U.S. cars have not been considered affordable for quite some time. The current average price of a new car in the United States is nearing $50,000, which reflects an increase of approximately $5,000 compared to two decades ago after accounting for inflation. The rising costs are attributed to several factors, including increasingly complex and expensive vehicle manufacturing processes. Additionally, the COVID-19 pandemic disrupted global auto supply chains, and over the past decade, American automakers have shifted focus from more affordable passenger cars to higher-margin trucks and SUVs, which are more in demand.
Recent automobile tariffs imposed by the Trump administration, along with upcoming parts tariffs expected to take effect next month, are projected to further increase vehicle prices by thousands of dollars, potentially impacting the affordability of cars for American consumers. Experts suggest that this could pose significant challenges for the most price-sensitive buyers in the country, who may need to delay purchasing a new car, thus increasing demand in used-auto markets.
At the end of March, data from Cox Automotive indicated that only 27 U.S. vehicles had an average transaction price below $30,000. Of those, seven models are discontinued with only remaining stock for sale. About half of the remaining models will be affected by the new tariffs due to their assembly outside the U.S. This additional cost, estimated by the firm to be around $6,000 per vehicle, would leave only five models under the $30,000 price point: the Hyundai Venue, Kia Soul, Nissan Sentra, Chevrolet Trax, and the soon-to-be-discontinued Nissan Versa.
Models potentially impacted by the tariffs include the Hyundai Kona built in South Korea, Jeep’s least expensive SUV, the Compass, assembled in Mexico, and the base model Ford Maverick truck also from Mexico. General Motors experienced success last year with the Chevrolet Trax, starting at $21,000, but this model is assembled in South Korea and may also see a price increase.
The situation is expected to become more complex next month when additional tariffs on imported auto parts are introduced. Even popular, affordable models assembled in the U.S., such as the Subaru Crosstrek manufactured in Indiana and the Honda Civic built in Ohio, incorporate components from outside the country.
According to Erin Keating, an executive analyst at Cox Automotive, some affordable models may vanish altogether. She notes that American consumers favor large, customized, and cost-effective products, making current market conditions challenging. The era of the $20,000 car is nearly over, and the $30,000 price point may soon follow suit.
Potential car buyers might have to familiarize themselves with not only the manufacturers’ headquarters locations—Toyota and Honda in Japan or Volkswagen and Audi in Germany—but also where individual cars are produced. For example, the $23,000 Toyota Corolla is assembled in Mississippi, the $45,000 electric Volkswagen ID.4 is produced in Tennessee, and the $25,000 Honda Civic comes from Indiana.
