I get a little bit of a chill every time I see the average transaction price (ATP) cresting $50,000. Some of this is the natural emotional response to the price of cars crossing into a new five-digit realm. The better part of my reaction, though, is my fear that people will misunderstand what ATP means in the context of the larger market.
Yup, it’s another Morning Dump where I try to make clear what the ATP movement does and does not mean. There’s a way to look at this latest increase as a sign that the market is leveling off a bit. Maybe. There’s also a fun quirk in the data I’ve been wondering about and I finally have an explanation. The market certainly needs more affordable cars, whereas automakers want more profitable cars, and Ford just hired someone who can hopefully help with both.
Will Stellantis actually be able to sell its Canadian plant? The government seems a little upset about the move.
The K-Shaped Car Market Is Still K-Shaped
Here’s the graphic I always show when ATP comes up, via Kelly Blue Book, showing incentive spending versus transaction price across the market in the United States:
A little inflation isn’t a bad thing, and you can see the seasonality of the car market, as well as the general upward trend, leading right up to the pandemic. I covered this in great detail in my trimflation article, but a semiconductor shortage led automakers to prioritize higher trim models and more profitable products (like fancy trucks). Automakers, facing a supply squeeze, also dropped incentive spend to modern lows.
While incentive spending has rebounded, ATP has remained stubbornly high, and has crossed the statistically unimportant but psychologically significant $50,000 barrier a few times. The October ATP of $51,109 is a new October record.
What’s going on here? There are plenty of barriers to automakers lowering the prices of their own cars, including persistent tariffs, increased input costs due both to tariffs and energy costs, and just the general increase in pricing of everything. I think that’s why prices have stayed higher than maybe expected. The bump in price, though, I think goes back to a revelation automakers and consumers had, which is that people want bigger and nice cars.
Crazy talk, I know.
Even if automakers offer cheaper cars, people are buying the expensive ones, which forces the average ever upward.
Cox Automotive’s Erin Keating touches on this:
“The average is telling us as much about product mix as it is about affordability. Three of the five highest-volume segments transacted significantly below the industry’s $51,109 average, while vehicles priced from roughly $28,000 to $38,000 collectively gained 9.6% in volume year over year. Consumers are still buying plenty of vehicles well below the headline average transaction price, even as strong demand for full-size pickups and other larger, well-equipped vehicles keeps pushing the average to new highs.”
There are a lot of great, affordable cars for sale if you want to spend under that headline number. The thickest part of the car market right now is Compact SUV/Crossover, and the ATP for those is $37,895. Plus, prices historically go up by a lot in October, and they only went up by a little, which is another sign that there’s just only so much room for prices to grow.
A good example of what’s happening might be the Chevy Trax. The base model has been dropped, meaning that the price of the car has gone up significantly if you just look at the entry-level cost. However, GM has made the case that few people actually purchased the base model (I drove a near base model and liked it), and by combining the packages that people actually purchase, they’ve really lowered the cost of the car for most people.
Bottom line: You don’t need to pay $51,000 to buy a nice new car. There are plenty of great vehicles lower than that, and if you have a good trade-in or a decent amount of money for a down payment, you’ll probably be fine.
The Mystery Of The Subcompact Car Solved
Along with the topline average, Cox Automotive also sends out breakdowns for automakers (Stellantis is up the most year-over-year, whereas Mercedes-Benz group is down the most) and categories. There’s not a huge amount of variance when looking at the main categories (entry-level luxury car is up 3.0%, pickup trucks are up 1.2%, et cetera).
One category has seen a huge increase, and it’s been this way for the last few months:
Do you see what I see? Subcompact Car jumped by a wild 49.5% year-over-year from $25,707 to $38,423. I initially tried to reverse engineer what happened, and assumed it was the exclusion or inclusion of a specific model. According to Cox, it’s sort of both.
The category, which once included vehicles like the Ford Fiesta, Mitsubishi Mirage, and Nissan Versa, is now down to mostly just one vehicle: the Mini Cooper. A Cox Automotive spokesperson confirmed that the category would be removed in future updates because “one-car segments are not segments worth including.”
Ford Snags Ex-GM Exec Marissa West To Lead Product
It’s not necessarily fair to use an almost 10-year-old photo of someone to announce they switched jobs, but I did find this image of Ford’s new VP of Vehicle Programs, Marissa West, kind of fun, and it demonstrates how much hands-on experience she has in vehicle development. It seems to be a photo of some sort of vehicle evaluation of a Buick from her old job at General Motors, where she served in various product planning roles as the Detroit Free Press explains:
She spent 21 years at General Motors starting off as an engineer and progressing through several leadership positions in vehicle sales, service and marketing, as well as product development. West was president of GM Canada from 2022 to 2024 before being moved to senior vice president and president for North America where she remained until she left GM later that year in 2024.
Well, it’s either vehicle evaluation, or West owned the world’s biggest iPod.
