Cheaper cars are moving off dealer lots considerably faster than at the start of 2026, but affordable models are hard to find, new industry data show. Vehicles priced between $20,000 and $29,999 sold about 20% faster by the third quarter than in the first quarter, the biggest acceleration of any price segment, according to Edmunds.
Sales in some key segments priced under $40,000 have fallen, particularly compact cars, down roughly 4% since the beginning of 2026, and compact SUVs, down nearly 8%, according to Cox Automotive. The average listing price for a new vehicle in September was $49,726, according to Cox Automotive. Vehicles priced from $30,000 to $39,999 sold about 18% faster from the first to the third quarter, and the $40,000 to $49,999 tier sold nearly 12% faster, according to Edmunds. The lower-priced tiers took fewer than 60 days to sell, while every segment above $50,000 took more than 60 days.
Analysts say one possible reason for the contrast is that there might not be enough lower-priced vehicles on dealer lots. “I think there are some supply things going on at that end of the market,” said Mark Strand, deputy chief economist at Cox Automotive. “We have to kind of grade the market on a curve until we see what's going on with fourth-quarter data.”
The compact SUV segment has been hit by the absence of two popular models: the Toyota RAV4, which has been in short supply as the automaker shifts production to its Kentucky factory and moves the lineup to hybrid powertrains, and the Ford Escape, which Ford discontinued to make way for an upcoming midsize electric pickup. Compact cars face structural inventory challenges, according to Sam Fiorani, vice president of global forecasting at AutoForecast Solutions. “We've seen the disappearance of affordable, compact new vehicles over the last decade,” he said. No American manufacturer currently sells a compact passenger sedan; the smallest American passenger cars are the Ford Mustang, Chevrolet Corvette and Tesla Model 3, with starting prices of $33,490, $71,300 and $34,990 respectively, while the Honda Civic, Toyota Corolla and Volkswagen Jetta all start below $25,000.
Fiorani said compact buyers are price-sensitive, and rising fuel prices eat into their car payments, pushing some into the used market. Wholesale used-car prices for compact cars have risen more than nearly any other segment, according to Cox Automotive. Financing data also point to strain: roughly one in four buyers financing purchases are taking 84-month loans, a record, and nearly three in 10 trade-ins toward new-vehicle purchases carried negative equity in the third quarter. Incentives average about 6.6% of the average transaction price as of October, according to Cox Automotive, and leasing rates are down.
Edmunds' director of insights, Ivan Drury, said trade-in data suggests many buyers of the fast-selling cheaper vehicles are first-time buyers or are purchasing supplemental vehicles. The subcompact SUV segment, which attracts first-time buyers, has seen sales rise in 2026, though Fiorani said it remains a small share of the market. "It's not the mainstream vehicle that Americans want," he said. "It is the vehicle that entry-level buyers need to get to work, to get to school."
Drury said repeat buyers are reluctant to step down into smaller vehicles after becoming used to features such as 360 cameras, ventilated seats and heated steering wheels. Fiorani said people trying to buy smaller vehicles are trying to move into used vehicles or maintain their current vehicles as long as they can. “Automakers should be prepared for a softening in the marketplace,” he said.
The front page in your inbox each weekday morning: the lead, the picks, and why each one earned its place.
Decrease in days to sell new cars by price tier, first to third quarter
%
Approximate: source says about 18% and nearly 12%. Source: Edmunds
§
Analysis
Why This Matters
The affordability squeeze is visible in record 84-month loans and in nearly one in three trade-ins carrying negative equity, signaling financial strain among car buyers.
With few affordable new vehicles on dealer lots, more entry-level buyers may be pushed into the used market or hold onto their current cars, reshaping demand across the industry.
Automakers' retreat from compact cars leaves a growing gap between what buyers can afford and what manufacturers produce.
Background
US automakers have long favored trucks, SUVs and crossovers, which earn higher margins than small cars, and have largely withdrawn from the compact sedan segment. That has made affordable new vehicles scarce at a time when high prices and borrowing costs are straining buyers' budgets.
