By Nathan Gomes
Feb 12 (Reuters) – For American buyers, affordable cars have not been this hot since the Gulf War sent gas prices climbing and Japanese automakers took market share by offering a simple proposition: “fill it, forget about it”.
Steep sticker prices on new cars are pushing Americans to opt out of premium trims for basic models, lifting sales of entry-level variants and prompting some automakers to adjust production.
Pickup trucks and crossovers have cemented their place as top-sellers despite their hefty price tags. But average transaction prices have hovered around $50,000 for nearly a year, according to Cox Automotive, putting many fully loaded models out of reach.
The strain extends beyond the showroom. Widening wealth gap in the U.S. and a sharp rise in costs for housing, insurance and healthcare are squeezing lower-income households, with President Donald Trump’s tariffs adding more pressure.
“If you want to keep a car for a decade, shouldn’t you get the bare minimum of options that you will use? No need to get the most powerful engine if the plan is just to commute to work,” said Sam Fiorani, vice president of research firm at AutoForecast Solutions.
For automakers, the shift to entry-level trims is not necessarily bad, since they are cheaper and faster to build.
While margins per vehicle may be lower than premium models, higher volumes can help shore up profitability at a time when consumers are tightening their spending.
Automakers say the impact is showing in sales. Ford reported lower overall U.S. sales in January, but said deliveries of the basic trim of its compact Maverick pickup rose 33.5%.
Honda flagged a similar shift to focus on entry-level models in January.
David Whiston, auto analyst at Morningstar, said affordability was still a key concern for automakers, pushing companies like Honda and GM to focus more on lower-cost offerings.
At Toyota, demand for affordable mainstay models like the Corolla, Camry were considerably higher in January, while sales of similar models at its premium sister brand Lexus fell.
Stellantis told Reuters it has cut prices over the past two years to improve affordability, pointing to lower starting prices on Jeep SUVs, sub-$50,000 Ram pickups and some entry-level Dodge and Chrysler models.
Across several top-sellers, the gap between the lowest and highest trims now averages about $5,000, according to a Reuters calculation based on data provided by marketplace and automotive data provider CarEdge.
“I always buy the most base interior,” said Chris Smith, 30, from Colorado who owns a 2020 Toyota Tacoma SR5, citing reliability and lower ownership costs. “Why pay extra for less reliability?”
At the same time, most basic spec models now come with just enough onboard tech for most consumers, such as an advanced infotainment system and core driver aid features.
“There was a time when lower-trim vehicles targeted fleets like police or taxi buyers, or for salespeople… Today, even base models are relatively well-equipped. It’s difficult to find the items that typically defined base models such as a manual transmission, roll-up windows, and vinyl seats,” Fiorani said.
(Reporting by Nathan Gomes in Bengaluru; Editing by Arpan Varghese)
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