Last Car under $20k

11/01/2023
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    Salesman Matthew Boston walks past a new Mitsubishi Mirage for sale in El Cajon, California. (AP/Gregory Bull)
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    Three versions of the Mitsubishi Mirage are for sale at El Cajon Mitsubishi in El Cajon, California. (AP/Gregory Bull)
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    Ford Broncos line the front of Gus Machado’s Ford dealership in Hialeah, Florida. Automakers are focusing on selling larger, more profitable vehicles. (AP/Marta Lavandier)
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    A man browses a used car lot in Pittsburgh, Pennsylvania. The prices of used cars have risen too. (AP/Gene J. Puskar)
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    Assembly line worker Alfredo Gutierrez attaches an LG battery to a 2023 Chevrolet Bolt EV at the General Motors Orion Assembly in Lake Orion, Michigan. The cost of labor and parts play a role in rising prices. (AP/Carlos Osorio)
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Five years ago, U.S. car shoppers could choose among several new vehicles priced under $20,000. Now, there’s only one: the Mitsubishi Mirage. But as Americans opt for bigger cars, even the Mirage may vanish.

U.S. car prices are headed up. The average price of a used car is $29,000. For a new vehicle, buyers spend over $48,000 on average. Many new car options reach over $100k!

A price of $20,000 used to be the unofficial threshold of affordability for a new car. Today, it’s no longer practical for almost any car—new or used.

Enter the Mirage. A new Mirage costs around $19,205—about the same as a four-year-old Chevrolet Cruze or Mazda 3.

“It’s not going to win any drag races,” says car salesman Richard Herod III of the wimpy three-cylinder engine. “It’s not going to make you more popular at school.” Still, he calls Mirage “the last honest affordable car in America.”

Low profit margins for small cars and consumers’ fondness for SUVs and trucks made automakers change directions. Detroit’s Big Three automakers—General Motors, Stellantis, and Ford—began abandoning smaller cars about five years ago. Toyota and Honda halted U.S. sales of subcompacts too. Without small cars in the mix, average new vehicle costs naturally rise.

Despite its low price, Mirage sales have been sluggish. Economic analysts say Mitsubishi will stop selling the car by mid-decade.

Michelle Krebs, an analyst at Cox Automotive, thinks sales of the Mirage would be stronger if more customers knew about it. “There aren’t that many Mitsubishi dealers, and they don’t have a very loud voice in the advertising world,” she says.

Mitsubishi can afford to sell the Mirage for less because it’s a long-established model. Experts say the company paid off the development cost long ago.

Low-wage labor is another factor in Mirage’s low price. Workers in Thailand—who manufacture Mirage—make only about $16 per day. That’s far less than workers in the United States or Mexico.

Krebs expects new-auto prices to drop slightly as production ramps up following parts shortages. That could force automakers to offer discounts as supply catches up with demand.

But, she says, don’t expect the return of the $20,000 new car.

Why? Cost of living expenses: food, housing, transportation, and more—are always rising. These costs coupled with supply and demand drive prices up and down.

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