Ford is planning to launch a ton of new products, so this is an extremely key role, as Ford explains in its own release:
Ford expects to refresh 70% of its global vehicle portfolio by volume by 2029 and West’s appointment strengthens the company’s leadership overseeing the development and delivery of its next generation of vehicles.
“Marissa brings deep experience leading vehicle programs, integrating complex products and delivering successful launches,” said Sam Basile, Ford vice president of Advanced Product Development, Cycle Planning & Programs. “Her leadership and product-development background will be valuable as we work across teams to bring great vehicles and experiences to customers.”
New Ford Aerostar when?
Canadian PM Calls Stellantis Move A ‘Betrayal’
Yeah, so the Stellantis plan to sell its Brampton factory to defense company Roshel isn’t going so well, even as the company says it’s going to pay back the money it got from the government to retool the plant to make Jeeps.
“Stellantis is failing to respect their commitment to the workers of this plant and also to the Canadian government,” Prime Minister Mark Carney told reporters in Montreal Nov. 10.
He categorized the automaker’s actions as a “betrayal” of the plant’s workforce and said Ottawa will “fully enforce” its rights to protect workers.
Stellantis, Unifor and Canadian and Ontario government officials are set to meet Nov. 12 to discuss the Brampton plant.
Unifor has framed the sale, which comes amid the ongoing Canada-U.S. trade war, as an existential crisis for Canada’s auto sector.
That’ll be a chill meeting, for sure.
What I’m Listening To While Writing TMD
Here are a bunch of words that are extremely Millennial-coded: This is Shaggy on The Late Late Show with Craig Kilborn. It’s Veterans Day and Shaggy served in the Marine Corps in Kuwait, so it seemed like a good way to combine our week’s theme with the day. We’re going to be having a half-day, so there may be fewer posts than usual.
The Big Question
What’s the best subcompact car ever sold in the United States?
Top photo: Stellantis/Cox
Oh here we go again!
Once again all our useless news media will make sure we are all good little consumers so our capitalistic overlords can sell us over-priced crap for no good reason.
This might be a newsflash for some, but you don’t HAVE TO spend that much on a new vehicle. Our media is using that highly publicized number to manipulate you into spending far more on a new car than you probably should because our economy is based on consumers overspending. Some spoiled housewife is going to push her over-worked husband into getting her a fully loaded white Audi SUV under the guise that she’s better than average. No one wants to be considered “average” – so go look at the next model up the lineup instead of sticking to your budget.
In a country where people are so damn bad at math, its like printing money for car makers.
Vehicles are just about the only item that has kept with inflation almost perfectly. Mom bought a new Eddie Bauer explorer in 1994 for about $24,000 WITH the A-plan. In 2026 that would be about $55,000 annnnnnd that is exactly how much the platinum costs today. Like to the penny.
I’ve seen this headline everywhere. “Car prices hit record high”. Well, yeah. Its called inflation. Its never going down. I understand that this translates to lack of affordability, yes. But cheap cars have been out there. There was Mirages and Fits. Noone bought them. Ford Escape. Cancelled. Ford Explorer? Best seller. People want what they want. Theyre still going to go into their Ford dealer and spend $75k on an F150 to tow nothing with. Americans are genererally bad with money. Sorry. Thats a fact. 84 month loans are going to become the norm. Who wants to guess how long before we see the first 120 month auto loan?
Looks up definition of subcompact
Typically less that 165 inches long and less than 100 cubic feet of interior volume.
Hmm The Lancia Stratos has an overall length of 146.1 inches
Well that’s easy!
Contenders: CRX Si, Insight, FiST, Fit…
Wait, the judges have handed me a note about the technical definition of sub compact… This just got easier:
NSX Zanardi Edition.
Are Mazda MX-3 (v6) and VW Corrado considered subcompact? Or 2-series BMW? Oh (someone probably asked this already) but since this is The Autopian, isn’t the answer always BMW i3 (2013)?
Was the original Accord a subcompact?
Had a 1977, by today’s standards yes.
Drove a Fiesta for 10 years, loved it, overall best car I have had. Wanted a Fit, but Fiesta was 6k less, and only repairs were a water pump at 100k and a clutch slave cylinder at 160k. Cheap, fun, efficient.
TBQ:
I don’t know about the best, but I have always liked/respected the Scion/Toyota iQ.
Those cars have a shocking amount of room for the their overall footprint. You can fit three normal size adults in reasonable comfort, which is crazy for a vehicle smaller than anything on the road that isn’t a Fortwo or literal golf cart. The iQ wasn’t very popular because they are uniquely focused on one thing (being tiny outside but tolerable inside), but if you need a sub-subcompact commuter, they are the best choice.
But I would agree with the majority that the Fit is the best subcompact when all things are considered.
Or the Cygnet.
Have we ever taken a look at the trend line for ATP pre-pandemic to now? It is starting to look like its been stalling at $49k to $51k while the trend catches up. Could be confirmation bias on my end.
I agree with you, and if you adjust it for inflation the price is dropping.