Sweet new rides for under $20K about to go the way of the dodo

Art Raymond
·3 min read
Mitsubishi sales person Matthew Boston walks past a new Mitsubishi Mirage for sale at El Cajon Mitsubishi on Tuesday, Aug. 8, 2023, in El Cajon, Calif. At a time when auto buyers increasingly want pricey SUVs and trucks and fewer want small cars, the Mirage remains the lone new vehicle whose average sale price is under 20 grand — a figure that once marked a kind of unofficial threshold of affordability.

Even as inflationary pressures on new car prices have eased of late, a new report finds the average cost of a new vehicle in the U.S. is now north of $48,000. And even though a price-conscious shopper had some choices just a few years ago to score a new ride for under $20,000, there now remains only one option below that threshold.

And it’s probably about to disappear.

Cox Automotive reports the average price Americans paid for a new vehicle in July 2023 was 0.4% higher than one year ago, the smallest year-over-year price increase in the last decade. And, according to Kelley Blue Book, a Cox Automotive company, the average transaction price of a new vehicle in July was $48,334, a month-over-month decrease of 0.7%, or $337, from June’s average transaction price of $48,671 and up only $199 from one year ago. New car prices have tumbled since January of this year, according to the report, with average new car transaction prices down 2.7%, or $1,335, the largest January to July price decrease in the last decade.

“New-vehicle price inflation has all but disappeared in 2023,” said Rebecca Rydzewski, research manager at Cox Automotive, in the report. “New-vehicle prices, primarily driven by cuts in luxury and electric vehicles, are decreasing as inventory is steadily improving.

“With higher inventories and higher incentives helping to keep downward pressure on prices, there certainly are good reasons for shoppers to be heading back into the market.”

But those who do choose to engage the current U.S. new car market are going to find their options severely limited if they’re looking to keep their all-in costs for a new vehicle below $20,000.

Cox reports the Mitsubishi Mirage, a subcompact model that first debuted for the Japanese automaker in the late ’70s, was the only remaining new vehicle that could be purchased in the U.S. for under $20,000 last month, with a transaction price of $19,205 in July. The Cox analysis notes that back in July 2018, there were a dozen vehicles with average prices below the $20,000 barrier. In comparison, many of today’s smallest vehicles, including the Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, are all transacting well over $20,000.

And last week, Automotive News reported that Mitsubishi plans to discontinue the Mirage in 2025.

Those who may be rethinking a new car purchase in the face of exorbitant new vehicle pricing won’t be finding much relief on U.S. used car lots, either.

In a separate analysis released earlier this month, Cox reported the average list price for used cars across the country came in at $27,028 in July.