Why Cheap New Cars Are Disappearing in 2025
Category: Stock Market & Investments
Via: bob-nelson • last year • 14 commentsBy: Karl Furlong - Autoblog
The entry-level segment is most vulnerable to tariffs
Meanwhile, in Europe, regionally built "entry-level" cars are being launched by all the manufacturers, under pressure from Chinese imports.
But hey! Inexpensive is for people with little money, and people with little money are of no interest to Trump & Co. Well... unless a few more dollars can be squeezed out of them.
S E E D E D C O N T E N T
From disappearing EV tax credits to tariffs: Pricing for cheap cars is under pressure
Rising car prices tend to hit the entry-level segment hardest, where even a $2,000 increase for a specific model is much more significant than spending $2,000 more on a luxury model. In the EV segment, we explained why the imminent demise of the $7,500 tax credit will be especially damaging to models like the Chevrolet Equinox EV . Taking a broader view of all entry-level vehicles, including those running on gas, we’re now beginning to see the impact of tariffs on this sensitive segment, as pre-tariff stock runs dry.
Inventory Of Cheap Cars Has Declined
A study by Cars Commerce demonstrates that inventory of new cars at under $30,000 averaged 13.6% share in the first half of this year. That’s significantly down from a share of 38% back in 2019.
The vast majority of entry-level cars – 92 percent – at this price point are produced outside the United States, leaving them more vulnerable to tariffs. Looking at total new car units for the first half of the year, these grew by 5.6% year-on-year. Although vehicle units for models under $30k also increased, the 3.9% growth of these models are lagging behind the industry.
The $30,000 to $49,000 segment makes up almost half of all inventory, making it the largest segment in the market. After entry-level models, this category is most exposed to tariffs , as 50% of them are imported.
Although the average vehicle price only increased by $97 between January and July, tariffs disproportionately affected imports from the U.K.; models from this region increased in price by over $10,000.
The Sub-$20,000 Car Is About To Become Extinct, Too
While tariffs continue to affect vehicles under $30k, the sub-$20k new car will soon become a thing of the past. According to data from Kelley Blue Book , the only new car that still sold for an average price of under $20k ($18,484) is the Mitsubishi Mirage. However, it has been discontinued , and the units that are left are likely to sell out this summer – there are only around 1,700 of these Mitsubishi models left. To get rid of them, dealers are offering discounts that could see you drive off in a Mirage for under $12k . Even for a slow, dated hatchback, that’s still dirt cheap.
Nissan will sell you a new Versa for under $20k, but the base Versa S is hard to find at dealers, and the average Versa selling price is closer to $22k.
Once pre-tariff inventory runs out completely, it’s going to become increasingly challenging for manufacturers to keep the prices of entry-level cars low.
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There was a video on YouTube yesterday, about upcoming European-market EVs at less than € 20 000. Keep in mind that European prices always include VAT, around 20%. So we're talking USD 17 000 for a new EV.
I believe that European cars must have modifications made to meet both emissions standards and safety requirements before they can be sold in the US. So that USD 17,000 gets a bit more added on.
Most EU standards are tighter than US, so... no.
Umm, yes.
$20,000 cash will still buy a nice low mileage used luxury vehicle if you shop around. I can't imagine spending that on a cheap tiny e-car...
Difficult choice. We bought our previous car(s) in 2006-7, and had very few problems with them over the years. So buying "new" and taking that big "first years" depreciation hit was worth it.
We're in our late 70s, so this Elroq may well be the last car we ever buy. We don't want hassle, so...
But you're right - for lots of people, a recent used car is a good choice. There just aren't very many used EVs yet, so that really isn't an option.
But who wants to buy inexpensive pieces of junk?
In China, the least expensive new EV costs the equivalent of US$1,000.
Yes, but that's a completely different thing. That kind of "mini-car" is probably not legal in most US states. You're right, though, that China has some very affordable cars. A small four-door family city-car EV can be found for less that $ 10 000.
BYD launches cheaper Seagull electric car with starting price under $10,000 to fuel price war
This is coming to the EU, but requires some mods, so it will go up to around € 15 000
Including tariff?
I think so. In Europe, prices are usually all-inclusive. The first time my wife had to pay sales tax on top of the posted price of the product, she was steamed.