Americans Downsize The Cars They Buy

Stubbornly high car prices and elevated interest rates are persuading more Americans that when it comes to their next car purchase, bigger isn't always better.

- BEN GLICKMAN

For years U.S. car buyers have gravitated to larger, roomier vehicles, a shift that last decade had become so pronounced that some automakers killed off their small-car and sedan models because of slumping sales.

But with the average monthly payment for a new car soaring in recent years, some car shoppers are moving back in the other direction.

Sales of some smaller, entry-level models, such as the Honda Civic and Nissan Sentra, have taken off this year, rising 23% or more through November, according to research firm Motor Intelligence. Those increases have far outpaced the industry's growth, which has been in the low single digits this year.

Meanwhile, large pickup truck sales, long a highly profitable corner of the market for the Detroit car companies, slid 1.9% through November, data from car-shopping website Edmunds shows. Sales of midsize SUVs, the type of vehicle typically favored by families, have also declined, falling 2.3% compared with the January-to-November 2023 period.

This rising interest in smaller offerings comes as owning a car has become increasingly unaffordable. The average selling price of a new car is still at historically high levels, exceeding $45,000 in November, according to J.D. Power. Insurance premiums, financing rates and repair costs have also climbed in recent years, further stretching household budgets.

As expenses have ticked higher, some buyers have become more willing to make a trade-off, sacrificing size and space for a lower monthly payment, analysts say.