Key Perspectives
Sam Fiorani, AutoForecast Solutions: Says automakers have "abandoned the marketplace" for affordable compacts, that compact buyers are price-sensitive, and that automakers should be prepared for a softening in the marketplace.
Mark Strand, Cox Automotive: Says supply issues at the lower end of the market are behind the faster selling of cheaper cars, and the market should be graded "on a curve" until fourth-quarter data.
Ivan Drury, Edmunds: Says the faster-selling cheaper vehicles are often going to first-time or supplemental buyers, and that repeat buyers are reluctant to trade down from vehicles with comfort and convenience features.
What to Watch
Whether fourth-quarter sales data confirm that inventory shortages, rather than weak demand, are the main constraint on affordable car sales.
Whether any automakers respond to the shortage with new or reintroduced compact models, or adjust production plans.
Used-car prices for compacts, which have risen more than nearly any other segment and could keep pushing buyers out of the new-car market.
12 claims in this story checked against 1 source: 11 supported.
Show each claim
SupportedCheaper cars are selling significantly faster this year, according to data.US Top News and Analysis: “Cheaper cars are selling considerably faster than at the beginning of the year.”
SupportedAnalysts cite a possible shortage of lower-priced cars on dealer lots as one reason cheaper cars are selling faster.US Top News and Analysis: “One is that there might not be enough lower-priced vehicles on dealer lots in the first place.”
Partly supportedCars priced $20,000 to $29,999 sold about 20% faster in the third quarter than in the first quarter.US Top News and Analysis: “From the first quarter to the third, the number of days it took a dealer to sell a vehicle priced between $20,000 and $29,999 dropped 20%”
SupportedAffordable models are hard to find.US Top News and Analysis: “Cheaper vehicles may be selling faster, but they're still hard to find.”
SupportedSales of compact cars were down roughly 4% and compact SUVs nearly 8% since the beginning of 2026.US Top News and Analysis: “compact cars, which are down roughly 4% since the beginning of 2026, and compact SUVs, down nearly 8% in the same period”
SupportedMark Strand said, “I think there are some supply things going on at that end of the market,” and that the market should be graded on a curve until fourth-quarter data are available.US Top News and Analysis: “"I think there are some supply things going on at that end of the market," said Cox Automotive Deputy Chief Economist Mark Strand. "We have to kind of grade the market on a curve until we see what's going on with fourth-quarter data."”
SupportedThe Toyota RAV4 has been in short supply as Toyota shifts production to its Kentucky factory and moves the lineup to hybrid powertrains.US Top News and Analysis: “The Toyota RAV4, which is the most popular SUV in the U.S., has been in short supply at many dealerships this year, as the automaker shifts production to its Kentucky factory, Strand said. The company also has shifted the entire lineup to a hybrid powertrain”
SupportedFord discontinued the Escape to make way for an upcoming midsize electric pickup.US Top News and Analysis: “The other missing SUV is the Ford Escape, which that automaker discontinued to make way for its upcoming midsize EV pickup truck.”
SupportedSam Fiorani said, “We've seen the disappearance of affordable, compact new vehicles over the last decade.”US Top News and Analysis: “"We've seen the disappearance of affordable, compact new vehicles over the last decade," he said.”
SupportedRoughly one in four buyers financing purchases are taking 84-month loans, a record.US Top News and Analysis: “Roughly one in four buyers financing their purchases are getting 84-month loans — a record.”
SupportedNearly three in 10 trade-ins toward new-vehicle purchases carried negative equity in the third quarter.US Top News and Analysis: “Nearly three in 10 trade-ins toward new-vehicle purchases carried negative equity in the third quarter”
SupportedEdmunds director of insights Ivan Drury said trade-in data suggests many buyers of the fast-selling cheaper vehicles are first-time buyers or buying supplemental vehicles.US Top News and Analysis: “Vehicle trade-in data suggests that many buyers who are snapping up those fast-selling cheaper vehicles are either first-time buyers or are purchasing supplemental vehicles, Edmunds' Drury said.”