Everyone loves to focus on the topline Average Transaction Price (ATP) number, and I’m guilty of the same. It’s somewhat terrifying to say that the ATP is now regularly at or above $50,000. That is, to some degree, a story of the higher end of the market, which is dragging prices upwards. It’s the disappearance of the lower-end of the market that I think is more worrying.
New data shows that the under-$25,000 car transaction, which made up 21% of the market in 2019, has collapsed by 75% to just 4.7% last year. I’ll get into why that is and what it means to start The Morning Dump. You’d think this would make the used car market a more valuable place to be as a seller, but that doesn’t seem to be working out for Hertz. At least Hertz can sell cars. California automakers might be locked out if they don’t get emergency relief from automakers regarding a new feature to help protect individuals from stalking.
That’s heavy, so I’m going to end with a story about cars and iced novelties.
Where Have All The B-Segment Cars Gone?
I like charts, so here’s a chart:
Nope. I do not like this chart. Our pals at Edmunds have a new report out on affordability and, uh, there isn’t much. Comparing the 2025 market to the pre-pandemic market, you can see that the fat part of the market that existed under $30,000 has shifted a lot. COVID was a period of rising inflation, of course, as well as rampant trimflation.
It’s more than that, though, as segments are just disappearing:
Even the segments built for budget buyers have shifted. In 2019, 85% of compact cars sold for $25,000 or less. By 2025, that share had fallen to 37%. Subcompact cars were the last true foothold for buyers watching every dollar, but even those have now been predominantly discontinued (Mitsubishi Mirage, Nissan Versa, Honda Fit, Toyota Yaris, etc.). More than half of all subcompact cars sold below $20,000 in 2019. In 2025, fewer than 1 in 4 of the few remaining ones did.
For a first-time buyer, a recent college graduate or a single-income household, those numbers tell a difficult story. The new-car market has moved on without them.
The single biggest chunk of the market just six years ago was the sub-$35,000 segment, now it’s less than a third of the total. I’ve written about this before, but Cars.com has pointed out that building these cheap cars in the United States is tough, which is why few of them are built here; tariffs are making this worse:
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.
We lost the Fit, the Mirage, and the Versa, as well as the Nissan Rogue Sport and the Ford Escape. The Kia Soul is also gone. It’s been rough.
So, what’s there to look forward to? Obviously, David drove the Slate Truck and that’ll come in under $30,000 and is built in America. At that price you’re going to have just the basics, of course. Edmunds actually remarked on this in their report:
“Slate is making a $25,000 bet that drivers still want something simple. Our data show the market quietly walked away from that price years ago, so this is a real test of how much affordability still matters to today’s buyers. The base pricing is the headline, but the entry-level price point is paired with an unconventional build and a powertrain that is proven harder to sell today. The real question is whether the enticing price alone can overcome that.”
Rising new prices seem to bring prices up for used cars as well, so what’s happening at Hertz?
ATP Meets DPU At Hertz
Hey, I get to write about DPU again. I love to write about DPU. This is Depreciation Per Unit, and it’s one-half of how Hertz looks at the money it’s making or losing from buying, renting, and selling cars (RPU is the other side of this, and it stands for Revenue Per Unit). Hertz got all excited about EVs and, in the hype, purchased a bunch of them, which, combined with a pandemic, seriously screwed the company.
Prices for used vehicles are holding steady and, in newer cars like the ones Hertz resells, those are going up, as Cox Automotive mentioned in their mid-year review:
When we look at the trend on the average retail list price for the top 50 models in the coveted 3-year-old age group, we can see the average price has strengthened, increasing 3% YoY despite sales volumes running a bit lower than last year’s torrid pace. And the strength in pricing for the 3YO bucket appears to be growing as Q2 unfolds, with the gap between the 2026 trendline increasing vs 2025. Further, we see retail price growth holding generally positive across most other age groups as well.
But that’s not what’s happening at Hertz. An SEC-filing, via Bloomberg, shows the company sees DPU as a problem:
Although the second quarter of 2026 has not yet concluded, Hertz Global Holdings, Inc. (the “Company,” “we,” “us” or “our”) currently expects its second quarter results for fleet size, revenue, RPD and rental days will align with, or slightly exceed, its previous expectations due to healthy demand and better than anticipated capacity utilization with second quarter to date year-over-year growth in RPD increasing above the growth trend in the first quarter. Current unexpected softness in the used car market caused us to realize losses on the sale of vehicles in May 2026 compared to gains in April 2026, which will negatively impact net DPU per month in the quarter. Based on this recent trend in used car sales, we now believe our second quarter net DPU per month will be approximately $300. As a result, our Adjusted Corporate EBITDA is expected to be in the $50-$80 million range, which is within our margin expectations but towards the lower end of our second quarter range.
