way to fix affordability problems. Literally can fix it in 30 minutes or less. Nuke the world. No people, no affordability problems, oh, and an added benefit, in about 10,000 years pollution and human caused extinction will also be non existent.
Another definite consideration is the cost of maintaining a car.
Around here, a basic (front and rear, pads and rotors) brake job costs $2000. I am fortunate that I can do that job for ~$200 in parts, but it seems like not many people do their own repairs.
A $2000 repair would have me questioning whether to keep / fix or trade, and could definitely steer me towards something with a full warranty.
$2k for a brake job?
guess that’s why I do it myself as you do and don’t drive a luxury brand. I can only assume it’s some german thing that requires such expensive service.
That’s a basic brake job on a Tundra. Nothing special. My friend got the same quote from the dealer and an independent shop.
A local store of a national muffler place was running a special for $1600 (posted on their sign), which I assume would come with $400 in up-charges if you actually went there.
I was shocked because I haven’t noticed the prices of brake parts climbing drastically (yet).
Ah, the tundra tax. Sorta like the 4runner tax, but with different threads.
Shortly after the brake job he traded the Tundra for a 4Runner.
Strangely enough, this friend quite vocally hates all taxes. He’s a pre-n**i. . . I mean Libertarian.
I took my 2020 Civic into an independent shop because after 90,000 miles the clutch is slipping a bit. Shop said they called a Honda dealer and they dealer said that they would sell them a clutch for $3500. Not the clutch kit with the throwout bearing, just the clutch. RockAuto has an OEM Exedy clutch kit for less than $200 including shipping. Stealerships can go kick rocks.
this is one of the things I worry about with the future of EVs. parts will have two sources, dealers and scrap yards. everything will be proprietary and changed so often as to make 3rd party versions nonviable. next up, they’ll digitally sign parts so you can only use ‘approved’ parts or they just won’t work.
the future of disposable cars is closer than we want to admit.
I disagree with your assertion that during the chip shortage automakers choosing to produce higher trim models was the way to go.
You know what doesn’t require chips to function?
Manual seats, windows, mirrors properly designed cabin heating/cooling ducts, etc.
What the automakers should have done during the chip shortage was produce vehicles and specific trims of vehicles that require less chips per vehicle, then invest in making chipless solutions for problems that don’t require chips.
It’s easy to retrofit an electric motor to a hand crank window system, it’s near impossible to retrofit a hand crank to a dedicated electric window system.
The chip shortage should have been the golden era of base cars, where you could option them with higher end trim features, like manual seats with leather, manual sunroofs, manual convertibles, etc.
The chip shortage is just another excuse. They always have an excuse for not lowering prices.
I was going to say it’s unlikely they even know how to make a manual window or vents that don’t require a touch screen and menus to move… but then I realized that all these companies sell vehicles around the world that have those elusive cheap features.
They just know that in the US they don’t have to. If the market tanks, they get a bail out. If they manage to eek out more profits, they win again.
They had no suppliers for the cheap versions.
Manufacturers were assembling whatever they could with the parts available. I remember several stories of automakers selling de-contented higher trim models because they couldn’t get certain parts or assemblies. So you may get the top trim interior but with the infotainment screen from a mid model.
I assume they generally sell more of the lower trims than the top ones, but the more common parts ran out fast with nothing else in transit. If they had a contract for the top model seats that usually sell in lower volume, their supplier could have been sitting on a model year’s worth of inventory. Gotta use what you can get, and you’re not going to assemble base models with heated/cooled seats and sell it at the base price.
They don’t sell more of the lower half of trims than of the top half of trims, because they artificially limit base model trims.
For example:
Ford came out with the Maverick with an (at the time) “standard” hybrid drivetrain and with the Base (XL trim) it was under $20K
80% of orders were for the XL Hybrid.
Guess what percentage were produced as XLs with the “standard” hybrid drivetrain?
20%.
Call me old fashioned but if your “standard drivetrain” isn’t the majority of production then it isn’t standard.
Last I checked a year or so back 60% of orders were still for XL Hybrids even after all the price increases and they only made up 40% of production.
The reason you don’t see base trucks on lots is because the profit margin is lower for them, so automakers artificially limit them, they also artificially limit options to certain trims.
For example I wanted a 6 seat interior for a full size pickup, I found a model and trim I could get the 6 seat interior with in the configuration I wanted.
Guess what? I went to the dealer and the configurator is wrong, they don’t offer the 6 seat interior for any of the trims of the Ram 1500 I want (said trims are necessary to get the air suspension I need) so now I got a 5 seat interior truck on order that I’m going to put a bed cap on and put dog beds in the bed to transport the dogs in because they’re big and there’s not enough room in the cab because automakers are shit.
Are there suppliers for those parts any more?
The chip shortage did lead to higher end cars, but not the way you think they did.
Because of the Chip shortage, the manufacturer couldn’t make many cars. It wasn’t the power windows, it was stuff like ABS computers and the like that were hard to find.
At the same time, over a year of reduced production due to Covid meant there was a significant demand for new cars that had built up.
Let’s say you have two models. The Mennonite Special with vinyl seats, floor mats and roll up windows and the King Platinum Carbon Black Special Elite Platinum, with power windows, leather seats, carpet, power butt warmers, more speakers, and nicer looking plastic bits that are piano black instead of just black.
How much extra does it cost to get the shiny bits that take a Mennonite to a KPCBSEP? $2-3k? Maybe $5k in extra parts if you consider dealer markups?
And how much extra can you sell that KPCBSEP? $15k? $20k? More?
Given that you are going to sell every car you are capable of making regardless if it is vinyl flooring or unicorn fur carpet. Why not make the vehicle with the extra $10-20k in profit?
Unfortunately, what the manufacturers have learned is that the Mennonite specials don’t sell well enough and those are gone.
Well decontented “King Platinum Carbon Black Special Elite Platinums” with less than stellar build quality are not selling well either, especially now that you can buy the same cars and truck built to a higher standard of quality with all of the features for a given trim present, and that the automakers that promised to add the chips necessary to make features paid for active once chip availability came back, for free, started charging thousands of dollars to do so.
The Mennonite Specials would still sell pretty well in spite of the lower build quality inherent to that time.
For example:
How would you feel if you bought a base truck at a discount because it was made during COVID and it had problems?
How much worse would you feel if you bought a premium truck at a discount (but still much more than the base truck) because it was made during COVID and it had problems?
Regardless of the experience of the end user, the manufacturer sold the vehicle for a lot more then a base model would have sold for.
How to solve car affordability? I’ll start my own car company with blackjack and hookers.
John DeLorean would probably tell you that’s a bad idea if he were still around.
He’d say go big or go home.
In fact forget the car company and the blackjack!
There are a lot of things that can be done at all levels but the head of the line is the consumer.
People need to learn:
There are definitely some systemic issues on the political and corporate side but they really need to be driven from consumers changing their habits. Good luck, though.
So the reason why the average vehicle price is the price of a luxury vehicle is because the average vehicle is a luxury vehicle now because of consumer demands? What a concept, we’re all spoiled. Consumers changing habits, good luck indeed, lol.