What Happened to the Affordable Car?

The Journal.

This episode of The Journal explores why affordable new cars have become scarce in the U.S., examining rising vehicle prices, shifting indus

Key takeaways

The average price of a new car has doubled since 2000, reaching around $50,000 due to inflation, higher feature content, and increased production costs.
Car manufacturers have shifted away from affordable sedans and hatchbacks toward more profitable SUVs, pickups, and crossovers with higher margins.

Main topics

Rising cost of new vehicles
Decline of affordable car models

Notable quotes

"The affordable new car has, I would say it's harder to find. They're harder and harder to find and fewer and far between." – Sharon Terlep

Conclusion

The auto industry's pivot toward high-margin SUVs and trucks has made affordable new cars increasingly rare. As consumers

Transcript preview

Speaker 4 (0:11) My truck's name is Chachi, and it's a very simple truck. It's a Toyota from the 90s. Speaker 2 (0:18) That's Josiah Johnson. He drives a 1993 Toyota T100. Our producer Pierce interviewed him. Speaker 4 (0:25) And what are the types of things that you Speaker 3 (0:27) use your truck for Speaker 4 (0:28) at work? I have a trailer that I pull with all my tools in it. And then I use it to move materials, going to lumber yards, picking up whatever I need, and driving it to the job site. Speaker 2 (0:41) Josiah lives in Southern California, and he's a carpenter. So his truck is more than just transportation. It's one of his tools. The truck itself is red, and it has an eight-foot bed, which is useful for hauling wood. Speaker 4 (0:54) I do a lot of cabinet making, and this is the first year that Toyota made a full-size truck that could fit a sheet of plywood between the wheel wells. Speaker 2 (1:02) Chachi is an old truck, over 30 years old. It has manual locks and crank windows. Speaker 4 (1:10) One thing I hate is the roll-down windows. That's a bummer. If someone comes up to your passenger side window and is like, hey, can I talk to you quick? And then you have to lean over and roll down a window. That's a downside. Speaker 2 (1:22) And by modern truck standards, it's pretty small. Speaker 4 (1:25) It's a small truck compared to a lot of American trucks. Now people would look at it and say, oh my gosh, that's so much smaller than some massive F-150, F-250. But it is big enough to move around everything I need to. Speaker 2 (1:38) Have you ever thought about buying a new truck? Speaker 4 (1:41) But I could never really convince myself to consider in a serious way buying a new truck. Speaker 2 (1:46) That's because new trucks are pretty expensive. Today, the average price of a new vehicle is around $50,000. And trucks tend to cost even more. Speaker 4 (1:56) Yeah, I would never want to spend the better part of a year's salary on a vehicle that's only going to last me a decade. And throughout that decade, it's going to need a lot of maintenance. That would feel unwise. Speaker 2 (2:13) Many people in the U.S. are like Josiah and holding on to old cars. That includes me. I drive a 2014 Subaru Forester. It's a far cry from Josiah's 93 model, but my car is about the average age of cars on the road right now, which is about 13 years old. Speaker 1 (2:30) People are holding on to their cars longer and fewer people are buying new cars. Speaker 2 (2:36) That's our colleague Sharon Turlip. She covers the automotive industry. Speaker 1 (2:40) There are a lot of market factors that are preventing people from buying new cars. New cars are increasingly expensive. And it's not just the car. It's the insurance, the loans, the repairs. It's tougher for people to swing these payments now than it used to be. The affordable new car has, I would say it's harder to find. They're harder and harder to find and fewer and far between. Speaker 2 (3:07) Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, September 10th. Coming up on the show, what happened to the affordable car? When Sharon says new cars have gotten pretty expensive, she means that the average price for them has doubled in the past 25 years. Speaker 1 (3:48) The average car is selling for around $50,000 now. You know, back at the beginning of 2000, that was closer to $25,000. Now, of course, there's been inflation and, you know, everything's gotten more expensive. But the idea that you can spend $50,000 on average on a car, I think, is a big deal and pretty impactful. You know, and part of what compounds it is that there are so many... Things you have to spend money on in order to own your car. You have to fix it. You have to finance it. You have to insure