I purchased a new Corolla LE in 2017 to donate to my disabled daughter’s group home. My final out-the-door price was $15,308 (including registration, etc. but no sales tax in Oregon). The MSRP of a 2017 Corolla LE was $19,820, but they (and most small cars) were not selling well at the time so I was able to negotiate a pretty good deal.
Now I’ve just purchased another one, for a second car there, which will allow them more flexibility with their activities. Same basic Corolla LE. This time my check was for $23,976, a 57% increase. The CPI increase over the same time period (2017-2024) is 28%. That means the price of a new Corolla has grown by over twice the rate of inflation.
No wonder so many would-be new car buyers have sticker shock and are forced to buy used cars, not that they’re exactly cheap either. And no wonder profits for the manufacturers are so high, even on lower volumes. They’re largely done with the low end of the market; trucks and SUVs are where it’s at. Let them eat (used) cake.
According to Cox Automotive, the average price of a new car this year is $48,205, up 21% from five years ago, which is actually down a bit from the peak in 2022. But that obviously doesn’t tell the whole story, by a long shot, as in the case of these two Corollas which went up by 57%. Why the disparity? I don’t have stats to readily back me up, but undoubtedly the biggest single factor is manufacturers backing away from low end cars, killing many model lines. Toyota ditched both the Yaris and Yaris iA (Mazda 2) which were cheaper than the Corolla, thus making it now the bottom of the Toyota lineup. And clearly Toyota is not making enough Corollas to meet the demand, as my buying experience showed. I felt like I was back in the mid-’80s or so, when folks would give a deposit to the Toyota or Honda dealer and await a call weeks (or months later) telling them to hustle down right away with their check to buy it off the truck.
Not only did my local Toyota dealer not have a single Corolla LE in stock (very unlike back in 2017), but they wouldn’t give me an out-the-door price for the next one coming in. The price they did give me included the usual little extras to pad the bottom line, and even then I wasn’t sure it would be the final selling price. Very unlike in 2017, when they accepted my low-ball offer and were quite gracious about it.
I found more transparent pricing at a smaller family-owned dealer 45 miles away, and they sent this to me via text. This was Friday afternoon. Since I had to come there with a person from the non-profit company that runs the group home, who would be the actual titled owners, I asked if I could make a deposit to hold it until Monday. “Yes, but only in person”. Really? You won’t take a credit card number to hold it for two days? “No; only in person”. I was steamed.
The person from the group home operator said he could swap days off and come Sunday. I called Saturday afternoon to see if it was still available. “No; it’s been sold. We expect another one late next week”. Then Sunday night I get a message that that deal fell through, it still is available. Ok. So off we went on Monday, but not before checking again. Is this anyway to treat a customer? Well, yes, especially if you’re a cash buyer, since dealers hate that more than anything, as they make their biggest profits on F&I, Financing, Insurance and all sorts of ridiculous extended warranties and “Paint protection” and other useless crap. The total of all these items offered was over $11k; with the final price being a bit over $35k. No thank you!
Having surmounted the hurdle of actually being able to buy a Corolla, the rest of the dealer experience was actually very pleasant. Our salesman was a very young guy, smart, great people manners, drives a Miata, and we talked about vintage Datsun roadsters. And the Sales Manager and Business Manager were all very pleasant and efficient. I was out in about an hour.
Here’s stats from KBB for average prices of compact sedans, 2018-2024. But note: “Consumer incentives are excluded”. That’s the problem with these stats; they don’t reflect the actual sales prices, which were of course typically significantly lower before the pandemic. No more. There’s fewer low end models, inventory is tight, and they’re selling for a lot more out the door than they once did.
By the way, there are still a handful of new cars priced below the Corolla, although the number is shrinking. But when it comes to a safe buy with long-term value, low depreciation and expected reliability, it’s something of the gold standard. According to this list by KBB, there’s only two priced below $20k; the Mitsubishi Mirage and the Nissan Versa. But that list is already out of date; the Mirage has been cancelled and the Versa will be after 2025. It’s the end of the $20,000 or less car, in the US, that is.
