Economic Pressures Push U.S. Car Buyers Toward Smaller, Cheaper Models

Rising vehicle prices and affordability concerns lead to increased demand for compact cars, SUVs, and leasing options.

The average price of a new vehicle remains near $50,000, prompting buyers to shift toward compact SUVs, subcompact SUVs, and compact cars, which are significantly more affordable.
Compact and subcompact vehicles gained over 2% in market share in 2024, while larger SUVs and pickups lost market share due to their higher price points.
Leasing has surged by 19% this year, driven by lower monthly payments and incentives like the $7,500 EV tax credit applied to leases, while retail vehicle purchases have declined by 5%.
The supply of new vehicles priced under $30,000 has grown by 42% year-over-year, offering more affordable options for budget-conscious consumers.
Electric vehicle prices are stabilizing, with future cost reductions expected due to advancements in battery technology, though uncertainty looms over potential policy changes under the incoming administration.