There’s Now One Option for a New Car Under $20K – Interested?

In the not too distant past, car buyers in the United States had numerous options for purchasing a new vehicle under $20,000. However, the landscape has drastically changed in just five years, leaving buyers with only one option—the Mitsubishi Mirage. Even this option is at risk of becoming a relic of affordable cars. According to the AP, American consumers are increasingly gravitating towards SUVs and trucks. The combination of this shift in preference and the rising prices during the pandemic has resulted in sticker shock on car lots. The current version of the Mirage, which entered US dealerships a decade ago, had an average selling price of $19,205 last month, based on data from Cox Automotive. (While a few other new models have starting prices below $20,000, their final purchase prices, including options and shipping, surpass that amount.)

The Mirage stands out as a cost-effective option compared to the average new vehicle in the US. The current average price for a new vehicle is now slightly above $48,000—25% higher than before the pandemic struck. The scarcity of small cars contributes to the increased cost: General Motors, Stellantis, and Ford, known as Detroit’s Big Three, began phasing out compact and subcompact cars approximately five years ago. Low profit margins for small cars, combined with consumers’ growing preference for SUVs and trucks, made this decision an easy one. Toyota and Honda later followed suit by discontinuing the US sales of subcompacts. Furthermore, a global shortage of computer chips, brought on by the pandemic, significantly reduced global auto production. This sudden decrease in supply coincided with a period of high demand, causing prices to surge.

Another contributing factor to the inflated prices is the availability of 32 models in the United States with selling prices exceeding $100,000, according to Cox. In contrast, in 2018, only 12 models were sold above this price point. Even most used vehicles have an average sale price of $29,000, which is higher than the price of a new Mirage. The Mirage, priced similarly to a four-year-old Chevrolet Cruze or Mazda 3, comes with a five-year, 60,000-mile bumper-to-bumper warranty. Despite its affordability, sales of the Mirage in the US have been sluggish. In the first half of this year, Mitsubishi sold only 5,316 units, which is 44% lower than the same period in 2022. The Automotive News publication reported last week that Mitsubishi plans to discontinue the Mirage by the middle of this decade.

(Read more auto industry stories.)