Meanwhile, in Europe there’s scads of sub-$20k cars, like this Dacia Sandero, starting at €11,800 ($12,889), which includes the 19% VAT (tax) in Germany. Minus the VAT, that would be $10,440, or just about one half of the cheapest cars in the US, if you can find one. The Corolla is probably a bit nicer, but for ferrying folks a few miles around town, the Sandero or such would certainly do.
In Japan I’d be able to buy this roomy Honda N-Box van for under $12,000. Make that two of them; one for the group home and one for me.
In case you’ve been living under a stone, the US car market is by far the most profitable one. Americans have been happy to slurp up trucks and SUVs costing $50k and commonly significantly more than that. Combine that with drastically higher interest rates, and a significant portion of the market is feeling sticker shock and turning to used cars. Or Corollas, if they can find them.
While we were sitting in the dealer waiting on our paperwork, I couldn’t help but notice a sign in the windshield of this Tacoma in the showroom: $3,494 off MSRP. And their website shows all their Tacomas have at least $2500 discounts, to start with. The cheapest Tundra I see in their inventory is $51,946. The most expensive is $70,374. And that’s not an i-Force Max (hybrid).
Yes, these expensive cars and trucks are facing a bit of a headwind. Per Reuters:
Toyota is expected to report a 14% year-on-year operating profit decline in July-September, to 1.2 trillion yen ($7.9 billion), according to the average of nine analyst estimates in an LSEG poll. That would mark its first profit decrease since the same quarter in 2022. It has already said quarterly global sales shrank 4% from a year earlier and that output declined 7%.
Yes, manufacturers are having to discount trucks and other higher-priced cars these days, but the prices ran up so high, it’s still petty change. The profit margins on trucks are phenomenal; it’s what’s (sort of) bailing out Ford despite losing billions on EVs.
Here’s a chunk from a recent article at Bloomberg that says it all rather succinctly:
A recent survey by Edmunds found that almost half of American car shoppers expect to pay $35,000 or less for a new car. That makes sense because the average trade-in is six years old, which means those buyers last purchased a new car back when the average price was in the mid-30s.
When they return to the showroom and discover they’ll have to pay almost $50,000, they’re walking away. The Edmunds survey found that 73% of consumers are holding off on buying a new car because of the cost.
“The prices are just shocking people,” says Jessica Caldwell, head of insights for Edmunds. “They’re like, ‘How come buying the same car costs $300 more a month?’”
Monthly payments on new-car loans now average $767, up 17% from four years ago, according to Cox. And 1 in 6 new-car buyers this year will take on payments of more than $1,000 a month,
No wonder Americans are disgruntled. The years of overproduction and historic low interest rates are over. We were massively spoiled by their combined effect. In reality, the Corolla’s price has just returned to its historic norms, if we assume it sold for at or about its MSRP in previous decades. Adjusted for inflation, here’s what a 4-door sedan in one trim level above the lowest was priced at (the L was dropped a few years ago):
1981 – $19,775
1991 – $23,798
2001 – $22,697
2011 – $23,341
2021 – $20,375
2025 – $23,609
And some of us are old enough to remember sky high monthly payments in the 1980s. On our first new car, a 1985 Cherokee, the monthly payment was $484 ($15,000, 36 months, 10% APR). That’s…$1441/month in 2023 dollars. Gulp. No wonder most of us drove smaller and cheaper cars back then. There’s more than one kind of inflation, including the inflation of expectations.
“I purchased a new Corolla LE in 2107…”
Might want to fix that. Unless you are psychic? (heh heh)
I’m not psychic, so I guess I’d better fix it. Thanks.
I ordered my ’21 RAM Classic Tradesman and with the options I selected, it MSRP’s at $40,655. The dealer gave me 10% off at the time I ordered (our local dealers were sticker or sticker+, and only on what was on the lot), and I received an additional 8% off in incentives when I took delivery. I had already sold my ’15 RAM 2500 Tradesman for only $4K under what I paid new, so my delta to get into the new truck was about $9K.
I did a B&P in 2022 for comparison (as close as I could get it), and it came to $44,090. Just ran it again (2024), and it’s now $44,490. This, of course, is the last year of production for the Classic.