I guess I’m going to have to wait for the full explanation from Hertz, but I’m curious why DPU is dropping in an otherwise decently strong used car market. What’s going on here? I’m open to theories. Do they have a lower fleet number and thus more miles per vehicle? Vehicle mix?
Automakers Plead With California To Pass Legislation So They Can Keep Selling Cars
I’m grateful that my vehicle can alert the authorities in the event of a crash, but it does sometimes feel like all of this tracking creates a situation that’s a bit of an inversion of Truman Capote’s maxim that the worst part about living outside the law is you no longer have the protection of it. The worst part about living inside the modern surveillance sphere is that you can no longer get away from it.
This is especially true of victims of domestic violence who fear, often with good reason, that a partner or spouse could use the tracking equipment within their devices to find and harm them. A modern car is a connected device, and California passed a law stating that no vehicle could be sold that doesn’t allow someone to turn off all this stuff.
Automakers, so far, have complied with the digital version of this, wherein an individual can shut down digital access. The law also requires automakers to have a way to do this within the vehicle, and that’s where the issue is.
A group representing major automakers warned June 23 that car companies may be forced to halt sales of both new and used vehicles in California on July 1 unless the state delays vehicle technology rules that aim to prevent perpetrators of domestic violence from tracking survivors.
The Alliance for Automotive Innovation, which represents General Motors, Toyota, Hyundai and most other automakers, said unless a legislative proposal is signed into law by July 1, “there is substantial risk that auto sales in California will be suspended.”
The group said automakers are implementing the domestic violence victim protections required under the 2024 law, “but compliance with some elements of the law is impossible this year.”
As you all know, car development moves slowly, so it doesn’t seem unreasonable that it might take automakers a little longer to get this done.
Test Drive An AION, Get An Ice Cream
We rarely talk about Aion, which is a brand of Chinese automaker GAC, and is currently selling electric family vehicles in the UK. One of its literally cool features is the CoolHot Box, which is “a generous 6.6-litre temperature-controlled compartment with the capacity to keep several tubs of ice cream frozen, drinks cold or takeaways hot. It can operate between -15 degrees to +50 degrees Celsius. It comes as part of the AION V’s optional Premium Pack.”
I’m pretty sure we turned my high school buddy’s Toyota Previa into a CoolHot Box after he got a three-disc Trip Hop collection sophomore year.
As a way to support the vehicle, anyone who test drives one in the UK will get an ice cream from the CoolHot Box. Does anyone know what kind of ice cream this is?
Some kind of chocolate thing and a strawberry mango something?
What I’m Listening To While Writing TMD
I made the reference above, so I had to turn up the Paula Cole and blast “Where have all the cowboys gone” right? The song is pretty clearly meant to be sarcastic, though I’m not sure everyone got the message.
The Big Question
What’s the best iced novelty treat you can reasonably eat in a car?
Top photo: Nissan
While I agree that it’s mind-boggling where car prices are going, they’re going to continue going up until a larger percentage of Americans become financially literate.
In the meantime, this idea that we’re squeezing people out of the new car market rings hollow to me. If you can only afford a $20-$25k car, there are TONS of lightly used cars on the market that are a lot nicer than the recently killed new cars mentioned. You can have a loaded car that cost $40k 3-4 years ago or you can have a brand new Toyota Yaris…I mean, is that even a decision?
I think we should also talk about class-flation. Every model that still exists is at least 1/2 a class up from what it was 25 years ago. My 2003 Suburban has very nearly the same footprint as a “midsize” pickup now. A 2002 Camry is the same size as a Corolla. People still perceive a Corolla as too small for a family though.
That chart very clearly shows how misleading using the mean instead of median is when talking about the “average” transaction price of a new vehicle.
If anyone approaches my car with an ice creamed treat I will wait for them to finish before they get in, provided they wash their hands first. You can drink water in my car, I’m not a monster.
best iced Treat you can easily eat in a car is still the old standard shake. not too thick as to require a spoon like a blizzard or frosty, and in a self contained cup to avoid drippage during melty periods. also easy enough to consume one handed.
I know it is just the age thing though I still feel like the massive inflation during Biden and now the the tarifflation on Jungle Website goods has really caused a lot of sticker shock for those of us that could get car parts 2 years ago for literally half the price, and car price segments going away for being cheap car territory are price ranges for high end pony cars just 10 years ago,
What are we, heathens? You don’t eat in the car, especially not melty, messy, stuff.
Other than that, there are a lot of yummy ideas below for eating while sitting on the tailgate of the pickup, assuming you have somewhere to wash your hands before getting inside.
Dilly bar. I’m old school.
