The Era of the $20,000 New Car Is Over

This is the first year no automaker is selling a new car for under $20,000 in the United States. The dream of buying a brand-new car in the United States for under $20,000 is officially dead. In recent years, automakers have steadily pulled the plug on entry-level models. The Kia Rio was discontinued in 2023. Mitsubishi’s Mirage ceased production in 2024. The last holdout was Nissan’s Versa, which once started at $17,390. But in December, Nissan announced it would end production of the car for the U.S. market. Now, in 2026, there are no new mainstream car models available in the U.S. below the $20,000 threshold, according to Kelley Blue Book. Meanwhile, this shift comes as car prices remain high. The average new car buyer paid $49,191 in January, down 2.2% from December’s record $50,326, but still near historic highs. There are plenty of reasons prices have climbed this decade, like pandemic supply-chain disruptions, rising material and labor costs, and tariffs. But the bigger reality is that automakers are prioritizing more profitable models that people who can actually afford to buy new cars—and that’s not a budget compact car. In fact, compact SUVs are the best-selling vehicles in America, with the average one selling for $36,414 in January. “Consumers are still finding plenty of options below the industry average, especially in core segments like best-selling compact SUVs,” said Cox Automotive Executive Analyst Erin Keating in a Kelley Blue Book blog post. “But the disappearance of true entry-level vehicles continues to lift the floor higher. At the same time, strong sales of full-size pickups and large, luxury SUVs keep pulling the averages up, proving that demand for high-priced models remains incredibly resilient.” At the same time, the typical new-car buyer is getting wealthier. The New York Times reported last month, citing data from Cox Automotive, that families with household incomes of $150,000 or more now account for 43% of new-car purchases. That’s up from about one-third of sales in 2019. Not long ago, cars below $20,000 were the entry point for new-car ownership for first-time buyers and working-class families. As recently as the late 2010s, multiple models competed at that price point. Today, that entry point has effectively disappeared. Patrick Manzi, chief economist at the National Automobile Dealers Association, recently told The Washington Post that under $30,000 is now the “new threshold for affordability.” Automakers are responding to this new landscape and are rethinking their lineups to focus on higher-margin vehicles at more affordable price points. Some vehicles that hit this new sweet spot include the Chevrolet Trax crossover, which starts at $21,700, and the Ford Maverick pickup, which starts at $28,145.