(Axios) The under-$20,000 new car is a goner.
Why it matters: The demise of cheap new rides thrusts more shoppers into the used-car market, where prices have consequently soared in recent years.
Driving the news: The last remaining new car with an average transaction price of less than $20,000 in July was the Mitsubishi Mirage compact car, according to Cox Automotive.
- And Automotive News reported this week that the Mirage is being discontinued.
- Mirage sales totaled only 1,974 in the second quarter of 2023, down 57% from a year earlier.
The big picture: Automakers have been spurning cheap — and almost exclusively small — cars for years, having discontinued models like the Honda Fit, Toyota Yaris, Chevrolet Cruze, Ford Focus and Volkswagen Beetle.
- Americans have moved on from passenger cars, embracing SUVs, crossovers and pickups — all of which are more expensive on average.
- In the second quarter, Ford sold 108 units of its F-series pickup for every Mirage sold by Mitsubishi.
State of play: New-vehicle prices averaged $48,334 in July, according to Cox’s Kelley Blue Book — and they haven’t averaged less than $30,000 in well over a decade.
- “Automakers largely decided to get out of the low end of the market,” Cox Automotive executive analyst Michelle Krebs tells Axios. “There’s not as much profit in them.”
Zoom in: The Mirage, the final holdout with a starting price of $17,340, sold for an average of $19,205 in July, according to Cox.
- The next cheapest vehicles were the Kia Rio ($20,157), Nissan Versa ($20,763) and Hyundai Venue ($23,971).
- In July, Ford and Stellantis didn’t sell any new vehicles for an average price of under than $30,000, Cox spokesman Mark Schirmer says.
The impact: Some consumers who previously could afford to buy a new vehicle will be nudged into the used-car market.
- As a result, subprime loans for new vehicles have dried up: “Those people have largely fallen out of the market with interest rates going up,” Krebs says.
- Mitsubishi declined to comment.
Context: In addition to vehicles getting bigger, a number of other factors have contributed to cheap rides going away:
