Notification: Affordable Cars Priced Below $30,000 Potentially Disappearing Soon
In recent times, there has been a growing concern among car dealers and consumers alike regarding the country of assembly for new vehicles. According to a survey conducted by Cars Commerce since mid-February, there seems to be a mismatch in dealers' understanding of a car's country of assembly.
This misconception is particularly prevalent in the case of domestic brands, as some are not finally assembled in the United States. This misunderstanding can have significant implications, especially when it comes to tariff-related discussions.
The current market conditions are causing new cars to spend 20% longer on dealership lots before being sold compared to a year ago. After 30 days on a lot, a vehicle starts to cost money and should be discounted, according to Greene. However, with the inventory of sub-$30,000 vehicles accounting for only 14% of inventory, significantly less than the 38% share seen in 2019-21, dealers may find themselves struggling to offload these vehicles.
The Trump Administration's imposition of 25% tariffs on vehicle imports, including those from Mexico and Canada, has added to the woes of the market. This has made the sub-$30,000 vehicles, which account for a majority of the inventory, especially vulnerable to tariff-driven cost increases and potential production cutbacks. If a dealer sells a brand offering one of the sub-$30,000 cars, they should be concerned about being able to get those.
The badge on a car's hood may not indicate where the vehicle is built. In fact, out of the 23 vehicle models priced under $30,000, all but three are imported, primarily from Mexico. The most affordable vehicles come primarily from Mexico and Canada, which are under price pressure due to tariffs.
Interestingly, the report does not provide information about the country of final assembly for the sub-$30,000 vehicles. This lack of transparency could lead to further complications in the market.
However, there is some positive news on the horizon. In the first week of April 2025, Ford was preparing to launch a new mid-sized, four-door electric pickup truck built at its Louisville, Kentucky plant, targeting an affordable price around $30,000 within a few years. Tesla was also planning to start serial production of the Tesla Semi electric semi-truck by the end of 2025 in Nevada.
Despite these upcoming launches, dealers should still prepare for a potential shortage of affordable vehicles due to tariffs impacting new-car supply. To mitigate this, dealers should manage their inventory more tightly when market conditions are changing and should avoid taking risks on vehicles they are not sure they can sell.
