“New Cars Are Increasingly Becoming Just For Rich People, And Even Some Dealers Hate It,” reads the headline for this morning’s collection of news drops, and therein you’ll discover the Kia Rio, Mitsubishi Mirage and Nissan Versa are only cars that can be had for less than $20,000 in the USA. Across the board, cars are just too damn expensive. There are reasons for this, of course, none of which make any of us feel better when forking over the dough. And so, our question to you is this: What should a new car cost?
Obviously, different types of cars are going to cost different amounts; trucks are pricier than small sedans, SUVs are pricier than little hatchback, four-wheel drive vehicles tend to cost more than two-wheel drive counterparts, and on and on. So to really answer this question, you’ll need to break up your answer by vehicle class. Some examples:
- Subcompact car: Nissan Versa, Kia Rio
- Compact car. Example: Honda Civic, VW Golf, Mazda3
- Minivan: Chrysler Pacifica, Honda Odyssey
- Midsize pickup truck: Toyota Tacoma, Ford Ranger
- Full-size pickup truck: Chevy Silverado 1500, Ram 1500
- Midsize cars: Honda Accord, Toyota Camry
- Midsize Crossover SUV: Toyota Rav4, Jeep Cherokee, Mazda CX-5
- Body-on-frame midsize SUV: Jeep Wrangler, Ford Bronco, Toyota 4Runner
- Subcompact crossover: Subaru Crosstrek, Jeep Renegade
What should be the entry price point for each class, what should the standard options be, and what should you be able to option it with (and for what price)?
We don’t expect you to weigh in on every category of car, SUV, and truck, but we’re sure there’s two or three you’ve got buying experience with and have well-defined feelings about. [Editor’s Note: I think you should be able to buy a work-truck with an eight-foot bed for $22,000; that seems like a fair entry price. I mean, come on, it’s not like it’s costly to build a body-on-frame truck with the same V8 you’ve been using since the first Ice Age. Crank windows, manual locks, bench seats — keep it simple, keep it cheap. I’d like to see a subcompact car like a Nissan Versa for $13,000 or so; no options, not even AC or a radio. Just give me a stick, the required safety features, and not a whole lot else. Heck, I’d ditch ABS if it weren’t required. As for midsize off-road vehicles like the Wrangler? $32,000+ is absurd for a small body-on-frame machine with crank windows! -DT].
To the comments!
A entry level luxury vehicle should cost around $32k, something like an Acura TL, BMW 3 series, MB C-class etc.
The cheapest new car should cost 1/2 of the annual income of someone working full time on minimum wage. Now since that comes out to just over $7,500 right now, that tells you a little something.
Going by median family take home income of 53,000 in 2023, the maximum percentage of take home pay recommended to spend on all transportation expenses for the family is 20% or $880/month, including gas, insurance, maintenance, etc. Take away gas (120/month), insurance (170), maintenance (variable, call it 75), and we are left with $515 available for a monthly payment. The average length of time people keep their vehicles is 8 years, so that should allow a two car family to alternate replacements and only have one car payment at at a time IF the loan is kept to 4 years or less.
At today’s interest rates of 5%, that means a starting principal of $22,500. Assuming the buyers have a 15% down payment in addition to tax and tags up front saved up or in trade equity, that gives a maximum affordable purchase price of $26,500, and means the buyer is showing up with ~$6,500 in cash and/or trade equity.
So for the median family, on the median income, with the average 1.94 children, driving what is now the most common class of vehicle purchased – the mid-size crossover (RAV4, CRV, etc.), the vehicle transaction price should be $26,500 or less, so starting price should be a bit lower at around 23k.
This is what would be financially sustainable for the average family today starting out. Unfortunately, automakers have become too reliant on excessively long loan terms, stretching to 72 months and beyond. It’s just not sustainable.
Well, let’s see how stuck in the past I am:
Reliable, safe transportation (that includes A/C because a car without A/C is deadly in some parts of the country) should be affordable to more people than not.
Median hh income is $71k, so about $4,500/mo after taxes. 1/3 for shelter leaves $3k for everything else. Subtract groceries, utilities and gas, $2k left. Kid? Idk, never had one, but prob $1k. Insurance, health deductibles, etc mean a car payment should probably be under $300.
