The $25k car is going extinct?

You can still buy a new subcompact car (like a Renault Clio or Skoda Fabia) in Europe for under 20k EUR.

The more interesting question is why these cars disappeared in the US. And while many of the factors discussed here are true for both EU and US (inflation, interest rates, manufacturer profit margins etc) I am surprised no one mentioned the 'SUV loophole' of US regulations that effectively boosted the SUVs (off-road vehicles are classified as non-passenger automobiles with everything that entails, notably much less stringent emission standards) and made the small cars unprofitable to make in comparison.

They are disappearing in europe too. Emissions and other required by law equipment costs just as much on cheap car as it does on expensive one. At some point, cheap cars stop beinf cheap, just a bit cheaper but with way worse quality, so they stop making sense.

It's true that affordable European models are disappearing. The average mid-range offering from, say, Volkswagen, has become quite surprisingly expensive.

But this is why Chinese cars are taking over in Europe. Half the new cars I see are from Geely, BYD, Chery, etc. These average about 20,000-25,000 EUR new.

My own opinion, having looked into the matter a bit, is that you'd have to be insane to buy a Volkswagen or BMW at 2-3x the price. If I were in the market for a new car, I wouldn't consider anything but a Chinese car.

Just because they are not heavily advertised, doesnt mean they don't exist.

Dacia Sandero/Duster/Spring exist. (Renault)

Citroen C1, Toyota Aygo, Peugeot 108, (VW up!.)

Considering Volkswagen Group:

With a choice of Skoda Fabia/Seat Ibiza/VW Polo you would go for Skoda or Seat, not the VW brand itself if you dont care about marque but price.

But prestige is a huge factor still, so people would still go for an overpriced Golf for no apparent other reason

Also 20k-equivalent from 2015-2019 is already above 25k just by inflation. Car manufactures have strong unions so that stuff comes around fast.

So you simply can't expect the old sub 20k cars anymore, that's 25k now.