Pic was taken at delivery. I’ve done a lot of mods since.
I like the 2017 Corolla better because it has cleaner styling and lacks the silly GMesque black filler panel behind the rear door window.
I would love to see the Sandero come to the US, it would probably have to be badged as a Nissan though. It would be a good replacement for the Versa.
A very interesting case study, thanks for that Paul, and good on you for going above and beyond for your daughter’s group home.
I am saddened by the demise of the Honda Fit, as I know several young people who bought lightly used Fits, and are looking to a future devoid of lightly used Fits. However, when Honda can sell every CR-V they can make why bother with the Fit?
Even my own sister drove a Versa for years, it met her needs well and she bought a new CR-V last year.
I believe the pandemic shutdown and supplying interruptions helped the auto sectors a lot. They finally got a chance to resolve the years over supply and racing down to bottom selling tactics compounded with low interest financing.
My friend in Central New Jersey for years had been leasing the midsize Japanese sedans with 4-year lease ($2000 down and monthly payment around $260 including tax). His problem came when his lease expired during shutdown, the financial company took his car with no buying option. He struggled to find a vehicle for six months, eventually got a 9 series Volvo sedan with monthly lease payment over $700. He said Volvo dealer was the only one willing to negotiate and offer lease. In reality he doesn’t need such high end vehicle for his mobility.
European car market is different from us, its regular vehicles are much simpler and less of features we see in US vehicles. It also has cheap Chinese cars (internal combustion engines, hybrid or full EV) available.
The hope to see low price Chinese made cheap vehicles in US is gone now with high import tariffs. In Chinese view, the uncertainty on tariffs almost makes them to plan its business impossible. Even if they come, they will likely be EV because China auto industry never really mastered its own internal combustion engines technology. I was told its hybrid design is its own development, but the engines technology are foreign.
The Inflation Calc says that $15,308.00 = $19,690.88 in 2024.
are used cars the way to go?
In my opinion they are the way to go. As I like to say, “Let someone else pay the depreciation.”
My 2016 Honda Civic EX-T Coupe is the only car in my life that I bought wherein when I first drove it, the odometer had almost all zeros. 000007 to be exact.
In 2016 dollars, I spent about $23,500 out the door for the thing, and although that seemed high to me, it was brand new out of the box. in 2024 dollars, that amounts to about $30,872, which may or may not be where a middle-tier Civic is today. I haven’t really checked, although I may consider a hybrid if I get another one.
Meanwhile, in 2023, I bought my wife a slightly used CX-5 for about $28,000 at CARMAX with 29K on the clock (about $30K after taxes) at a time when used car prices were cooling off, but still way too high. This is a nice one, a 2019 Grand Touring, which while not at the top of the range, it’s very nicely appointed. The equivalent new CX-5 at the time was around $35 to $36K before taxes and other new car dealer BS (to be avoided).
“Every car has a story” as we like to say here, and I should just save it for my eventual COAL series, but even my Mustang (used) only had 1127 miles on it, and I got it for $20K (also CARMAX), when an equivalent new one at the time was $24.5K.
So yes, used (if used gently) is the way to go.
That’s all i could muster and “boy”, did I ever get a “used car”. lol ((Older than the one I had to replace))
I did get “my, coveted convert” though.
As a ‘European’ I have just gone down the Dacia route, it’s a very worthy little car. It’s not considered as a Corolla competitor, as they are hybrid only over here and quite premium. The Sandero obviously has some cheap cabin plastics, but is modern, performs well and is roomier than the smallest Kia and Hyundai models we get. However it is not as cheap as it was, simply because of all of the mandated safety kit ADAS that they all need to carry. Many of the big players in Europe have left the small / cheap market, and so parallel to the US. Interestingly though, the Dacia is Europes best selling car, so there is demand.
We hired a Sandero for a road trip from Cornwall to Scotland last month. The interior and NVH are what you would expect from a budget car but it was economical, comfortable and handled fine. These and the larger Duster are a common sight locally, the county Peugeot dealership was ahead of the game with diversifying into Dacia and Kia which is probably why they are still going, Peugeots are getting less and less common as time goes on.
