5 Cheapest Luxury Cars Under $40,000 According to U.S. News

When shopping for a new vehicle, luxury cars come at a higher price than their non-luxury counterparts. But that doesn’t mean that they’re outlandishly priced or unattainable for most. U.S. News compiled a list of luxury cars that won’t break the bank. Here’s what you need to know about the five cheapest luxury cars from the list.

2022 BMW 2 Series

One of the cheapest luxury cars, 2022 BMW 2 Series is on the road
2022 BMW 2 Series | BMW

BMW’s 2 Series is the second-smallest car in its fleet, second only to the X4. The 2 Series has three options that fit under the $40,000 budget: the redesigned 230i coupe and the 228i and 228i xDrive Gran Coupe sedans. The 230i is powered by a 2.0-liter turbocharged inline four-cylinder engine producing 255 horsepower and 295 lb-ft of torque. That’s a step up from the 228i and 228i xDrive which get 228 horsepower and 258 lb-ft of torque from their turbocharged 2.0-liter four cylinders. Both powertrains are efficient at 29 combined miles per gallon in the 230i, 28 in the 228i, and 27 in the all-wheel drive 228i xDrive.

Inside the cabin, simulated leather upholstery welcomes riders in all four seats. U.S. News reviewers tout the smooth ride, handsome cabin, and adult-friendly seating in the sedans. But they acknowledge the 230i coupe is down on cargo space compared to other luxury cars on this list. Technology-wise, an 8.8-inch infotainment display is connected to Apple CarPlay and Android Auto and a 10-speaker audio system. A navigation system is standard as well.

BMW includes driver aids in the 2 Series as well. Forward collision warning, front and rear parking sensors, lane departure warning, and blind-spot monitoring are all standard. There are optional upgrades including heated seats, full leather upholstery, and more driver aids. TrueCar named the 2 Series the best luxury coupe on the market.

Starting price: $35,700

2022 Audi A3

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Audi’s smallest sedan is fully redesigned for 2022. Though it’s one of the cheapest luxury cars from Europe, U.S. News reviews say it’s one of the most well-rounded vehicles on this list. All A3 models are powered by a 2.0-liter turbocharged inline four-cylinder that produces 201 horsepower and 221 lb-ft of torque at 32 combined miles per gallon. Front-wheel drive is standard but all-wheel drive is available for all A3 models. Two trims fit under the $40,000 budget: the base Premium and the Premium Plus.


Leather upholstery covers the two rows of comfortable seats in the quiet, stylish cabin. There’s enough room for adults in the second row of seats, but this does come at the cost of having one of the smallest trunks in the class; its cargo capacity is rated at just 10.9 cubic feet. Reviewers say the technology is user-friendly with a first-rate touchscreen and easy wireless smartphone integration. All models come with a panoramic sunroof. Upgrading to the Premium Plus trim adds a wireless charging pad, auto-dimming mirrors, and driver’s seat memory settings.

The A3 may be down on power compared to others on the list, but its turbocharged engine has ample power. Reviewers highlight the enjoyable driving dynamics as well. All A3 models come with lane departure warning and forward collision mitigation. The A3 Premium Plus trim includes blind-spot monitoring, automated parking system, adaptive cruise control, and lane keeping assist.

Starting price: $34,800

2022 Mercedes-Benz A-Class

Mercedes’ smallest sedan stands out in a crowded segment of inexpensive new luxury cars. Only the standard A 220 and A 220 4MATIC fit under the budget cap of this list. It is down on power compared to other luxury sedans on this list with just 188 horsepower and 221 lb-ft of torque from its turbocharged 2.0-liter four-cylinder engine. But it handles well and all-wheel drive is standard for the A 220 4MATIC.

What sets the A-Class apart, according to U.S. News, is the excellent interior. The materials used are high-quality and the infotainment systems are intuitive. There’s plenty of standard comforts including simulated leather upholstery, heated side mirrors, a touchpad controller, five USB ports, and customizable ambient cabin lighting. Standard safety features include blind-spot monitoring, safe-exit, driver attention warning, and automatic emergency braking systems.

There are lots of individual or package upgrades available to make the A-Class fit specific needs. The Driver Assistance package adds a bundle of safety features; Parking Assistance package gives you parking sensors and other parking aids. The Premium package bumps the infotainment display from seven inches to 10.25 and adds auto-dimming mirrors; and the sport-focused AMG Line package lowers the ride height. Stand alone options include heated and ventilated front seats and the MBUX Interior Assistant technology. 

Drawbacks for the A-Class are the small standard infotainment screen and lack of wireless smartphone connectivity. Though the handling is responsive, U.S. News reviewers say the ride can be a bit rough. The trunk is also small and the rear seats can be tight for adults.

Starting price: $33,950

2022 Cadillac CT4

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Cadillac’s smallest luxury car gets a lot of power out of its standard turbocharged 2.0-liter four-cylinder engine — 237 horsepower and 258 lb-ft of torque are some of the highest figures on the list. It’s a pretty efficient engine as well, getting 27 combined mpg. Two trim options make it under the cap: the base Luxury and Premium Luxury.

U.S. News reviewers call the CT4’s handling athletic and the relaxed ride gives you that power quickly. You can expect many of the same standard features seen on other luxury cars on this list. An eight-inch touchscreen infotainment system connects to Apple CarPlay, Android Auto, and an eight-speaker audio system. Simulated leather upholstery is standard in the Luxury but is bumped up to full leather in the Premium Luxury trim. Driver aids including blind-spot monitoring, forward collision mitigation, and automatic high-beam assist all come standard on all models. 

However, the rear seats are cramped and cargo space is limited at 10.7 cu-ft. That’s more than the A-Class and less than the A3 or 2 Series Gran Coupe. And reviewers note the interior quality is lacking compared to rivals in the inexpensive new luxury car segment. TrueCar did rank the CT4 third on its list of best compact luxury cars for the money.

Starting price: $33,695

2022 Acura ILX

Acura’s compact sedan is the cheapest luxury car on the list, coming in at just a few thousand dollars more than its non-luxury counterpart — the Honda Civic. All models are powered by the only non-turbocharged engine on this list: a 2.4-liter four-cylinder engine producing 201 horsepower and 180 lb-ft of torque. Those are some of the lower numbers on this list; although, it is an efficient engine averaging 28 combined mpg.

U.S. News reviewers say the handling is composed and the ride is smooth, but there’s not much else to like about the ILX. It does get a suite of standard safety aids like lane departure warning, forward collision warning, and collision mitigation braking systems. Simulated leather upholstery, heated front seats, a sunroof, and Bluetooth audio are the highlights. Upgrading with the Premium or A-Spec packages gets a bit more with both Apple CarPlay and Android Auto and perforated leather upholstery, respectively. The Technology package adds on to both with a navigation and 10-speaker sound systems.

Reviewers note the rear seats are snug, wind and road noise can make it to the cabin, and the design is uninspiring inside. Edmunds ranks the ILX as the second-worst small luxury sedan on the market.

Starting price: $27,300

Which cheap new luxury car is the best choice?

All of these new luxury cars come without a high price tag. Still, there are some that stand out for different needs.

For a powerful engine in a new luxury car, the 2 Series is the top choice. It’s a better car with that power than the next-best choice in the CT4. If luxury is a premium in a new car, the A-Class is a step above the others on this list. The best all-around choice that combines solid power, luxury, and features for a lower price is the A3.

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