I last bought a new car about 10 years ago. Back then, you could find smaller, entry-level cars, like the Honda Fit, for well under $20,000. Now I’m having a hard time finding a new vehicle equipped with what I want for less than $25,000 to $30,000. What happened? With everything else getting so expensive, might those cheap starter cars come back? Surely there would be demand for them. – Dave, Vancouver
Five years ago, you could buy a brand new Chevrolet, Nissan or Mitsubishi for less than $11,000, a Hyundai or Kia for less than $15,000 and a Toyota or Honda for less than $16,000.
Those days are over. Now, Mitsubishi is the only carmaker left with a model starting at less than $20,000.
So, who killed the entry-level car? Mostly, it was consumers favouring bigger, fancier SUVs, a car industry analyst said.
“We got here because people kept buying [SUVs and trucks] because there is some sort of preference for them. Nobody forced people to do that,” said Robert Karwel, a senior manager at J.D. Power’s Canadian office. “And once a carmaker’s unit volume [for entry-level cars] drops below a certain threshold, it’s not enough to keep the plant running – so they get rid of the car.”
About 85 per cent of vehicles sold in Canada are SUVs and trucks – and they’re typically pricier than cars, Karwel said.
According to AutoTrader, the average new vehicle price in 2023 was $67,817, up more than 19 per cent from the year before.
Since 2019, companies have axed relatively cheap starter cars, including the Chevrolet Spark, Fiat 500 (although it’s been reborn as a $40,000 starter EV), Ford Fiesta, Honda Fit, Hyundai Accent, Kia Rio, Nissan Micra and Toyota Yaris.
While automakers usually blame poor sales for the decision to stop selling a model, some carmakers have deliberately hastened the demise of their cheapest models by limiting the number they’re making, Karwel said.
“Some brands might artificially restrict car sales,” Karwel said. “But that’s really just kind of facing the inevitability that they’re probably going to stop making this car eventually.”
The Mitsubishi Mirage is still around, although the starting price has crept up from the manufacturer’s suggested retail price of $14,298 in 2023 to $16,998 for 2024 before taxes and $2,200 in freight and predelivery inspection fees. (Mitsubishi dropped the manual version last year).
The Nissan Versa is the second-cheapest car, at $20,298 before taxes, freight and PDI. There have been rumours that the Versa’s days are numbered but Nissan did not confirm.
Price creep?
The price of most carmakers’ cheapest cars has been climbing. Long gone are the days of bare-bones models with manual windows and no air conditioning.
Generally, carmakers say that’s because buyers want features like heated seats, Apple CarPlay, Android Auto, automated climate control and safety tech and carmakers are making them standard.
The starting price for a Honda Civic was $6,635 (manual two-door hatchback) in 1990, $14,300 (manual two-door hatchback) in 2000, $15,990 (manual four-door sedan) in 2010 and $18,500 (manual four-door sedan) in 2020.
In today’s dollars, that would range from $13,680 for the 1990 Civic to $21,642 for the 2020 Civic.
But for 2024, the starting price for the cheapest Civic – a four-door? sedan with an automatic continuously variable transmission, remote engine start, LED lights, automatic climate control and safety features including adaptive cruise control and lane-keeping assist – is $26,790 before taxes, freight and PDI.
Some carmakers, including Honda and Subaru, have dropped manual transmissions from their base models because they said few were selling.
But with increasing living costs all around, isn’t it likely there will be renewed demand for smaller starter cars – even if they won’t be quite as cheap as they used to be?
“There would be consumers that would be willing to buy them,” Karwel said. “The problem is there’s not enough of them to keep a plant open just to make that body style. So [some of those] consumers get forced into buying a subcompact or compact SUV.”
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