Since 2017, new cars have steadily become something mostly wealthier, better-credit shoppers can afford. Lower-income buyers and those building their credit have been nearly squeezed out of the new car market and sent to used car lots for their transportation needs.
But last quarter saw a snapback. Sales of the least expensive new cars in America surged in the second quarter of 2024.
The Auto Industry Changed Who It Served
In December 2017, automakers produced 36 models priced at $25,000 or less. Five years later, they built just 10.
Since then, the numbers have collapsed further. The Chevy Spark, America’s least-expensive new car for several years, left the market in 2022. The Hyundai Accent followed. Then the Kia Rio.
The few inexpensive new cars that remain may be on short leashes. Mitsubishi has denied media reports that its Mirage subcompact is on the chopping block. But the rumor persists.
Expensive cars, meanwhile, are everywhere.
In December 2017, automakers offered 61 models for sale with sticker prices of $60,000 or higher. By the end of 2022, they offered 90.
Brands once aimed at middle-income buyers have moved upscale. Chevrolet once considered Buick its entry-level luxury marque and Chevrolet its mass-market brand. But in 2023, the average Chevrolet buyer outspent the average Buick buyer.
Even Jeep has launched six-figure models now.
Early in 2024, dealers began to warn automakers that the industry had a problem.
The industry gathers early every year for a major conference – the National Automobile Dealers Association (NADA) show. Most car companies use the event to meet with their dealers and discuss future product plans.
This year, dealers had a simple message for them – we need affordable cars in greater numbers.
Last quarter’s sales results proved their point.
But Cheap Cars Are Suddenly Selling
The Nissan Versa is America’s most affordable car this year. It starts at $17,820, including the mandatory $1,140 delivery fee. With most similar cars off the market, industry analysts have wondered how much longer Nissan would bother to build it.
In the first half of last year, Nissan sold just 11,014 Versa subcompacts. In the same six months of this year, Nissan sold 17,812 – a 62% increase. Sales surged 45% last quarter alone.
The Versa isn’t the subcompact model seeing the biggest sales boost. The humble Mirage, $20 more with delivery, was the choice of just 5,316 buyers in the first half of 2023. In the first six months of 2024, Mitsubishi has sold 9,862 Mirages – an 86% sales increase.
Last quarter, Mirage sales grew 146% year-over-year.
Not every sub-$25,000 car is seeing a similar sales boost. Hyundai’s Venue and Kia’s Soul – the brands’ least expensive models now that their subcompact sedans are off the market – have been close to flat.
But brands that put effort into the smaller classes are being rewarded. Chevrolet drastically improved its Trax SUV, the brand’s least-expensive offering, with a recent redesign. Since then, the company reports, it has seen “five consecutive quarters of year-over-year sales growth of 100% or more.”
Some companies that moved upmarket, meanwhile, are sharing regrets.
New Jeep CEO Antonio Filosa recently promised a return to lower prices as Jeep dealers sit on high inventories of six-figure SUVs.
