Here’s why there are so few new cars for under $30,000

The ongoing affordability crisis in the U.S. automotive sector continues to escalate, with the average price for a new vehicle soaring. As of June, the average manufacturer's suggested retail price (MSRP) for a new car has reached $51,124, while the average transaction price stands at around $48,907, according to Kelley Blue Book. Despite these rising costs, car sales have surprisingly remained robust in the first half of 2025, with some months recording exceptionally high sales volumes. However, experts are predicting a tightening market as the year progresses, as highlighted in a recent report from Cars.com. One of the contributing factors for the earlier surge in sales was the uncertainty surrounding tariffs from President Trump’s trade war. In anticipation of tariffs on imports and parts, dealerships stocked up on inventory before the new regulations took effect in April. This preemptive move resulted in a spike in new car sales, driven by manufacturers providing incentives to clear out stock. Consequently, the average transaction price has been several thousand dollars less than the average MSRP. But as this inventory dwindles, prices are expected to climb and sales to decelerate. The impact of tariffs is becoming evident, with various segments of the market experiencing differing effects. Unfortunately, the lower end of the market is bearing the brunt of these changes. In fact, cars priced under $30,000 accounted for only 13.9 percent of all sales in the first half of this year, a stark decline from 38 percent in the same period of 2019 before the pandemic-induced price hikes. Cars.com also points out that a staggering 92 percent of vehicles in this price range are manufactured outside the United States, making them particularly vulnerable to the new tariffs. The Toyota Corolla and Honda Civic are the only notable exceptions being built domestically. Furthermore, June marked the end of an era, as it was the last month consumers could purchase a new car for less than $20,000, following Mitsubishi's decision to cease production of the Mirage and eliminate incentives for that model.