Why low-cost automobiles are disappearing from sellers’ showrooms

The new car category, which cost less than $ 20,000, has shrunk in recent years, and it could keep younger car buyers off the market and push them further towards ridesharing and other modes of transportation.

Data from JD Power shows cheap car sales have fallen off a cliff in recent years, even though auto sales have been strong overall. In 2013, sales of cars less than $ 20,000 represented 20.1% of total annual new car sales. By 2020 it was 9.4%.

One reason for the decline is the steady thinning of the small car and small car segments, from which many vehicles under $ 20,000 came. These have been replaced by small cars and compact sport utility vehicles, which tend to have slightly higher sticker prices starting at or just over $ 20,000.

Of course, with auto sales at or near record highs in recent years, there has been little pressure to sell less profitable vehicles, as is the case with subcompacts and small cars.

But cheaper cars are valuable in attracting young buyers to a brand and building lifelong loyalty. Some auto industry analysts say that by selling more expensive vehicles, automakers run the risk of leaving money on the table in the future.