$300 payment over 4 years (as it should be, longer just builds negative equity) at 5% means a $17k price… If you can put $4k down. Which most people won’t have. $2k down means a $15k car.
People shouldn’t buy new, but playing the new-car-every-3-years boomer american dream game, I’ll assume they’re buying new.
So a new non-penalty car like a Civic or a basic truck should cost $15k.
Tracy is right. We don’t need all this extra fancy pants crap. Just decent, reliable, affordable rides.
“What SHOULD be the entry price…”
Just asking a SHOULD question will certainly start a firestorm which I guess was Peter’s point of this article.
As my 8th grade PE teacher would say “your opinions are like assholes, you all have one and they all stink”
Now we know why he taught PE.
This is where I think they should be. To get there, I think people would have to be OK with less features in the base models.
O_o This is like 15+ years ago. I’m for removing the tech, but it’s the oddity that the tech isn’t that much more expensive to add vs. the mark up made to pay for the jobs being performed.
This whole topic has to do with the wages we make and the expense of everything else relatively (Office suite salaries included in the markup wars). It’s also a repeat of the muscle car craze of the aughts with rare cars going for eye watering prices (Integra Type R, etc. Now ) . The trick is hedge your bets on that low mileage Genesis Coupe R that’s like $3k above value now, or wait for the dip. We’ll have a lull soon enough (even DT had to thin his herd in moving cross-country as others will).
It says a lot that the base Maverick starts at $22k and the base Escape on the same platform starts at $28k. Where is the $6k coming from?? More glass? $3k little triangle windows in the back?
With that I’ll say compact cars/crossovers should start at $22k, as apparently they can but just don’t. Subcompact then should be around $16k as a good $6k should be the difference between the base of the next ‘level. So mid-side then at $29k, and full size at $35k.
Trucks are different, but back to the Maverick point, let’s start small at $22k, then mid-size at $29k, and full size at $35k. So the market seems about $10k-$15k off from what I’m thinking and I’m thinking it’s the post Covid craziness as pre-covid think that’s about where things were, and it’s only been 3 years.
Housing market also went crazy then too so it’s just this whole thing, waiting on the crash.
Appliance cars aren’t going to be manual hatches with no options, and they probably shouldn’t. For your non-enthusiast, the ideal vehicle is comfortable and requires as little maintenance/interaction possible. It probably has a CVT to ensure very smooth acceleration, it certainly has power locks, possibly proximity key. It has lane keep assist, cameras, and all that.
Since that’s your buying market, you have to assume we are starting at 18-20k, minimum, for the appliance car. The enthusiast, unfortunately, is a smaller market, so the production doesn’t scale to make it cheaper, even if it is simpler.
Small Sedan/hatch: 20k
Coupe (should be cheaper, but less demand means more money): 28k
Small crossover/large sedan: 26k
Medium crossover/wagon: 30k
Small SUV/Minivan: 34k
Large crossover/mid-SUV: 38k
Large SUV: 44k
Fleet pickups/vans could go simpler with their base packages, and, in my perfect world, bring down consumer prices.
Small fleet pickup/van: 19k
Small consumer pickup: 22k
Mid-size fleet pickup/van: 23k
Mid-size consumer pickup: 26k
Full-size fleet pickup: 26k
Full-size consumer: 30k
HD pickup: 38k
All of this is based on what I feel and has no basis in economic, mathematical, or philosophical models.
Just out of curiosity punched in the $17k MSRP for my 96 XJ (2 door, manual, crank windows, off road package) into an inflation calculator, and it came out to just over $32k in 2023 dollars. Looks like a $32k starting price for a bare bones Jeep today is pretty spot on.
Yeah, I did the same for my ’08 Ram 1500, which was nicely optioned (4×4, V8, cruise control) but not flashy (reg cab, 6M, long bed). $39K in today’s dollars.
The real issue with inflation is that you can’t equip your mind to automatically factor it in. Makes most people responding to these types of articles sound like their grandkid should be putting them down for a nap.
