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According to Carscoops, as the average price of cars continues to rise and monthly loan payments balloon, many Americans are seemingly shifting away from their fondness for large vehicles towards more compact and affordable options.
Data reveals that the average price of a new car in the US has reached an all-time high of 47,000 USD. This has taken a toll on the sales of larger vehicles, with a 1.9% decline in large pickup trucks and a 2.3% dip in mid-size SUV sales, as per Edmunds.
On the flip side, small car sales have skyrocketed, witnessing a 23% growth in the last year, while the overall market has only managed single-digit growth. Edmunds further highlights a 16% surge in small car sales in November alone, with a concurrent 11.5% rise in the consumption of small SUVs in the US.
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Charles Chesbrough of Cox Automotive shared his insights with The Wall Street Journal, noting that American consumers require the functionality that cars offer but are increasingly gravitating towards smaller options.
However, the US market currently falls short in terms of providing a diverse range of choices in this segment. In the last year, there were just over 45 new vehicle models priced below 25,000 USD, and this number is expected to dwindle to 11 in 2025, mostly comprising small sedans and hatchbacks.
As Carscoops points out, gas price trends play a significant role in influencing car sales in the US. When gas is cheap, larger vehicles with higher fuel consumption tend to remain popular among buyers.
One such success story in 2024 was the Chevrolet Trax, with Motor Intelligence attributing an impressive 89% surge in its sales during November. However, not all car manufacturers have enjoyed similar triumphs.
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Carscoops highlights that many automakers have discontinued their budget-friendly models due to thin profit margins, leaving US dealerships with a limited ability to cater to the growing demand for affordable cars.
The website further predicts that while small, inexpensive cars seem to be gaining traction in the US, this trend might not last long. With President-elect Donald Trump’s proposed 25% import tax on goods from Mexico and Canada, two significant sources of affordable vehicles for the US market, car prices are expected to climb even higher.
Analysts estimate that this move could push the average price of a new car in the US up by an additional 3,000 USD, significantly impacting buyers with limited budgets.
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