The Hustle Daily Show Why are cheap cars so expensive now?
Jul 10, 2025
Car prices are skyrocketing, especially for entry-level models from brands like Kia and Hyundai, while luxury vehicles hold their ground. The share of affordable cars under $25,000 has plummeted from 25% to just 4.8% of new sales. This shift is driven by automakers prioritizing profit margins and consumer demand for higher trims. Meanwhile, Nvidia's stock soars to $4 trillion and Starbucks prepares hefty bonuses to curb costs. The landscape of the automotive market is changing, leaving affordability behind.
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Budget Car Demand Shows Signs
- There is some recent uptick in budget-oriented car buying, like Nissan Sentra sales rising 40% year-over-year.
- However, automakers prefer selling pricier vehicles if the market is large enough for them.
Consumers Drive Pricey Car Demand
- Consumers share blame by choosing higher trim and pricier cars despite limited cheap car options.
- Automakers meet demand for premium models while cheap car options shrink.
Dealer Model Shapes Car Prices
- The dealer model in the U.S. encourages stocking and selling higher trim, more expensive vehicles.
- Consumers end up buying pricier cars as dealers limit cheaper inventory.