Why Can’t You Buy a New Car for Under $20,000 Anymore?
If you’ve been car shopping lately, you’ve probably noticed something unsettling: the days of finding a brand-new car for less than $20,000 are just about over. In fact, as of June, the Mitsubishi Mirage is the last holdout, with an average transaction price of $18,484. But even that’s about to change—once the remaining Mirages are gone, the sub-$20K new car will be history in the United States.
What’s behind this shift? It’s a mix of rising production costs, stricter safety and emissions standards, and a market that’s increasingly focused on larger, more profitable vehicles. According to Cox Automotive, the average price paid for a new vehicle in June hit $48,907, up slightly from May and more than double what you’d pay for a Mirage. That’s a staggering gap, and it’s leaving budget-conscious buyers with fewer options than ever.
What Happened to Affordable Models Like the Nissan Versa?
For years, the Nissan Versa was a go-to for buyers looking to keep things cheap and cheerful. But in late May, Nissan dropped the entry-level five-speed manual trim, leaving only the CVT-equipped S model. Factor in the $1,140 destination charge, and you’re looking at a starting price of $20,130—no longer under the magic $20K mark.
This isn’t just a Nissan story, though. Across the board, automakers are trimming their least expensive offerings. The Mirage itself is on borrowed time, with fewer than 1,700 units left on dealer lots nationwide. Once those are gone, Mitsubishi will officially exit the affordable small car segment in the US, focusing instead on crossovers and SUVs.
How Have Buyers Responded to the Disappearing Mirage?
You might think a car as basic as the Mirage would fade quietly into the background. Not so. In fact, Mirage sales doubled last year, making it Mitsubishi’s second-best-selling model in the US with 22,766 units sold—a 125% jump over 2023. Clearly, there’s still strong demand for simple, affordable transportation, even as the industry moves in the opposite direction.
It’s a bit of a last-chance scramble. Buyers who want a new car without breaking the bank are snapping up the remaining Mirages before they vanish. After that, the only options will be used cars or pricier new models.
Are All New Car Prices Rising, or Are There Exceptions?
The overall trend is unmistakable: new car prices are climbing. June’s average transaction price of $48,907 is a 0.4% increase from May, and while that might sound small, it adds up fast. Some brands and groups saw even bigger jumps. Geely Auto Group (which includes Volvo and Polestar) saw ATPs rise 1.7% in June, while General Motors was up 1.6%.
There are a few exceptions. Tata Motors (parent of Land Rover) saw prices drop 7.7% month-over-month, and Tesla’s average price slipped by 0.5%. Volkswagen also posted a 3.3% decline. But these are outliers in a market that’s otherwise marching steadily upward.
Which Brands Are Leading the Price Hikes—and Which Are Bucking the Trend?
Looking at the brand-by-brand breakdown, Chrysler posted the largest monthly gain at 3.4%, followed closely by Mitsubishi at 3.5%. MINI, Buick, and Chevrolet also saw modest increases. On the flip side, Land Rover’s average price dropped 7.9%, with Lincoln and Ram also seeing declines.
Year-over-year, some brands have seen double-digit increases. Buick’s ATP is up 10.2% compared to last year, and Cadillac is up 10.3%. On the group level, General Motors’ ATP is up 7.4% year-over-year, while Volkswagen Group’s is up 9.3%. It’s a mixed bag, but the general direction is clear: prices are rising, and fast.
What Does This Mean for the Average Car Shopper?
For most buyers, the shrinking pool of affordable new cars means tough choices. With the average new car costing nearly $49,000, many are being pushed into the used market or forced to stretch their budgets further than they’d like. According to a 2024 report from the Bureau of Labor Statistics, the median household income in the US is about $74,000. That means the average new car now costs two-thirds of what the typical household brings in each year—a ratio that’s simply unsustainable for many families.
Some shoppers are turning to longer loan terms or leasing to keep monthly payments manageable, but these solutions come with their own risks. Others are holding onto their existing vehicles longer, which is reflected in the rising average age of cars on the road—now over 12 years, according to S&P Global Mobility.
Is There Any Hope for Affordable New Cars in the Future?
It’s not all doom and gloom. While the sub-$20K new car is disappearing, automakers are experimenting with new ways to bring costs down. Some are exploring smaller, simpler electric vehicles for urban markets. Others are looking at subscription models or flexible ownership plans to make new cars more accessible.
Policy changes could also play a role. Incentives for affordable EVs, for example, might help fill the gap left by models like the Mirage and Versa. But for now, the reality is that buyers looking for a truly budget-friendly new car will need to act fast—or start shopping used.
The big takeaway? Chasing the elusive sub-$20K new car isn’t about perfection—it’s about smarter adjustments. Start with one change this week, whether it’s expanding your search to certified pre-owned or considering a longer loan term, and you’ll likely spot the difference by month’s end.