Very interesting from a number of respects. My wife and I are among that 73% of consumers holding off on buying a new car because of the cost, and we often bemoan the lack of lower-end stock.
Your analysis that prices are returning to historic norms is interesting because in the last CC article I wrote (a few weeks ago I posted an article about a stripped-down ’89 Sentra), I calculated that that car’s $9,000 price as new to be about $23,500 in current dollars. Honestly, I expected the modern equivalent to be much less.
For what it’s worth, I’ve bought my last two new cars (both minivans) for cash, and once I settled on the type of vehicle, I emailed about a dozen dealers saying that I was looking for a complete out-the-door price quote on a certain car. I was specific on the type of car and certain equipment, but flexible on things like color. In both cases, out of the dozen or so dealerships that I emailed, about 3 or so offered very good prices. I found it a quick way to get new car price quotes, and one of the advantages of buying with cash is that the transaction itself is easier, so it was doable over a handful of emails and phone calls.
I applaud the contacting of a dozen dealers. When I bought my 1986 Mazda 626 the first place I casually stopped at had a dealer markup, so common then, on the car. Now alerted I went to the first dealer closest to me prepared. Knew what I wanted to pay, wasn’t paying any markup, and showed him my map of every Mazda dealer between Oakland and out past Sacramento that I was prepared to go to. I got my price right there at $9K out the door.
I think part of this is the manufacturers are responding to the simple fact that cars are more reliable and last a lot longer in the past, so a used car is a much more viable option than it was in say, 1981. But why that would be the case in the U.S.A. and not Europe, is a different question. I wonder if this is in part due to the regulatory environment. I don’t know about Europe, but in Japan used cars are quite a bit more of a pain to own than in the U.S.A. because of the much stricter periodic inspection requirements – partly this was done on purpose as I understand it, to stimulate the automobile industry – so a lot of used cars from Japan make their way to other markets in Asia, just as many used cars from California make their way to Latin America.
So you get a bit of the same problem that the independents faced in the 1950’s – why would someone with the money buy a Hudson Jet when they could spend a teeny bit more and get a nice Chevrolet, or a teeny bit less and get a nice used Buick.
On all my trips to the Philippines between 1990-2000 almost every taxi I used in Manila was a well used Corolla. The massive trucks they had plying the highways, from the port, looked to be well worn Japanese trucks. I also know that Filipino owners of vehicles, in the Philippines, take very good care of their cars. Seeing them dusted during the day not unusual. Clearly all these vehicles were imported used from Japan.
If I were to buy a new small car it’d be a Corolla for sure. You can’t go wrong with best in class dependabiltym longevity, and re-sale vaIue.. it’s th elogical choice. Wish we could get some of those inexpensive Euro cars, it’d fill a market need for many,
That said since our only new car that we bought way back in 1974 (SAAB 99) we’ve always bought cars 3-5 yrs old with 40-60k miles, because to us it makes no sense to pay more than is needed for dependable transportation that is also a depreciating asset. One can (or at least could) get 75-80% of the life by expending only 50% of the cost by selecting the right vehicle at the right price. At least that’s been our experience. However for institutional use a new vehicle probably makes sense, and kudos in the extreme for doing that deed for a qroup home, a worthy cause for sure.
Paul, you are one of the good ones. Everyone here makes valid points relating to the market. Truly disheartening that given the situation.The dealer knew where the car was going, they could have opened their heart and voluntarily made a donation to cover part of the cost.
The lack of price transparency and obnoxious games were an issue with every SoCal Toyota dealership I encountered while helping a friend shop for a Corolla 15 years ago; they ended up buying a Fit instead. The actual prices were lower, of course, but none of the Toyota dealers or salepeople had an attitude that would make me want to give them my money — at least one of them glibly lied to my face about information I’d gotten from his dealership earlier, and turned beet red when he realized I had it on my phone.
An upper trim manual Sandero would suit me perfectly, but the market has no interest in buyers like me. People could lower their standards, but I doubt they will.
Kudos for the tremendous support of your daughter’s group home!
