For those navigating the new car market in 2023 with a focus on budget, brands like Kia, Chevrolet, and Ford are emerging as leaders in affordability. According to Cars.com’s inaugural Affordability Report, these automakers are providing some of the Most Affordable New Cars available this year. Adding to the financial advantages, Chevrolet also stands out with strong trade-in values, making it an even more compelling option for cost-conscious buyers.
The Rise of the Cost-Conscious Car Buyer
Economic factors are heavily influencing consumer behavior in 2023, with a significant portion of Americans (46%) expressing concerns about their financial stability. Issues such as inflation, job security worries, and increasing interest rates are weighing on potential car buyers. Despite these concerns, Cars.com notes a considerable pent-up demand for new vehicles, stemming from inventory shortages that began in 2021 and are only now starting to ease. This combination has created a robust car market driven by consumers who are prioritizing value and affordability above all else.
Jane Ulitskaya, news editor at Cars.com, points out this shift in priorities: “The compounding effects of inventory shortages, economic uncertainty and industry challenges have elevated value to a primary consideration for car shoppers.” While electric vehicles and cutting-edge technologies capture headlines, affordability is undeniably the dominant factor guiding today’s car purchasing decisions.
Cars.com Affordability Report: Top Cars by Segment
The Affordability Report by Cars.com rigorously evaluated over 70 new vehicles currently on the market. The assessment considered model, trim, features, and fuel efficiency (or minimum range for EVs), comparing these against the median price within each vehicle category.
The following models were recognized as offering the best value in their respective segments for 2023:
| Cars.com’s Affordability Report Top Cars by Segment |
|---|
| Competitive Category |
| Small Car |
| Small SUV |
| Small Pickup Truck |
| EV/Plug-in Hybrid |
Many car shoppers might be surprised by the current pricing landscape. A Cars.com survey of active car shoppers revealed that over half are planning to buy a new vehicle, but a quarter expect to spend less than $20,000. This expectation may be challenging, considering the median new car price was more than double that figure at the close of 2022.
Ulitskaya further explains the market dynamics: “The increasing preference for larger and more expensive vehicles is pushing buyers to leverage long-term savings, adaptable financing solutions, and the trade-in market to bridge the gap between their ideal car and their budget.” This trend also sees potential new car buyers exploring the used car market, which in turn maintains strong demand for trade-in vehicles.
The Advantage of Trading In Your Current Vehicle
As Jerry Reynolds, host of the CarPro Show, often highlights, elevated used vehicle prices can be advantageous if you have a car to trade in. This can significantly offset the overall expense of purchasing a new vehicle.
Cars.com’s data shows that as used car prices surged amidst inventory constraints, trade-in values followed, reaching peak levels in mid-2022 before stabilizing. Key trade-in statistics from Cars.com include:
- Approximately 40% of individuals in the car market intend to trade in their current vehicle when purchasing a new one.
- Among those considering used cars, 76% are interested in models that are no more than 5 years old.
The Affordability Report also analyzed trade-in values for 2018 model-year used vehicles, identifying top models for same-model upgrades, predominantly electric vehicles. Notably, used EVs have become considerably more affordable compared to the previous year.
The top three 2018 models with the highest trade-in value as a percentage of their new purchase price are:
| Vehicles With Best Trade-in Value as Percent of New Purchase Price |
|---|
| Chevrolet Bolt EV |
| Honda HR-V |
| Toyota Prius Prime |
Saving Strategies and the Reality of Financing
Data from Cars.com indicates that a majority of car shoppers (two-thirds) are planning to save for a vehicle over a period of three months to a year. Most buyers aim to save between 10% and 25% of the car’s final price for a down payment, with nearly half planning to put down less than $5,000.
However, both new and used car buyers might encounter unexpected challenges with interest rates, even those with strong credit histories. The era of extremely low interest rates is generally over. While better credit scores typically secure more favorable rates, Cars.com reports that even buyers with excellent credit are now frequently facing double-digit interest rates on financing offers. For those with non-prime and subprime credit, rates can climb to between 20% and 30% with shorter repayment terms. Even individuals with exceptional super-prime credit ratings (800-plus) are seeing average interest rates as high as 8%.
The Impact of Fuel Prices on Overall Cost
Fuel prices remain a significant factor in the total cost of vehicle ownership. Although prices have decreased from the peaks of 2022, AAA reported a national average of $3.50 per gallon of gasoline as of January 30, 2023.
Cars.com emphasizes fuel costs as a crucial element in their affordability analysis. Beyond the top-rated EVs and plug-in hybrids, which had projected first-year fuel costs between $600 and $1,100, the Hyundai Elantra stands out as the most fuel-efficient gasoline-powered finalist, with an estimated first-year fuel expense of $1,350.
For a comprehensive understanding of the report and further details, you can access the full Cars.com 2023 Affordability Report here.
