American car shoppers are running into record prices as the lowest priced new models disappear from showrooms. In 2024, buyers still had three new vehicles priced below $20,000, but that bargain tier is now gone. Estimates from Kelley Blue Book show new car buyers paid $50,326 on average in December, while Edmunds reported a slightly lower record average of $49,466. CNN journalist Auzinea Bacon tied the surge to a market that keeps getting pricier while entry level choices keep shrinking.
The last model under the $20,000 line was the Nissan Versa, and its departure marked the end of an era for true entry level pricing. Nissan ended production of the Versa in December 2025, nearly 20 years after it first went on sale with a starting price around $12,550. In October 2025, a 2025 Versa was still priced at about $18,000, which made it the final holdout below the cutoff. The Mitsubishi Mirage was discontinued in August 2024 at roughly the same price point, and Kia moved away from the Forte after the K4 was announced in March 2024.
These cancellations matter because inexpensive models often serve as the first step for buyers with limited savings or a short credit history. Even when profits are thin, a low priced car can bring people into a dealership and build long term loyalty to a brand. Ivan Drury, the director of insights at Edmunds.com, argued that the disappearance of these cars changes what a new vehicle means for the average buyer. He said, “virtually every car on the road that is brand new with those dealer plates is a ‘luxury purchase,’”.
Several forces are pushing the price floor upward, including where many of the cheapest cars are built. Low cost models have often been produced abroad, where labor costs can be lower, which can also leave them more exposed to trade policy. President Donald Trump’s 25% tariffs on imported cars and auto parts raised costs for automakers, and those costs are hardest to absorb on vehicles that already have slim margins. When manufacturers worry buyers will delay purchases after a price increase, it is often the least profitable models that get cut first.
With the below $20,000 shelf empty, the least expensive new cars now start above a threshold many shoppers used to consider realistic. Edmunds lists the 2026 Hyundai Venue as the lowest priced new car, with a manufacturer suggested retail price of $20,550. That figure can rise once taxes, registration, and common dealer add ons are included, which can push the final total farther from what budget buyers planned. The shift also changes what buyers get for their money, since entry pricing is tied less to small sedans and more to compact crossovers.
Affordability pressure is reshaping who buys new vehicles, and the split is becoming clearer. A Cox Automotive analysis using S&P Global Mobility data found that households earning under $75,000 made up 26% of new vehicle sales last year, down from 37% in 2019. Over the same period, buyers earning more than $150,000 climbed to more than 40% of sales, up from about 29% in 2019. The pattern matches a market where higher income shoppers keep buying while many working households pivot away from the new car lot.
Erin Keating, an executive analyst at Cox Automotive, has warned that dealers see lower income shoppers being excluded. She traced the turning point back to supply chain disruptions and pricing shifts that followed the global health crisis. Keating said, “(The pandemic) fundamentally restructured pricing dynamics,” and she added that higher figures are “now the new baseline,”. If that baseline holds, the consequences can ripple into daily life because many Americans still rely on a personal vehicle for work commutes, errands, and family logistics.
For households priced out of new cars, the fallback is often the used market or simply keeping an older vehicle longer, but those paths can tighten quickly when demand rises. Buyers may look for cars that are one or two years old, hoping to save money while still getting modern safety features. Automakers can also try to pull shoppers back with incentives, which can change the math on monthly payments. Drury expects that strategy to spill over into used pricing as well, and he said, “Once we see incentives pile on for those new cars, it trickles on down.”.
When you see averages and price cutoffs in headlines, it helps to remember a few basics about how vehicles are priced. A manufacturer suggested retail price is a benchmark, while the transaction price is what buyers actually pay after options, fees, and negotiation. Incentives like rebates and discounted financing can lower monthly payments, but they often depend on credit and can change quickly with inventory. Depreciation is usually steepest in the first years of ownership, which is why many shoppers compare a discounted new car with a lightly used alternative.
Share your thoughts in the comments on whether you think truly affordable new cars will return soon, or if the sub $20,000 era is over for good.
