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If even ICE cars are now super expensive, why isn’t this a screaming opportunity for some auto manufacturer to target the low end of the market? I’ve never spe

• wyre 2y ago
  My understanding is that because cars are generally purchased rarely, they make more money with the status quo instead allowing customers a budget option.
  • criddell 2y ago
    Budget options are out there but consumer demand for them is weak. Americans love their cars and seem to be willing to pay for a lot more car than they need.
    • bluGill 2y ago
      Which would you buy - a brand new car with no options, or for the same price a three year car with all the options. Or you can go cheaper yet with a 10 year old car with all the options of 10 years ago. Anything other than the most luxurious car doesn't make sense for anyone to build in general because people who want to pay less are willing to settle for a used car. If cars only lasted 3 years instead of the 20+ they do today (average car is 12 years old), there would be demand for cars that don't even have a heater by people who want to save money.
• bluedino 2y ago
  Kia sells quite a few cars that start at $20k, like the Soul and Forte
  • wlesieutre 2y ago
    Quite a few $20k ish, though only the Forte actually making it under that. Forte LX starting at $19,900. Of course that's without without the $1,155 "destination" fee, so even the Forte really starts at $21,145. But considering inflation, $21k isn't a bad price.
    • OptionOfT 2y ago
      We need laws that ban these junk fees. Any advertised price should be one I can get when I walk in. I cannot get the car without registration. I cannot get the car without 'destination' fee. Bake it into the price.
      • rootusrootus 2y ago
        Registration cost is too variable. Varies by state, and even by city.
        • bartvk 2y ago
          You'd say someone would build an API to retrieve that information by city. But I would not be surprised that the product seller can't be bothered inserting that information into their sales flow.
          • rootusrootus 2y ago
            Okay, so build the API, and now customers will need to enter their locality before they can see the advertised price. It won't be a popular decision.
        • triceratops 2y ago
          So compute and post some defaults? At least the state and city that the dealership is located in?
          • rootusrootus 2y ago
            Sure, add that to the list of disclaimers in the small print so that the customer from the next town over will have something to reference when the dealer cannot sell them the car for the advertised price. The problem is that cars are not treated like most other commodities. E.g. You don't have to buy a license to use a microwave or register it with the government. The closest analog is if you live somewhere with sales tax.
  • warner25 2y ago
    The Nissan Versa currently starts around $17k, and I see a lot of those on the road. The Mitsubishi Mirage is similarly priced but I don't think I've ever seen one in the wild. I rented a Kia Soul a few years ago and thought it was perfectly fine. But with so few options, like the parent, I'm planning to keep my current car (a 2008 Prius) indefinitely, just paying for repairs as needed until parts are unavailable or nobody is willing to do the work. My worry is that US automakers have all but abandoned the compact and midsize economy car segments, and I don't know what tariffs will mean for the Japanese and Korean automakers that do cover these segments. But see my other comment about the pendulum swinging back and forth.
    • seanmcdirmid 2y ago
      Japanese and Korean automakers make a lot of their US-bound cars in USA, so I don’t think it will be that bad. A Honda civic is likely to be more American than a Chevy compact, for example.
    • JohnBooty 2y ago
      I rented a Versa about 5-6 years ago and I was surprised how completely "fine" it was. It was a totally functional vehicle. The radio sounded good enough. The seats were comfy enough. It was a bit of a slug, but it had enough power so that you weren't scared for your life when merging onto a highway. If those sound like low standards... well, this was not always the case for bargain basement cars...
      • warner25 2y ago
        Right. I've been saying for a while that if you need four seats or fewer, there's no good reason to buy anything more expensive than an entry-level Versa, Soul, Corolla, Civic, etc. (If you need five or more seats, especially with kids' car seats, you're obviously looking at more expensive three-row minivans.) One way of looking at it, validating the point that others have already made in their comments, it is that there are no bargain basement cars anymore; everything now comes with an automatic transmission, air conditioning, power locks and windows, cameras and sensors, etc. As recently as 2008 when I was buying my Prius, these things were optional on many models. Today's compact cars are, I think, the size of midsize cars from 20 years ago too. It's kind of like housing in America where the cost per square foot didn't actually rise much in some places, but the average home is now twice the size, so the average home price doubled.
