For those in the market for a new car in 2023 without breaking the bank, brands like Kia, Chevrolet, and Ford are excellent starting points. According to Cars.com’s inaugural Affordability Report, these manufacturers lead the way in offering the Most Affordable New Cars this year. Furthermore, Chevrolet stands out by providing strong trade-in values, making your purchase even more budget-friendly.
The Rise of the Cost-Conscious Car Buyer
In today’s economic climate, affordability is paramount for car buyers. Cars.com’s research indicates that less than half of Americans (46%) feel confident about their financial situation. Concerns about inflation, job security, and increasing interest rates are weighing heavily on consumers’ minds. Despite these financial anxieties, the demand for new vehicles remains robust. This is partly due to pent-up demand from the inventory shortages that began in 2021 and are only now beginning to ease. This combination of factors has created a strong car-buying market driven by consumers who are acutely aware of costs.
Jane Ulitskaya, news editor at Cars.com, highlights this shift in consumer priorities: “The compounding effects of inventory shortages, economic uncertainty, and industry challenges have elevated ‘value’ to a top priority for vehicle shoppers. While electric vehicles and cutting-edge technologies capture headlines, affordability is the key trend influencing today’s car-buying decisions.”
Unveiling the Affordability Report’s Top Picks
The Cars.com Affordability Report rigorously evaluated over 70 currently available vehicles. The assessment considered various factors including model, trim level, features, fuel efficiency (or minimum range for EVs), and compared these against the median price in each vehicle category. This comprehensive analysis identified the vehicles offering the best value in today’s market.
Here are the standout models from Cars.com’s Affordability Report, representing the best value in their respective segments:
| Cars.com’s Affordability Report: Top Cars by Segment |
|---|
| Competitive Category |
| Small Car |
| Small SUV |
| Small Pickup Truck |
| EV/Plug-in Hybrid |
Car shoppers may experience sticker shock as vehicle prices have generally increased. A Cars.com survey of active car shoppers reveals that over half are planning to purchase a new vehicle. However, a significant portion, about 25%, expect to spend less than $20,000. This expectation might be challenging to meet, considering that the median price for a new car exceeded twice that amount at the close of 2022.
Ulitskaya further explains the strategies consumers are employing to navigate these higher prices: “The growing preference for larger and more expensive vehicles is leading shoppers to rely on long-term savings, flexible financing options, and the trade-in market to bridge the gap between their desired car and their budget. Many traditional new car buyers are now also considering the used car market, which in turn is maintaining strong demand for trade-in vehicles.”
The Advantage of Trading In Your Current Vehicle
As Jerry Reynolds, host of the CarPro Show, often points out, elevated used car prices are a boon for those looking to trade in their current vehicle. A valuable trade-in can significantly offset the cost of a new car purchase.
Cars.com’s data supports this, showing that as used car prices surged during the inventory shortage, trade-in values followed, reaching record peaks in mid-2022 before stabilizing. Key statistics from Cars.com regarding trade-ins include:
- Roughly 40% of individuals currently shopping for a car intend to trade in their existing vehicle when purchasing a new one.
- Among those considering used cars, a substantial 76% are interested in models that are no older than 5 years.
The Affordability Report also delved into trade-in values for used vehicles from the 2018 model year. Interestingly, the models with the best same-model upgrade values are predominantly electric vehicles. Used EVs are becoming increasingly affordable compared to their prices just a year ago.
Here are the top three 2018 models with the highest trade-in value as a percentage of their original new purchase price:
| Vehicles With Best Trade-in Value (as Percent of New Purchase Price) |
|---|
| Chevrolet Bolt EV |
| Honda HR-V |
| Toyota Prius Prime |
Saving Strategies and Interest Rate Realities
Cars.com’s data reveals that a majority of car shoppers (approximately two-thirds) plan to save for a vehicle for a period ranging from three months to a year. Most of these shoppers aim to save between 10% and 25% of the car’s final price before making a purchase. Furthermore, nearly half are planning to make a down payment of less than $5,000.
However, both new and used car buyers are likely to encounter higher interest rates than they might expect, even those with excellent credit scores. The era of ultra-low interest rates is over for everyone. While strong credit typically secures a better rate, Cars.com notes that even buyers with very good credit are now frequently facing financing offers with double-digit interest rates. Individuals with non-prime and subprime credit profiles are experiencing rates between 20% and 30% with shorter loan terms. Even those with exceptional super-prime credit ratings (800 and above) are seeing average interest rates around 8%.
The Ongoing Impact of Fuel Costs
Fuel prices remain a significant consideration for car buyers. While they have decreased from the peaks of 2022, AAA reported that the national average for a gallon of gasoline was still $3.50 as of January 30, 2023.
Cars.com emphasizes fuel costs as a crucial element in their vehicle analysis. Apart from the top-ranked EVs and plug-in hybrids, which boast remarkably low first-year fuel costs between $600 and $1,100, the most fuel-efficient gasoline-powered vehicle among the finalists is the Hyundai Elantra. The Elantra has an estimated first-year fuel expense of $1,350, highlighting the continued cost advantage of electric and hybrid vehicles in terms of fuel.
For a deeper dive into the report’s findings and methodology, you can access the full Cars.com Affordability Report here.