Out of curiosity, I configured a Ram Classic as close to my ’08 as possible. Except for the manual trans and smaller V8 (auto and Hemi now) it’s identical down to the carpet delete on big things. $43,015 MSRP.
Accounting for things like power windows/locks and other niceties, that’s not much price creep in 15 years.
$20K Fit EX in 2014 is at $27K now.
I did the same thing with the Corolla to highlight how awfully price creep has become with graphics cards. I’m both impressed with Toyota’s restraint…but that also comes with the feeling inflation is being strongly driven by record corporate/oil profits, most of which are borderline despicable.
“To highlight the price gouging, my first GPU was a 9800 GTX+ (launched in 2008) and it had an MSRP of $230. The 4070 is its modern equivalent but costs 160% more ($600).
In 2008, the base Corolla was $15k. It’s now $21,450. That’s a difference of 40%. That’s also the exact same amount of inflation that’s taken place over the last 15 years. In conclusion, Nvidia is trying to fuck us.” https://kotaku.com/nvidia-geforce-rtx-4070-budget-4k-ray-tracing-dlss-3-1850327485
Damn. That’s crazy. If only wages had kept pace with inflation.
Another thing to remember is we be bigger, no even bigger, no even bigger and most buyers arent fitting in any small car. You need a hothatch sized sedan for a 2 seater coupe. I think it would be suicide for an MG Midget to be on the road. And figure $12,000 for safety regs on any car.
So much this. I was behind a mid-90s ZJ yesterday and I swear it was barely bigger than the EcoSport in the next lane.
Same thing has happened with trucks. Sent my friend, who has a newer F-150, this photo of a Ford Maverick. https://www.reddit.com/r/FordMaverickTruck/comments/12h0b8z/im_just_a_baby/?utm_source=share&utm_medium=mweb3x&utm_name=mweb3xcss&utm_term=1&utm_content=share_button
It’s parked between what appears to be two giant daily drivers. He thought the Mav was approximately 90’s Ranger size. Upon further research, it’s virtually the same size as a 2012 Ranger. 204″L x 71″W x68″H vs. 200x73x69.
Looking for a comparable F-150, you don’t have to go too far back. The 2004 model was only slightly bigger at 208x79x71.
nevermind.
Minicar: under 10k (Ford Figo, Honda Brio, Toyota Vios)
Subcompact: 10-12k
Compact: 12-15k
Midsize: 15-20k
Full-size 20-25k
Small truck: 12-15k
Midsize truck 15-20k
full-size truck: 20-25k
The cost of steel while increasing is not what has caused the price increase. It is government regulation Union Blackmail, and Corporate Greed. Government wants 100% safety, you cant fix stupid. Unions want their most experienced members to do the very least for the very most. Leaving rookies to do the actual terrible work. And management is spending millions for government protection from overseas competition. Get all 3 of these to accept what they are worth and costs will be cut in half. And finally even the brokest dick car buyer wants more than he/she can reasonably afford. Think 6 year old caddy vs brand new toyota in the 70s
I’d like to see a subcompact start in the $11,000-$12,000 range, even if just as a loss-leader Spartan base model that hardly anyone actually orders, and the more reasonably optioned version that most buyers actually want starting around $15k-$16k
Include a bulletproof warranty and an attractive way to trade up the bare-bones model within three or four years and I’m betting you’d cultivate some brand loyalty.
Think of all the people who are one garage bill away from losing their job, throwing good money after their bad old rusty shitbox to keep it barely running. Give them the $12,000 car without constant finger-in-the-dyke maintenance and that repair money just might instead go into the “trade-up” savings jar.
EDIT: And then you simply refurbish the Spartans and put them back out in the exact same place on the lot. There’s practically no risk.
Nope. Mitsubishi had this sub-500 credit score piece of the market cornered 20 years ago – nearly wiped them out.
Ah yes, for a while there they put an Eclipse in the hands of every Vanilla Ice numbskull in the country
Maybe a 7 year/70,000 mile power train, 3 year/35,000 mile comprehensive and a $500 owner loyalty rebate if you trade in on another one any time between 3-6 years of initial purchase (minimum MSRP applies to rebate)?
