What Happened to the Affordable Car?

New vehicle prices have doubled over the last 25 years, reaching an average of $50,000 and forcing consumers to hold onto their cars for longer—now averaging 13 years on the road. Automotive manufacturers have shifted their focus away from affordable sedans toward more profitable, larger SUVs and trucks, which offer higher margins. This trend, compounded by rising interest rates, pandemic-era supply chain disruptions, and the introduction of subscription-based features, has effectively turned new car ownership into a luxury purchase. While some manufacturers are attempting to reintroduce budget-friendly models, the industry remains divided by a K-shaped economy where affluent buyers continue to purchase high-end vehicles while lower-income households are increasingly priced out of the new car market. Startups like Slate Auto are attempting to address this gap with bare-bones, affordable electric vehicles, though their long-term market viability remains uncertain.