  • josefresco 2y ago
    I posted in another comment above, but I bought a 2023 Kia RIo 5 - excellent car. Small, simple, efficient and IMHO good looking. The Forte and Soul are larger (I also own a Soul)
• gonzo41 2y ago
  I bring you https://www.carexpert.com.au/car-news/toyota-hilux-champ-launched-in-thailand-starting-from-only-20k https://www.carexpert.com.au/car-news/toyota-hilux-champ-lau... You can't have it because of existing tarrifs.
  • p1necone 2y ago
    Man this thing is awesome. One of my dream cars was always a 90s hilux - I got so disappointed when they started taking design cues from giant American trucks and making them bigger. Single cab with maximized tray space is the most practical option if you actually need to use it as a ute.
• p1necone 2y ago
  I would imagine the most price sensitive buyers wouldn't be looking at the new market at all - there might not be enough demand for "cheap, but still nowhere near as cheap as a second hand car" to make the price point worth targeting as a manufacturer.
  • smitelli 2y ago
    They used to, that’s the thing. It used to be possible to get barebones A-to-B transportation with zero frills. Power windows/locks, air conditioning, ABS, power steering, automatic transmission—all manner of things that aren’t strictly required to get a person to/from where they need to go—could be optioned away if the buyer was very price sensitive. In 1998 a Chevrolet Metro could be optioned without a radio or rear defogger, even. New purchase price was about $9k (equivalent to $14.5k today). Somebody was buying those, enough for it to be worth the manufacturer’s effort to produce it. I suspect a whole segment of people would be willing to consider a no-frills EV at a comparable price point. Hell, if somebody made something new like a base model 90s Civic into a $15k EV without extra luxury nonsense I don’t actually need, I’d be in the dealership tomorrow.
    • rootusrootus 2y ago
      > I suspect a whole segment of people would be willing to consider a no-frills EV at a comparable price point. GM made that play with the Bolt. It was routinely available for just over $20K. Still sat on lots, not getting a lot of love. People shopping for new cars want nicer toys, people who cannot afford new shop used and enjoy getting those nice toys at a discount. I bet the subset of buyers looking for a bare bones no frills brand-new car is quite small.
      • warner25 2y ago
        > I bet the subset of buyers looking for a bare bones no frills brand-new car is quite small. I think you're correct; we're probably talking about a portion of the weirdly minimalist and frugal crowd pursuing FIRE. Also, most folks in that small subset wouldn't even consider buying a GM product; it's going to be either a Toyota or Honda for them. Source: I'm one of them, still driving my base-level trim 2008 Prius. As an aside, I'm reading that the new Bolt sold nearly as well as the Tesla Model S in 2017. Before that, I think the similarly basic Nissan Leaf was the best selling EV. Since then, however, my sense is that EV purchases became more about "fun" (which Tesla has emphasized and provided) than anything else.
• lmm 2y ago
  IIRC the US has some ass-backwards fuel economy laws that mean it's essentially illegal to produce small cars. Also there's enough demand for high-margin cars to max out available production capacity, and would you want to be making major investments in ICE car production right now?
  • voisin 2y ago
    I don’t think companies are penalized for producing small cars so much as larger vehicles like trucks and SUVs are incentivized to become larger to sit outside the rules as commercial vehicles even though everyone knows that only a small percentage are used for commercial purposes.
    • millerm 2y ago
      Exactly. The large gas guzzling, glorified grocery getters are just an easy out for manufacturers to subvert the requirements made for smaller vehicles (which was completely short-sited, or it was planned by lobbyists). It was simply easier for these companies to continue doing what they were doing with what they had. Give a company and alternative that costs them nothing, then they will do nothing. We need a new fuel standard. A truck or SUV purchased after <some date> then you pay an extra $<some dollar amount> per gallon. Yeah, I know the implementation is a problem, but I am simply throwing out an idea. Perhaps they yearly registration is now an extra $2000/year. They already screw EV owners in many states. I pay an extra $220 a year for my car, and that is ridiculous. I have owned my car for 5 1/2 years, and I have 24k miles on it. This tax is completely unfair and has no basis in reality for "road tax".
    • kube-system 2y ago
      > I don’t think companies are penalized for producing small cars They are. CAFE target formulas have the footprint of the vehicle(s) in the denominator. Larger footprint = easier fuel economy targets https://www.nhtsa.gov/sites/nhtsa.gov/files/cafe-ghg_my_2012-2016_final_rule_fr.pdf https://www.nhtsa.gov/sites/nhtsa.gov/files/cafe-ghg_my_2012...
