Only one new car currently sells for less than $20,000 in the United States (2023)

Just five years ago, a budget-conscious US car buyer could choose from a dozen new small cars selling for less than $20,000. Now there is only one: the Mitsubishi Mirage. And even the Mirage seems to be on its way to the junkyard.

At a time when Americans are increasingly choosing expensive SUVs and trucks over small cars, the Mirage remains the only new vehicle with an average retail price below $20,000 -- a figure that once marked some kind of unofficial affordability limit. With prizes —new and used- After a huge increase since the pandemic, $20,000 is no longer a real starting point for a new car.

This current version of the Mirage, which debuted at US dealerships a decade ago, was reported to have sold for an average of $19,205 last month, according to reportsfactsby Cox Automotive. (While some other new models have starting prices under $20,000, their actual purchase prices, including options and shipping, exceed that amount.)

According to a recent study by the New York Federal Reserve, the near-extinction of sub-$20,000 cars is also due to higher insurance premiums causing more motorists — especially those in their 20s and 30s — to fall behind on their car payments.found it. According to statistics from Lending Tree, the average American pays more than $700 a month for their new carshow, an amount that continues to rise as car loan rates soar.

The Mirage, in both hatchback and sedan versions, costs less than half what the average new car costs in the United States. That average is now just over $48,000 -- 25% up from before the pandemic three years ago.

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"I just don't want to pay that price," said Karen Schaeppi of suburban Minneapolis, who bought a red Mirage sedan for about $19,000 last month. Schaeppi, 78, said she could have afforded a new vehicle for an average price. But because she's only 1.80 meters tall, she wanted a small car so she could see over the hood.

When she wanted to swap out her 2008 Ford Focus, Schaeppi was surprised to find that the dealerships she visited didn't have small cars available - at any price.

"There was nothing that existed," she said. "Not nearly."

The Big Three have shut down small cars

The lack of small cars at dealerships explains why the average new car costs so much: Detroit's big three automakers - General Motors, Stellantis and Ford - began exiting the compact and small car industry about five years ago. Low profit margins on small cars and increasing consumer shifts toward SUVs and trucks made the decision easy. Similarly, Toyota and Honda later stopped selling their small cars in the United States.

Subsequently, a shortage of computer chips caused by the pandemic reduced global automobile production.well below demandfor new vehicles. Partly due to this new car shortage, prices for new and used cars shot to record levels early last year. With an average retail price of $29,000, even most used vehicles cost more than a new Mirage.

Another factor pushing up median prices is that 32 models in the United States now have retail prices in excess of $100,000, Cox said. SUVs and trucks currently dominate the US market, with Ford F-Series pickups -- priced between $40,000 and $112,000 -- taking the top spotOrtfrom Kelly Bluebook's Top 25 Best Selling Cars of 2023. In 2018, only 12 models sold for over 100,000.

People like Andrew Lang of Flint, Michigan feel completely left out of the market. Lang, 26, said he can't afford a new car right now, not even a Mirage.

"I don't make enough money," he said.

Lang spoke after stepping out of his 2009 Chevrolet Impala in the parking lot of a supermarket near Ypsilanti. The Impala with dim headlights, a crack in the front bumper and a dent in the right side of the trunk has 150,000 miles on the clock. Lang, an information technology coordinator, said he didn't know what he would do if he had to replace it. He would have to buy a used car - if he could find something affordable.

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At White Bear Mitsubishi near St. Paul, Minn., where Schaeppi bought her car, used cars are the Mirage's main competition, according to Richard Herod III, the dealer's managing partner. But since so few new small cars have been sold in recent years, the supply of used cars is low and prices are high.

39 miles per gallon

A new Mirage, which costs about the same as a four-year-old Chevrolet Cruze or Mazda 3, comes with a five-year, 90,000-mile bumper-to-bumper warranty. Most used cars of this age, said Herod, no longer have such guarantees. The Mirage tops out at about 39 miles per gallon, making it one of the highest of any non-hybrid or electric vehicle in the United States.

Nevertheless, the output of the three-cylinder engine is a tepid 76 hp.

"It doesn't win drag races," Herod said. "It doesn't make you popular at school. It's the last honest, affordable car in America."

Slow sale despite low price

Despite the low price, US sales of the Mirage have been slow. Mitsubishi sold just 5,316 in the first half -- 44% fewer than the same period in 2022.

And maybe in a few years it won't be available at all. Automotive News magazine reported last week that Mitsubishi will stop selling the Mirage in the middle of the decade. Mitsubishi, part of the Nissan-Renault alliance, declined to comment. However, the website states that production of the Mirage will end in Thailand, where it will be built.

Once the Mirage disappears, Mitsubishi's cheapest vehicle would be the small SUV Outlander Sport. Pricing starts at around $24,600 including shipping.

Michelle Krebs, an analyst at Cox Automotive, said she believes Mirage sales would increase if more customers knew about it.

"There aren't that many Mitsubishi dealers and they don't have that big a voice in advertising," she said.

Additionally, Krebs said, Mitsubishi buyers typically have below-average credit ratings, and many have been locked out of the auto market altogether as higher borrowing rates drove up monthly payments.

A buyer making a 10% payment at the median Mirage selling price of $19,205 would owe about $365 a month for 60 months at a 7% lending rate.

The latest data suggests that Mitsubishi's decision to phase out the Mirage may be premature. Overall, small car sales rose 11.7% in the first half of the year after declining for the past seven years. Some of that increase could be due to greater interest from consumers concerned about higher gas prices, Krebs said, but most of it is from fleet sales to rental-car companies.

"It won't be where it was," she said of the small car purchase.

"Mitsubishi can afford to sell the Mirage at a lower price than its competitors for comparable vehicles because it's such an old model that the money to develop it has long been spent," said Sam Abuelsamid, analyst at Guidehouse Insights .

Low-wage labor is another factor: factory workers in Thailand make only about $16 a day -- much less than unionized automakers in the United States and slightly less than Mexico.

While the Mirage is expected to be phased out, some other cars and SUVs average retail prices just over $20,000. These include the Kia Rio, Nissan Versa, Hyundai Venue and Nissan Sentra. Prices range from $20,157 for the Rio to $23,994 for the Sentra, according to Cox.

As new cars for less than $20,000 disappear, Krebs recommends buyers who need affordable transportation consider certified used compact cars that are reasonably priced and come with at least a one-year warranty.

Krebs said she expects new car prices to fall slightly as factories produce more vehicles, which would likely force automakers to offer discounts. Electric vehicle price cuts, led by Tesla, have also helped lower overall car prices.

But don't expect the return of the $20,000 new car.

"I can't imagine that unless a Chinese automaker comes in and sells cheap," Krebs said. "Politically, that seems unlikely."

In:
• electric vehicle
• Inflation
• Mitsubishi
• car industry