Americans are paying more than ever for cars. Cheap models are disappearing

<i>William Volcov/Brazil Photo Pres/Shutterstock via CNN Newsource</i><br/>Nissan announced in December 2025 that it is discontinuing the Nissan Versa

By CNN Newsource

Published January 16, 2026 2:00 AM

By Auzinea Bacon, CNN

(CNN) — In 2024, US buyers had a choice of three cars priced under $20,000. Now, there are none.

Data on car-buying costs released Monday show how much the loss of cheaper models can hurt customers: New car buyers paid $50,326 on average in December, a record high, according to estimates from Kelley Blue Book, a Cox Automotive brand. Car buying site Edmunds also reported a record (though slightly lower) average price of $49,466.

Both estimates mean many buyers are paying far more than $50,000 and will continue to do so moving forward.

The high average price isn’t just due to automakers’ high sticker prices or buyers’ demands for larger, more expensive models. It’s partly driven up by fewer and fewer cheap options for new car buyers.

The most recent casualty was the Nissan Versa, which first went on sale nearly 20 years ago with a starting price of about $12,550. Nissan ended production of the Versa in December.

The lack of low-priced options could put owning a car out of reach for many people, another example of an affordability crisis that’s squeezed Americans. And the contrast with booming luxury auto sales underscores the K-shaped economy that’s left the wealthy spending freely while lower-income people struggle.

“As we hack away at these entry-level vehicles not being available, you can say that virtually every car on the road that is brand new with those dealer plates is a ‘luxury purchase,’” said Ivan Drury, the director of insights at Edmunds.com.

Concerns about car affordability have pervaded the market since the pandemic, when prices rose due to supply chain constraints.

“(The pandemic) fundamentally restructured pricing dynamics,” Erin Keating, executive analyst at Cox Automotive, said during an end-of-year webinar about the car market on December 17. The higher numbers are “now the new baseline,” she added.

Slim pickings in the new car market

The 2025 Nissan Versa, which was priced at about $18,000 in October, was the last car model to fall under $20,000, according to Ivan Drury, the director of insights at Edmunds.com.

The Mitsubishi Mirage, which was discontinued in August 2024, was priced at about $18,000; the Kia Forte, which Kia essentially replaced with the more expensive K4, was discontinued after the K4’s announcement in March 2024.

Those cars were largely produced abroad, where wages for autoworkers are cheaper. President Donald Trump’s 25% tariffs on imported cars and auto parts have raised costs for automakers, although many companies have eaten most of the billions in additional costs because of concerns that consumers would reject price increases and delay purchases, Drury said. The tariff costs likely doomed the least expensive models, which had thin margins to begin with.

The least expensive new car today is the 2026 Hyundai Venue, which has a manufacturer’s suggested retail price of $20,550, according to Edmunds.

Affordable cars like the Versa, which may not sell in profitable volumes, are more likely to be cut from automakers’ lineups while leaving other affordable models on the market, said Drury. Competing automakers, like Toyota, stand to gain customers who will prioritize a less expensive, entry-level vehicle over brand loyalty, he added.

The K-shaped economy hits car dealerships

Car dealers are increasingly worried that lower-income consumers are being excluded from the market, as a wealthier group of buyers sustain car sales, warned Keating.

Buyers who can’t afford new cars are opting to buy used vehicles or holding onto their current cars for longer, Keating said. But Americans who can’t afford a car at all will face more hurdles when returning to work, running errands and chauffeuring children — especially in cities or towns lacking reliable public transportation.

Households making less than $75,000 annually made up 26% of sales last year, compared to 37% in 2019, according to a Cox Automotive analysis of S&P Global Mobility data.

Meanwhile, wealthier buyers who can afford new vehicles are opting for premium, larger SUVs, Keating said. People making more than $150,000 now make up more than 40% of new car sales, compared to about 29% in 2019, according to Cox. Those 2019 income levels are not adjusted for inflation or changes in average income.

It’s another example of America’s increasingly K-shaped economy, where wealthy Americans continue to spend while a larger share of middle- and lower-income households pull back due to economic strain.

Wealthier Americans have seen their net worths boosted by the strong stock market, wage gains and higher home values. But lower-earning Americans have seen a slowing job market, high debt burdens and years of accumulated inflation take a bite out of their spending power.

Buyers care most about their monthly payments, said Tyson Jominy, senior vice president of data and analytics at J.D. Power. A $500 monthly payment pre-pandemic may have been enough to afford a Toyota Highlander but now gets a compact car like a Toyota Corolla, he said.

Overall car prices are expected to drop by about $500 on average in 2026, he said, signaling a better-priced environment for consumers.

And as automakers fight for a smaller share of consumers, they’ll offer more incentives on new cars to compete with one- or two-year-old vehicles, noted Drury.

“Once we see incentives pile on for those new cars, it trickles on down. So hopefully the used market can give consumers a place to go if they are just completely turned off,” said Drury.

CNN’s Chris Isidore contributed to this report.