  • josefresco 2y ago
• fragmede 2y ago
  Because there's no incentive to. The invisible hand of the free market only encourages a race to the bottom when the incentives are aligned. With the ridiculously high capex required to become an automaker these days, why would someone come in, just to make $3,000 per car, in a saturated market, chock full of regulations, to make money on the bottom end of a market where existing manufacturers can easily just undercut you the second you get any traction in the market. Manufacturers make more money off selling luxury cars. The poors can just buy used luxury cars for all they care. We see the same problem with housing and luxury vs spartan options. The spartan option exists, but only begrudgingly so.
• tagami 2y ago
  A 2025 Toyota Corolla hybrid is ~ $25k
• AlotOfReading 2y ago
  There's no way to sell a good, cheap car without also cannibalizing your high margin sales and the dealers wouldn't want to sell it anyway. The vast majority of vehicle cost goes to: 1) amortizing the assembly line and upfront platform design costs 2) the raw materials of the basic car components, e.g. power train, chassis, and body 3) getting the car into consumer hands (distribution fees, taxes, advertising, dealership margin, etc). Everything else like labor and upgraded trims works out to a relatively small percentage of the overall price, often under 20%. Since you can't make enough impact by cutting amenities, you have to cut one of the listed things. You mostly can't build things more efficiently than major manufacturers do (though Tesla is quite good here), so that's out. You can't shave 50% off the basic materials costs because you run into basic FMVSS issues. Kia's strategy is to get as close to this line as they can though. That means you need to cut from the third category. No company wants don't want to cut their own margin, so that's out. Manufacturers can't work around the dealers by law, so they need to keep some dealer margin. Manufacturers can't stop advertising because the advertising department has significant political power and can get anyone proposing that fired. Manufacturers can't avoid taxes for consumers either. The only real paths to cheaper cars involve opening the market to competitors that aren't limited like this, for instance foreign companies that don't need dealers and are okay accepting lower margins and not advertising.
• trhway 2y ago
  >why isn’t this a screaming opportunity with the American consumer buying 15M cars a year at those average $50K there isn't an opportunity for the low end. And if such market really appears - i.e. if the American consumer would hit hard economic patch and would really need cheap car - it will be at any moment filled by cheap Chinese EVs.
  • deleted 2y ago
    [deleted]
• _ea1k 2y ago
  There are small, ~20k cars in the US, but this isn't where most of the sales volume is. Trax starts at ~20k and isn't even that small.
• rsynnott 2y ago
  Looking at what's available in Ireland at the moment, in the 20-30k range there's a Nissan, a VW (though it's the ancient e-Up, due to be replaced by the i2 any day now), a BYD, a Fiat, an MG, and an Ora (tragically no longer under the names "Good Cat", or "Funky Cat", presumably because Ora got around to hiring someone who had heard of marketing). There are a bunch more in this price range due to launch next year. Cheap-ish electric cars exist, they're just not, generally, suited to US consumer preferences.
  • darknavi 2y ago
    > Cheap-ish electric cars exist, they're just not, generally, suited to US consumer preferences. Some of the brands you listed aren't even really available in the US, or if they are that are 100% marked up with tariffs. Big cars are definitely a thing in the US, but I'd kill for a ~$20k smaller EV hatch commuter to swap out my Model 3.
    • klooney 2y ago
      The small hatch EVs have generally had ~200 mile ranges, which is a little tough
      • SoftTalker 2y ago
        If the cost is low enough, compromise on range becomes acceptable. I might buy a small, cheap EV that has range enough to handle my typical daily driving. But if I'm paying Tesla prices, it will need range to handle virtually all of my driving.
        • klooney 2y ago
          I mean, this is the Nissan Leaf- lightly used ones are really cheap.
      • darknavi 2y ago
        That'd be perfect for me to be honest. We have a Tesla Model Y which we can road trip in. I'm just looking for a slick, efficient commuter. I normally only charge my Model 3 to ~60%, which is ~150 miles of range anyways.
• eschneider 2y ago
  Low price normally requires lower margins, so for the same risk, you're making less money than with a higher end model. Make it up in volume, you say? Well, that increases the risk that you don't sell enough and end up with a loss. Ultimately, you CAN "win" by doing really well with a low-end model, but the chance of losing big is there, too.
• chessgecko 2y ago
  The real reason is that it's basically impossible to produce a cheap new car that is a better deal than a Toyota with 80k miles on it.