Luxury car sales are tanking as drivers look for cheaper options

After years of buying expensive vehicles and looking for luxury, more and more consumers are going all-in on cheaper — but reliable — cars that just get the job done well.

Over the past nine months, sales of vehicles priced at more than $100,000 have fallen by almost 46% compared to a year earlier, according to Boston-based CarGurus, an automotive research and shopping company. Sales of cars in the slightly cheaper $80,000 to $90,000 and $90,000 to $100,000 price ranges have grown only slightly, by 1.3% and 4.2%, respectively.

Now, compare that to the massive surge in purchases of vehicles between $20,000 and $30,000, which has grown by almost 44%. All but one vehicle price range — $0 to $20,000 — below $60,000 increased by double-digit figures.

In the used vehicle market, sales of vehicles between $15,000 and $20,000 grew by 62.6% compared to a year earlier. Sales of used vehicles priced above $30,000 fell dramatically over the past nine months, with a peak decrease of 30.5% for vehicles in the $40,000 to $50,000 range. On the other hand, purchases of used models marked at over $100,000 fell by just 1.4%.

“As we near the end of 2024, it’s clear that consumers are speaking loudly with their wallets,” Kevin Roberts, CarGurus (CARG)’ director of economic and market intelligence, said in a statement. “After years of post-pandemic revenge spending, consumers are becoming more prudent as they face economic uncertainty, still-high interest rates, and vehicle prices that remain elevated,” Roberts added.

Although the U.S. economy is fairly strong, Americans’ perceptions and priorities have changed, leaving many still uncertain, especially in an election year. On the automotive side, CarGurus notes that the impact of the Federal Reserve’s rate cuts won’t provide that much relief to consumers, since vehicle prices remain high. The average vehicle went for $47,870 in August, according to Kelly Blue Book. While the strongest gains were in the cheaper vehicle segments, sales of new vehicles priced between $30,000 and $40,000 and $40,000 and $50,000 have increased by 33% and 20%, respectively.

That’s partially because it’s tough to find really cheap vehicles. But the few models priced below $20,000 that are still sold by automakers, like the Mitsubishi Mirage or Nissan Versa, are soaring in 2024, Motor1 reported.

Vehicle affordability in the U.S. is “very stretched” Morgan Stanley (MS) analyst Adam Jonas wrote in a note to clients last month, citing average monthly vehicle payments that reach $700. According to MarketWatch, car payments should not exceed $675 per month unless an individual is taking home $6,000 monthly after taxes.