Tag Archives: Affordable cars

News

Tariffs Reshape U.S. Auto Market as Affordable Car Supply Shrinks

In 2016, Donald Trump promised to “Make America Great Again,” a mantra that carried into his economic policies—including his latest move to reimpose sweeping tariffs on foreign-made vehicles and auto parts. The policy, aimed at reshoring auto manufacturing and stimulating U.S. production, is now beginning to show its true impact on the American automotive landscape, particularly in the most price-sensitive segments of the market.

A new study by Cars.com, analyzing dealer inventories in the first half of 2025, reveals that the availability of new vehicles under $30,000—a critical price point for budget-conscious Americans—is already tightening. Although overall new-car inventory has grown by 5.6% year-over-year (YoY), the sub-$30K segment lagged behind at just 3.9%. That gap may seem small, but it points to deeper structural issues.

Imports Bear the Brunt

According to the report, 92% of vehicles priced under $30,000 are imports. Only two nameplates—the Honda Civic and Toyota Corolla—are primarily manufactured in the U.S., and even they have some variants built abroad. This makes the segment highly vulnerable to the new tariffs, which began in April.

To get ahead of the policy, many dealers bulked up their inventories early in the year, prompting a modest 3.9% YoY sales increase in March and April. That preemptive buying also led to an influx of used trade-ins, temporarily softening the used car market. Prices for used vehicles dipped in Q1 2025, but the relief was short-lived—Q2 saw used car prices rebound by 1.6% YoY.

Sticker Shock on the Horizon

Now, as pre-tariff inventory thins out, the study predicts a wave of price hikes. The average new-car price has crept up by a modest $97 so far this year, but that figure masks some sharp regional disparities. Vehicles imported from the U.K. have surged in price by over $10,000, while EU-built cars have climbed by nearly $2,500. Meanwhile, cars from China, Canada, South Korea, and even U.S.-built models have seen slight price drops—around $200 on average.

As we head into the second half of 2025, Cars.com warns that higher prices and reduced demand are likely to define the market. “The pace of sales and inventory movement will depend on the scope of tariffs,” the report notes, adding that manufacturers will likely recalibrate production to match a smaller, more price-sensitive buyer pool.

EV Momentum at Risk

The electric vehicle market is also entering uncertain territory. The study highlights that 53% of EV buyers cited federal tax incentives as a key motivation for purchase. With both the $7,500 credit for new EVs and the $4,000 credit for used EVs scheduled to expire after September, the affordability of EVs is under serious threat.

While new EV inventory has enjoyed 28 consecutive months of growth, that momentum may stall. Used EV prices appear to be bottoming out, which could either signal a buyer’s market or an approaching shake-up in consumer behavior.

Automakers Shift Strategy

In response to all of these pressures, automakers are beginning to adjust their model mix. Production is ramping up for both entry-level and high-end trims, while mid-tier models are seeing slight declines. The logic is straightforward: lower trims appeal to increasingly budget-conscious buyers, while premium trims offer better margins in a volatile environment.

This strategic reshuffle may soften the blow of tariff-related price increases, but it also signals a transformation in how manufacturers are thinking about their customers. The days of the “middle-of-the-road” car might be numbered as the market bifurcates into value and luxury.

Tariffs were intended to reinvigorate American manufacturing, but their ripple effects are already being felt across the entire auto ecosystem—from dealer lots to used car auctions and the EV segment. As the industry adapts to these new dynamics, consumers may have to adjust their expectations too—whether that means paying more for the same car or settling for less at the same price.

One thing is clear: the road ahead for the U.S. auto market in 2025 is anything but smooth.

Source: Cars.com

News

Are EU Green Rules Killing Affordable Cars?

Developing a new car for the European market has become a daunting task — not because of innovation demands, but due to the overwhelming pressure of regulatory compliance. As the European Union tightens its grip with ever-stricter rules on emissions, safety, and noise, automakers are warning that excessive bureaucracy is threatening not just vehicle affordability, but also the future of sustainable mobility.

John Elkann, Chairman of automotive giant Stellantis and also of Ferrari, revealed to Automotive News Europe that over a quarter of an engineer’s time at Stellantis is now spent solely on making vehicles compliant with EU rules. “If you look at our engineers, more than 25 percent just work on compliance, so no value is added,” Elkann stated, highlighting the mounting cost — both in labor and innovation.

The burden is only expected to increase. By 2030, cars in Europe will be required to emit an average of just 49.5 grams of CO₂ per kilometer — nearly half the target for 2025–2029. From 2035 onward, new vehicles emitting any harmful substances will be outright banned, marking a total phase-out of combustion engines.

While this legislation aims to steer Europe toward a greener future, it’s also pushing many vehicles — particularly smaller, more affordable ones — off the roads. Rising costs have forced automakers like the Volkswagen Group to discontinue compact city cars such as the VW up!, Skoda Citigo, and SEAT Mii. In 2019, over one million vehicles priced below €15,000 were sold in Europe. Today, that number has shrunk to a mere 100,000.

Elkann sees a solution in looking east — to Japan. He’s advocating for a European version of the Japanese kei car, a class of ultra-compact, lightweight vehicles that make up about 40% of Japan’s market. “There’s no reason why if Japan has a kei car… Europe should not have an E-Car,” he argued.

Former Renault CEO Luca de Meo echoed the sentiment, criticizing the current trend of oversized electric SUVs. “Driving around every day in an electric vehicle weighing 2.5 tons is clearly an environmental nonsense,” he noted earlier this year.

Despite the growing dominance of crossovers, some brands are succeeding with smaller offerings. Dacia, Renault’s no-frills budget brand, has carved out a 5.1% market share in the EU this year, thanks in large part to the lightweight and affordable Sandero. Even its SUVs remain relatively light, with the Bigster maxing out at just 1,400 kilograms.

The core dilemma is clear: in trying to build the greenest cars, regulators may be steering the market toward heavier, pricier models, inadvertently sidelining the very goal of reducing emissions. For many consumers, the choice will become either unaffordable electrics or keeping older, polluting vehicles longer — the opposite of what EU policy intends.

As calls grow for a more flexible, tiered approach to regulation — particularly one that fosters small, efficient urban vehicles — the question remains: will European lawmakers loosen the rulebook to make room for an “E-Car”? Or will red tape continue to strangle innovation and affordability in the name of progress?

If the future of European mobility is to be both green and accessible, something has to give.

Source: Automotive News Europe