Milkshake
Malted milkshake.
Edmunds research blindspot is the demo that used to buy entry level cars is no longer buying cars at all.
I live in a big city with sketchy/scary public transportation (with the exception of commuting hours). I have many friends with grown children in their twenties/early thirties who live here, don’t drive and don’t want to drive. They have jobs and no kids. They take ride-share when they need to, they live in smaller apartments often with a roommate to be able to afford the rent, near grocery and retail so they can just walk. They were a big part of the market for cheap cars before ride-share services arrived. Now they’re not in the market for any car, basic or fancy.
Some may say, “They’re spending more on uber than they would if they bought a cheap car.” Maybe in fringe cases, but insurance is insanely expensive here, gas is $6 a gallon, and if they have a car they have to maintain it, park it, and there’s a decent possibility it will be broken into or vandalized. Let’s say they take uber twice a week, that’s about five hundred dollars a month. You’re not going to be able to own even a “cheap” car inclusive of expenses for five hundred dollars a month.
I’ve seen this in action as well. However, when you get out of the metro areas and into “flyover country,” just about everyone of all driving ages and demographics needs their own car or they are stuck.
A $25000 car in 2019 is a $32770 car today. And that’s using probably fudged CPI numbers. Given that, the peak is actually in about the same place as it was in 2019. It does drive me nuts that the data points don’t line up with the labels on the X axis, so I’m guesstimating based on where it looks like the peaks are.
Supporting that, from the Edmunds article:
30% is almost exactly the rate of cumulative inflation over the past seven years (they must be using “new math” to get 2026 – 2019 = 6).
That said, even without inflation adjusted numbers, it’s clear that the distribution has shifted away from the lower end. The peaks at lower prices are just lower and the curve after that does not drop off as fast. They should have looked at that instead of quoting a bunch of meaningless absolute dollar values that essentially boil down to: Things get more expensive over time. That article really does a poor job of quantifying how much of an affordability crisis there is.
TBQ: My usual answer would be a bunch of stuff from a local ice cream stand, but that won’t mean anything to most of the people here. I’ll give the nod to root beer shakes from Culver’s (which are finally back on the menu after an extended absence!). No chunks to get stuck in the straw, but really, really good.
Median household income in 2019 was $68,700 vs $83,600 in 2025
2019 Toyota Corolla = $20,490 = 15.5 weeks of income
2025 Toyota Corolla = $23,460 = 14.6 weeks of income
How does this help your argument? More importantly, what is your argument? Things are fine and getting better?
I just had a Hyundai Venue as a rental. It’s a perfectly fine car for the money, and it just sips on the gas.
Kia K4 is also in the same price range. it looks quite a bit nicer than the venue, though I think it competes more with the civic or corolla vs the Trax. the little cars are actually not the worst. I actually chose a civic at the rental place this week. I though it was a bigger model at first then decided to just go with it.
K4 is a C-segment car definitely.
You are right – the Venue looks a little dorky. But it was fine. I don’t think the Trax is a bad choice either.
I’ve got a decent Trax 1LT that was only $24,000 MSRP, wound up paying a lot less than that with a little haggling and my trade-in. There are some good cheap cars out there, but I guess not nearly as many as the olden days
Agreed – you’ve got to haggle a bit and choose your options carefully to make it something you can live with. But there are some decent, inexpensive vehicles out there.
Are Dairy Queen Dilly Bars still a thing? I was a big fan of cherry. That’s about the last novelty ice-cream treat I can remember eating in a car. And that was The Old Man’s Chevette, the only car we were allowed to eat anything in.
$25K still feels like an insanely large purchase to me, not “cheap new car” territory. I’m within six months of paying off a $27K home equity loan I had to take out in order to replace my roof and can say I’ve gotten rather used to the extra $500/month drain on my account. I was actually starting to consider a new or newish car at this price level even though I’ve traditionally been extremely gun-shy of car-payments.
Then I went to see the 24 hours of Le Mans. Any new-car payments are now to be highly unlikely, as I’d rather take vacations of that sort each year. A fresh loan for $500/month to pay for an entry-level car I probably won’t even like all that much? Or, the six-hours of São Paulo next year, maybe Spa the year after, the six hours of Silverstone or perhaps Goodwood the year after that, and eventually the six hours of Fuji? Doesn’t even sound like a choice when I type it out.
holy hell Roof prices are insane. I did mine about 7 years ago for 15k out of my own pocket, hail netted me a new one 2 years ago now, and that 5 year difference was fully 10K more. I see some stuff going down precipitously with the layoff boom in effect. mostly overpriced toys though. Side by Sides, used Campers and Motorcycles, so hopefully other stuff will follow for a little bit,