What I’d really like to see, and might even be talked into buying, would be a basic honest compact-to-midsized hatchback/crossovery thing. Basic plastic/cloth interior, as little power stuff as possible, two wheel drive, and it doesn’t even have to be a manual if it’s going to cost you extra to EPA certify it. Start it at $18k or so with no options, with a couple tiers of basic option packages, but still nothing extravagant. Give us an option for basic no-frills transportation that doesn’t feel like a cookie tin. Why does cheap have to mean microscopic?
Someone would be wise to get something like this prepared for market.
The cheap and cheerful concept has been dead for a while now. My parents would like a replacement for their Hyundai Elantra Touring.
…the Chinese cars are coming. With Chinese-owned corporate dealerships in the US. And the Chinese won’t give a rats ass about joining the Auto Dealers Association –
I’m still skeptical that the government isn’t going to tariff the absolute bejeesus out of Chinese cars to the point where they’re uncompetitive.
The Inflation Reduction Act mostly does that as it is, making any imported electric car uncompetitively expensive, and electric cars are the only ones that will still be legal to sell in about 12 years. Theoretically, a Chinese automaker could swoop in with a cheap ICE car right now and carve out a space for themselves in the market so they’re already established by the time the EV mandate fully takes hold and they lose their price advantage
what’s to keep the Chinese from buying a factory in the deep South and assembling the bare minimum of overseas parts to skirt tariffs?
Absolutely nothing, unless a state government blocks them, but somebody’s going to want the investment if someone else passes. Hell, they could build in Puerto Rico
SC = 15k-20k
C = 20k-30k
M = 25k-35k
MV = 30k-45k
Small Cross =25k-35k
Mid Cross = 30k-40k
Large Cross = 35k-45k
Hey wait, we’re not even that far off from these numbers so what gives? The issue here is that manufacturers only want to produce high trims with tons of high margin-low value equipment. Want a sunroof? Gotta add 8k of equipment. Want leather? Gotta get the LIMITED EDITION.
What’s limited about the limited edition when it’s the only trim level that will be available for the next 8 months? They should rename the base and trim above base limited instead.
I’m not delusional about what’s possible; car manufacturers are making heaps of profits right now, despite trickling out low volume. We’re going to see more reasonable options appear suddenly from the manufacturers that survive the next downturn (probably all of them will get bailed out).
the other side of the coin is the longevity of newer cars. thanks to VVT systems, and EGR systems along with Direct injection result in Carbon Fouling poor running vehicles without expensive maintenance. the result is reduced value in the secondary market for the trade in process because people are less likely to buy the used vehicle that honestly many of the people interested in 12,000 cars would buy. the result of the planned obsolescence is theoretically more new cars sold, but much like Japan in the 80’s some car company is going to see this Muda and want the reputation of a long lasting well designed car. Having the lower end secondary market means that the positive image of the cars used will inspire that first new car when the opportunity arises to be of the same brand….that is called brand loyalty.
Yeesh, a new Civic is $28,000 CAD.
A Civic should be $20,000 CAD.
Thus all cars should be 70% of their current price.
Nope.
Not sure what the “nope” is referring to but I actually do have logic. All prices in CAD.
One, there should be a decent, reliable, $20k-ish car that can do most of what someone needs most of the time. In the past this has been roughly the size of a Honda Civic.
Two, price inflation has meant that the decent, reliable $20k-ish car is increadingly rare. I went into that joke expecting the Civic to be maybe $24-25k – not horribly priced in context but still leaving the low end behind. $28k is absurd.
Combine those statements and you get the following: Adjust the market to put the Civic back into the role for which it should be designed.
Let’s just aim for $20k on every class with steel wheels because I don’t want a Chevy Trax to be the only budget darling.
If an Escalade can be a $30k truck chassis and generate profit margins, the least carmakers can do is provide on the low end a neat lineup of cheap and cheerful cars.
That used to be a thing, sales figures be damned.
Yeah now it is profit.
Earlier you were lamenting government regulation, and here you’re unhappy about the effects of unfettered capitalism. Can’t have it both ways.