I bought my final new car last January; I usually keep my vehicles for 10-12 years and 250k miles, however I’m rounding the corner to retirement and figure my weekly mileage will be greatly reduced. I paid around $35k for my Maverick Lariat hybrid; I could have saved $10k by getting the XL but the Lariat has the amenities I wanted for the road ahead. I have a tough time putting my arms around cars costing $50-60k; I’m both 1) too cheap, and 2) too Catholic.
My niece picked up a base ’24 Corolla hybrid a few months ago and loves it. It was reasonably priced and will last a long, long time.
The Corolla Hybrid sedan costs ~$1500 more than the ICE version, and gets ~20 mpg better in the city (but only 5 mpg better on the highway).
I don’t know how long it would take to recoup the premium (especially with stable oil prices) but, all things considered, it seems like the hybrid would be worth the extra money in the long run.
If someone wants to eschew the whole plug-in thing of either a BEV or PHEV, the great fuel mileage of the Corolla Hybrid wouldn’t be a bad way to go.
Unless you plan to keep the car only for a short term (1-3 years), I definitely think the hybrid is the way to go. I’m expecting to save $600 a year with the 60% mpg improvement from my last car, a 2.5 Outback. With the Maverick, the hybrid and turbo motors are the same price. Different motors for different needs but the hybrid met mine.
Worst at Honda with their cheapest Hatchback being the Hr-v
more poorly designed than the gen before with the ‘magit-seat’ … A Civic HB manual commands a ridiculously high price. Cars are expensive in the US, those here in Canada are expensive too. Below the price for a Corolla ‘L’ yes an ‘L’ in Qc cash pdsf 26 451,50 $
TPS (5 %) fédéral Tax : 1 322,58 $
TVQ (9,975 %) provincial tax :2 638,54 $
Comptant ,Cash ; 30 412,61 $ ….all in canadian $
so it’s 21 831,75 U.S. $ for an ‘L’ Corolla, it’s 31 556,61 $ for an ‘LE’ = 22,647.58 $ usd U.S. equipment for the ‘LE’ is not quite the same as at in CDN.
I suspect the prices for Corollas here is much higher most new ones I see tend to be rentals but there are plenty of them around.
Car prices have gone insane. The car makers have used the turmoil surrounding the pandemic as an excuse to jack up prices. Very few “cheap” cars exist and in the coming model year we will see even fewer.
When I bought my Golf in 2018 I had a feeling that the end was near for good car deals. I paid C$28,000 for it and got 0% financing for 72 months. Those days are over.
Made me look at the two new cars I bought in this century to compare then and now. In 2004 my Focus ZTS cost $17,500 after Ford’s 2,500 rebate. Today that would be $29,200. Focus no longer made so no 2024 comparison.
My wife’s 2018 Mazda 3, almost a Focus equivalent, cost $18,000. This would be the bottom line of the three lines. That is $22,600 today. A equivalent 2024 is about $26,000. or a 15% increase. Mazda vs. Toyota it seems.
Hmm, my 2004 turns out to have cost me more than the 2018 and the 2018 was down right cheap. The 2004, being a manual, meant the dealer had to look all over the Bay Area for a manual. Yet, there were a lot of Mazda 3 cars on the lot and one at the lower cost level gathering dust in the far back. My wife thinks she is going to give her 3 to our son when he turns 16 next year and she will get a CUV. She has no idea on monthly payments today. I think she will keep her 3 and I will get our son a used car of my choosing.
There are a handful of decent choices at the 20-21k mark, including the Kia Soul, the VW Jetta, and the Chevy Trax. The Kia Forte is a hair under 20k, as is the Hyundai Venue. You won’t get Toyota reliability out of any of them, though.
Paul, on that price quote from Albany Toyota, what is the distinction between government fees and taxes? Seems like those should be in the same category, although maybe the first is for registration and title fees and the latter is for excise or some other form of tax (acknowledging that Oregon does not have a sales tax).
I’ve been casually looking so far at 2025 Camry prices and noticed one dealer is charging nearly $1000 for so-called processing fees. I walked out the door in 1990 for a $125 fee that wasn’t disclosed clearly when I was negotiating for a new Mercury Sable. No way would I pay a grand now!
There is a small tax now “Vehicle Privilege tax” that is 0.5% plus the 4-year registration. That sounds about right for that $404.
