Just five years ago, American auto shoppers had a wide variety of small cars to choose from, all under $20,000. However, times have changed and now there’s only one option left: the Mitsubishi Mirage. Unfortunately, even the Mirage’s future is uncertain. The demand for SUVs and trucks has skyrocketed, leaving small cars like the Mirage behind. Previously, a price point of $20,000 marked affordability for a new car, but with price hikes due to the pandemic, that figure is no longer realistic. Last month, the current version of the Mirage sold for an average price of $19,205, making it the only new vehicle with an average sale price under 20 grand. However, even though a few other models have starting prices below $20,000, their actual purchase prices, including options and shipping, exceed that threshold.
Not only are small cars becoming less accessible, but higher insurance rates are also causing more drivers, particularly those in their 20s and 30s, to struggle with car payments. The average American pays over $700 per month for a new car, a figure that keeps rising as auto loan interest rates reach new heights. In contrast, the Mirage, available as both a hatchback and sedan, costs less than half of the average new U.S. vehicle. That average now sits at just above $48,000, a 25% increase compared to pre-pandemic levels.
Despite the rising prices, some individuals still find the Mirage to be the right choice for them. Karen Schaeppi, a 78-year-old from suburban Minneapolis, opted for a red Mirage sedan last month for around $19,000. She could have afforded a more expensive vehicle, but being only 5 feet tall, she preferred a small car for better visibility. However, Schaeppi was surprised to discover that there were no small cars available at the dealerships she visited. This scarcity of small cars can be attributed to Detroit’s Big Three automakers, who abandoned the compact and subcompact car business years ago due to low profit margins and the growing popularity of SUVs and trucks. Toyota and Honda later followed suit by halting U.S. sales of their subcompacts.
The shortage of new car inventory, coupled with the pandemic-related computer-chip shortage, led to a surge in prices for both new and used cars. As a result, most used vehicles now cost more than a new Mirage, with 32 models in the U.S. selling for over $100,000. SUVs and trucks dominate the current market, with Ford F-Series pickups taking the top spot on the list of Kelly Bluebook’s best-selling cars. This shift has left individuals like Andrew Lang of Flint, Michigan, feeling priced out of the market altogether.
The Mirage, despite its affordability, has experienced sluggish sales. Mitsubishi only sold 5,316 units in the first half of the year, a 44% decrease compared to the same period in the previous year. There’s speculation that the Mirage may not be available in a couple of years, as Mitsubishi is reportedly considering discontinuing its production. However, some experts suggest that if more customers were aware of the Mirage, its sales could potentially improve. Mitsubishi’s decision might be premature, as small car sales have seen an 11.7% increase in the first half of the year. However, many of these sales are to fleet companies rather than individual consumers.
In terms of pricing, Mitsubishi is able to offer the Mirage at a lower cost compared to its competitors due to the development costs being long since paid off. Additionally, the use of low-wage labor in Thailand, where the Mirage is manufactured, contributes to lower production costs. While the sub-$20,000 new car category is disappearing, there are still some options available, such as the Kia Rio, Nissan Versa, Hyundai Venue, and Nissan Sentra, with average sales prices slightly above $20,000. Those in need of affordable transportation are advised to consider certified pre-owned small cars, which offer reasonable prices and often include a warranty.
Overall, analysts predict that new auto prices may slightly decrease as factories ramp up production, forcing automakers to offer discounts. The decline in prices among electric vehicles, led by Tesla, has also had an impact on lowering overall auto prices. However, it’s unlikely that we’ll see the return of the $20,000 new car anytime soon.
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