Just five years ago, there were many small cars in the United States priced under $20,000. Today, there’s only one left, the Mitsubishi Mirage, and it’s struggling. The Mirage is now the only new car under $20,000, a once-affordable threshold that has lost its significance due to rising prices. Last month, the Mirage sold for an average of $19,205, which is less than half the average price of a new vehicle in the U.S., now standing at over $48,000, a 25% increase since before the pandemic.
Americans’ preference for SUVs and trucks over small cars has contributed to this shift. Karen Schaeppi, who recently bought a Mirage, could have afforded a more expensive car but wanted a small vehicle due to her height. She found that small cars were virtually nonexistent at dealerships.
The scarcity of small cars is partly due to major automakers like General Motors, Stellantis, Ford, Toyota, and Honda discontinuing their compact and subcompact car lines, opting for higher-margin SUVs and trucks. A pandemic-related chip shortage further disrupted auto production, driving up prices.
Moreover, there’s been a proliferation of luxury models priced above $100,000, contributing to the rise in average prices. Even most used cars now cost more than a new Mirage.
Some people can’t afford any new car and are forced to consider used vehicles. The used car market, however, has also seen inflated prices due to the scarcity of new small cars.
The Mirage’s affordability, along with its warranty and good fuel efficiency, make it an attractive option for budget-conscious buyers. Still, U.S. sales of the Mirage have been slow, and there are reports that Mitsubishi may discontinue it in a few years. However, let’s face it, most people don’t want to drive a Mitsubishi Mirage. In many reviews it’s dubbed the worst new vehicle around, and it’s just a shame that it’s the only vehicle left that you can buy new for “under” $20,000.
While small car sales have seen a recent uptick, it’s mainly due to fleet sales to rental car companies, not individual consumers. The Mirage’s low price is possible because it’s an older model, and production in Thailand benefits from lower labor costs.
Despite the Mirage’s potential for its ‘low price,’ Mitsubishi faces challenges in marketing and financing for buyers with lower credit scores. Other cars, like the Kia Rio, Nissan Versa, Hyundai Venue, and Nissan Sentra, are priced slightly above $20,000, offering alternatives to the disappearing sub-$20,000 new car market.
While overall auto prices may dip slightly as production increases, the days of a new car under $20,000 are unlikely to return, barring a significant market shift or intervention.