By Claire Moraa
- The automotive industry is facing a shift as consumers ditch luxury cars for cheaper functional cars
- There was a 44% increase in car purchases in the $20,000 to $30,000 price range, the highest in four years
Unless you live under a rock, you may have noted that a good number of cars on the road do not exude luxury. In fact, vehicles priced over $100,000 have significantly dropped to nearly half in the last nine months. Consumers’ preferences are shifting towards more budget-friendly options in the automotive market and cars priced between $20,000 and $30,000 have recorded a 44% increase. These numbers increase when we enter the used cars market as it reported a 62.6% year-over-year growth rate.
Why This Matters: The luxury market as a whole has been having a rough year. However, cars are a little bit different than bags, shoes and clothes. Car owners and drivers are seeking cost-effective options but this did not happen overnight. It’s been a ticking time-bomb. Economic pressures like inflation and rising interest rates have turned consumers into survivors. Even with an income of $100,000 or $200,000, Americans are still living hand to mouth so a luxury car is definitely not on the essentials list.
Besides the cheapies and used cars, another category enjoying a surge in purchases are U.S. hybrid car sales, which have seen significant growth as more consumers prioritize fuel efficiency and environmental sustainability. These ones are flying off the shelf twice as quickly as gas cars and three times as electrical vehicles. Despite these changes, the luxury car market has grown from $1.17 trillion in 2023 to $1.29 trillion in 2024. And although the growth rate has not been as rapid as would be expected, there’s still demand for these cars. In fact, the projected growth by 2032 is $2.79 trillion.
Situational Awareness: There will always be demand for luxury goods, especially cars, but even the most affluent buyers may lean more towards value-driven options that offer a balance of quality, performance, and environmental responsibility at some point. The automotive industry is reshaping but this doesn’t mean luxury cars need to go extinct. With more budget-friendly models with attractive features to meet the changing demands of consumers, luxury-on-a -budget cars may be the new status symbol.
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