Just to throw another data point into the mix, my uncle bought a new 2003 Corolla CE for around $15,000, around Memorial Day weekend, 2002. Now my uncle wasn’t good at negotiating, so perhaps someone more savvy could have gotten a bit more off. But then again, the ’03 had just come out, extra early, had some rave reviews for supposedly upping the compact car game, so maybe that was the going rate? Adjusting for inflation, that’s like $26,290 today!
I think the concept of the cheap new car is a bit of a myth. Remember those first Mavericks that came out in April of 1969, and started at $1995? That’s about $17K today. And that would have been for a car with no a/c, crank windows, maybe an AM radio if you were lucky. Manual transmission, no power assist for the brake/steering, and so on. Hell, I don’t think they even had a glovebox door! Didn’t they just have an open package shelf?
Now those Yugos that came out for 1986, starting at around $3,995, that would be around $12,000 in today’s dollars, so perhaps that would qualify as “cheap”. And a $4,995 Excel would be around $14,500.
So maybe part of the problem these days, is that even a “cheap” car is still pretty well-equipped, both with the features most buyers want, and features required by the feds. I’d imagine they all have power steering/brakes, a/c, power windows/locks, tilt wheel, and a decent sound system standard these days. And aren’t backup cameras required by law?
Thank you Paul for an excellent article that explains and describes what I have felt for some time about the new car market. Put in very simple personal terms, this is what I rhetorically face on a fairly regular basis in my household when I’m asked how come we can’t buy a new car for under $20,000 that gets better gas (and I’m specifically talking about gas and not electric) mileage than the 45mpg that the Sentra in Eric’s post discussed a few weeks ago (and that he referred to in the comments above). Factoring out an analysis of data (since most consumers really don’t analyze data), it seems that the passage of time should have given us all more for less. But that’s obviously not true for many many reasons.
Not that people don’t continue to hope for that…as problematic as that may be.
Anyhow, a good presentation of facts.
And I’ll add one more kudo to the chorus of those applauding your donation to the group home. Truly excellent.
Personally, and in the UK market, I’d recommend manufacturer CPA offers for a mainstream car. I got 2 Focuses and a Fiesta, each with less than 10,000 miles and one year (the Fiesta was 2,000 miles in 8 months) at around 65% of list. In each case, there were enough around to get the spec I’d have chosen anyway, so I was happy to let someone else pay the depreciation.
In the UK, a popular way to “avoid” the high list price to take personal contract plan (PCP, leasing etc) where effectively you’re only covering the depreciation over a set period and mileage. There’s a deposit with frequently punitive penalty charges for higher mileage, scratches etc. But, a £40,000 BMW can appear at a similar price (= monthly fee) to a £30,000 Citroen or Vauxhall.
But after 3 years you’re looking for another or facing a fixed buy out payment. Of course, if you leased at the right time, that fixed payment might be less than market value, and that helped a colleague go from a 2019 Focus to a 2022 A Class saloon.
Great article Paul – and kudos for your assistance to the group home.
It also got me thinking how this compares to here in Japan.
Toyota’s Japan website has the base price for a new Corolla G non-hybrid (one model up from the base X) as 2,254,800 yen. Using the 10 year dollar/yen average of 128 that works out to $17,615.
And here Toyota has quite a few models priced lower than that; a base stripper 1.0 liter Yaris goes for $11,726 and a base Roomy for $12,161. Since you mentioned the N-Box, a topline Pixis kei van is $13,148.
Obviously this could all change based on the dollar/yen relationship but it confirms my sense that prices here (even in yen) haven’t grown that much as compared to the US.
Car prices today are reminiscent of the late 1970s and early 1980s–rising sharply.
A base Ford Fairmont was $3,663 in 1978, when it debuted. By 1981, it was knocking on $6k.
In 1976-77, small cars like Chevettes, Pintos, Datsun B-210s, Corollas, Civic, Fiats, had base prices in the low $3s. By 1980, there were few if any new cars with MSRPs under $4.
At least cars are much better now. We take it for granted that you sit, start it (with or without key), and it runs flawlessly, in any weather,