This comment section is going to be a veritable gold mine of:
-Ignorance of manufacturing costs
-Ignorance of component costs (no, removing all the screens from your car isn’t going to take $3000 off the MSRP)
-90s nostalgia
-Assumed set of universal priorities that no normies have ever or will ever share
In short, all the worst tendencies of online enthusiasts.
New car pricing in 2019-2020 was basically “correct”, that is to say in line with decades of historical trends. Those prices, plus 5-8% annual inflation since, less average discounting, are the right answer to the question. But that doesn’t scratch the itch like whining that we don’t have $12,000 new cars with crank windows anymore.
I don’t even think the issue here is the increase in MSRP, though it certainly hasn’t helped. It’s that most are actually paying MSRP (where nobody was before), and most are being shoved towards available bloated trim levels.
Which area are you the subject matter expert? Can you speak to bloated wages of installers wages? or increased duty taxes, or even just shipping and fuel surcharges?
Do you know how much analog gages versus digital really is? or are you just attempting to bloviate about that which you have no clue about?
Can you back up you claim about trends? can you explain the current trend since 2020?
I say put up or shut up.
Looks like I touched a nerve. How many of those things can you explain?
I’m not an expert on everything, but I have worked many years in automotive and in manufacturing, and while I won’t be writing a book with my knowledge, I know enough to understand some of the trends at play here.
Yelling into a comment section that cars are too expensive and if only some options were removed we could all be driving <$20k new vehicles is both predictable and wrong.
Bingo. I’ve watched the price of cars increase at a mostly steady trend since the Seventies, having grown up/worked in family owned new car franchise.
It’s called inflation.
The biggest thing I’ve noticed (in all industries, not just automotive) is that people want paid for their own time, but seem to ignore that other people also need paid for their time.
Folks also forget that the time spent on your specific item is not the only time spent on making said item. Even beyond overhead, R&D, and back-office workers who need paid, something something 10,000 hours to make an expert something something. 🙂
Given the reality of material and regulatory costs, some of the pricing comments here are implicitly calling for slave wages for their assemblers.
The manufacturers’ massive, massive profits, buybacks, and executive salaries indicate that regulatory costs are a red herring.
That statement is illogical.
The regulatory costs are real, no matter how big the corporate profits or CEO salary are. There’s a floor under which no car can be profitably built while paying a fair wage. There’s a reason we aren’t flooded with the cheap Chinese cars sold there, and a lot of it is because they aren’t engineered to US standards.
It’s amusing to me how many people here who lean left and presumably support union labor and higher wages for the working class are advocating for either building overseas in a slave labor factory or (worse) doing the same thing here.
A thought exercise to anyone who really thinks its possible to sell a $12,000 car here profitably (as it seems like many do). A Mirage starts at $16,245 and is already built in a very low cost country. Please explain in detail how you would reduce the cost by 25% while remaining both compliant with regulations and desirable for sale.
Or maybe some of those regulatory costs be reigned in. Perhaps those same regulatory costs also affect the material costs as those industries also have to pay wages and hopefully do business in the US to pay US wages.
Yeah everyone who demands a $12,000 car forgets that the Tata Nano was a failure. And I agree that 2019-20 is roughly where we should start when thinking about prices. The problem is just how far we are sailing above those prices. $28k CAD for a Civic? That’s insane.
The problem is that the automakers have moneyballed their lineup, and maximize profits over variety. They have an obligation to do this, but it sucks for those of us that are willing to buy a ‘stripper’ car to save money.
Anyway,
Subcompact car – there better be a sub $15k option in the lineup, and then pricier versions with amenities.
Compact car – start at $20k and go up
Full-size pickup – $20k for a 2WD single cab.
I’ll also add a category – full-size SUV (Tahoe, Expedition, etc.) – $35k for a base model. Go ahead and price things up to $100k for the fancy ones if you want to, but give me 3 rows of cloth benches, barn doors, and 4×4 to haul the family and tow a camper.
I honestly wonder if we will ever see the return of cheap new cars. With the amount of used cars out there and the switch from ICE to EV. It seems to me like we are going to be stuck with these prices for a while. Dealers aren’t helping either by gouging the shit out of customers.