’s Mark Phelan writes, new vehicles under $20,000 are an “endangered species” for a number of reasons—and automakers likely won’t rush to change that. Let’s get into why that’s the case.

A focus on high transaction prices is driving up costs

Automakers are focused on the more expensive side of the market. It’s one of the reasons why affordable sedans were first on the industry’s list when it came to downsizing production.

Small cars like the Chevy Cruze, Ford Focus and Honda Fit don’t pull in as much profit as the vehicles replacing them: SUVs. Instead, automakers are looking to higher trim-level vehicles to fill their coffers.

Let’s use trucks as an example. A new F-150 crew cab pickup truck at the highest trim level—think a 4x4 with premium materials, special badging and a truck bed that’s mostly for show—is much more profitable to produce and sell (starting at $75,835) than a basic F-150 4x2 single-cab truck that advertises cruise control as an available feature (starting at $29,990, excluding delivery).

MORE: Here Are the Cheapest New Cars of 2022

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High demand, low supply

Automakers are using market disruptions like the COVID-19 pandemic and Russia’s invasion of Ukraine as reasoning to slash vehicle production.

In turn, that’s creating a demand for new vehicles that can’t be met. It hasn’t affected automakers’ bottom lines much, despite what they might tell you; they’ve been taking advantage of this scarcity-induced demand to rake in record profits.

Which isn’t much of a problem for consumers, Phelan writes, so long as they’ve remained gainfully employed for the duration of the pandemic. Others aren’t so lucky; those who have lost employment or weathered the pandemic with scant resources—who would benefit from sub-$20,000 vehicles—have effectively been excluded from the new vehicle market.

What is the average price of a new car?

According to

Cox Automotive

, the average new vehicle price in the U.S. was $46,084 in February—nearly $8,000 above the pre-pandemic average, with incentives nowhere to be seen.

As Phelan writes, the only ones not hurting from this are the automakers, which are standing by as their

dealer networks

often add hundreds or thousands of dollars of “mystery fees” to vehicles that previously sold for less than sticker price. Even used cars are selling for far more than before the pandemic.

Misleading MSRPs

As Phelan writes, it’s rare to find a new vehicle in the U.S. with an MSRP below $20,000. The few that do, he notes, tend to leave out the non-negotiable destination fee, which automakers leave out when advertising the MSRP.

An example is the Honda Venue, which is a relatively inexpensive small SUV advertised with a base price of $19,000—not including the $1,245 destination charge. Compare that to the discontinued Nissan Versa subcompact sedan, which started at $15,180.

Why we need cheap vehicles

Not everyone can afford the payment on a new vehicle when the average price is so high. As Phelan writes, American automakers are putting their ability to attract first-time buyers at risk for the sake of record profits.

It’s expensive to attract new customers; advertising and marketing spending for new customers is about seven times that of existing customers, according to Cox Automotive.

But those new customers could remain loyal for decades, while old customers eventually age out of the market. And ignoring new customers can prove detrimental; just ask GM, whose chairman quipped in the ‘80s that entry-level buyers could buy a used

Buick

And with “affordable” EVs in the news lately (“affordable” being over $30,000), American automakers could be opening the door to more affordable Chinese brands without realizing it.

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