There is a fundamental truth you have to understand about car companies:They do not exist to make cars. They exist to make money. That distinction, analyst Kevin Tynan tells me, is why they’re not really interested in making affordable electric vehicles.
Perhaps that’s an oversimplification. Tynan is the director of research at an auto-dealer-focused investment bank, the Presidio Group, with decades of experience as an analyst at firms like Bloomberg Intelligence. What he means isn’t that automakers have no interest in affordable products. It’s that their interest begins and ends with winning customers who will eventually buy more expensive, higher-margin products.
One of the auto industry’s dirtiest secrets is that at scale, it doesn’t cost that much more to make a bigger, more expensive than a smaller and cheaper one. But they can charge you a lot more for the former, which makes this a game of profit margins and not just profits. In recent years especially, that’s a big part of why your new car choices have skewed so heavily toward bigger crossovers, SUVs and trucks.
Weird, Nissan doesn’t have a problem selling Versas for $16k? Chevy doesn’t have a problem selling a Malibu for $25k? Honda doesn’t have a problem selling a Civic for $25k or an Accord for 28k?
And what happens to the customers who literally can’t afford the expensive models? There’s a lost sale for every one of them.
This is just fundamentally flawed logic.
They’ve skewed that way because of CAFE standards.
I think you’re right, but I also think it’s insane that we think of 25000 dollar vehicles as the budget models. An affordable car is something a middle-class income could afford out of pocket in my opinion. Who can spare 25k nowadays?
Everyone and their mother is comfortable sitting on a car loan and $25k is pretty reasonable for a middle class family these days.
What still blows my mind is how common it is to I see people rolling around in $80k trucks.
I’m not comfortable with that. 25,000 is $400 a month (5 years). But yeah trucks are ridiculous. People gotta be taking out 8-10 years to pay for those
In our stage of capitalism, these arent even exceptions. 16k for a Versa. Is probably the best deal I’ve seen in forever, because almost no one makes sub $20,000 cars now. The last New cars I saw for that were economy cars (Sonic/fiesta/fit etc)
Malibu used to be sub $20,000 new. (2008) Civics were $13-15,000 in 2005 brand new. These prices are outrageous for the amount of car you get by comparison. $25000 for a civic? It’s small and goes vroom. For 3,000 more you have an Accord! Compared to an Accord Civics have no storage, small legroom, an engine that makes them zippy for sure, but it’s not as if the Accord is a slouch. At this stage mpg is comparable.
If you’re not interested in playing the game of taking on massive debt Then that’s fine - in their eyes you can keep buying used cars. For this type of person, they’ve fought so hard to make every car so unfixable to the average person. Parts and service departments are free to make a killing if you can’t fix it yourself.
For those that insist on buying dates models you CAN fix - You can forever own hand me downs with ghosts under the hood, gremlins in the electrical lines and odometers with 6 digits. It’s just a numbers game where eventually you will buy one that shits out way sooner than you can afford before your mentality suggests “maybe reaching deep on a CC and getting something with warranties wouldn’t be so bad?”
This might be hard to believe but 2005 was nearly 20 years ago…cars have improved in nearly every way possible, then add 20 years of inflation to that and it starts to sound like a good deal…
So they…don’t like profit? Because that also contradicts OP.
Comparison of all 3
Using an online inflation calculator shows the 2005 price inflating to 21,400, and the 2015 price inflating to 24,900. It would seem the civic is matching inflation. So, I’m wrong on how inflation has impacted the value of most cars, but that still doesn’t solve the problem that New cars aren’t being released for under $20,000 (stateside) anymore - and subsequently how much debt people have to sink into to buy New. Inflation has run what should just be a basic ass car into $24,000+
But my turnaround question would be does the cost to manufacture this car truly not fall? Is the manufacture cost also meeting inflation the way we found the MSRP has? Has manufacturing one truly remained at 90% MSRP? (A quick Google says profits are usually only 10%). If so, why? I understand facelifts and upgrades over the years but if you’ve been making the same “name” car that shares parts with itself through the years from 2005 till 2025, how are some of those parts not dirt ass cheap - because car brands are intentionally not reusing the parts. A great example is the 2012 and 2014 Chevy Sonic rims are the same. 2013 and 2015 are the same too. Why aren’t they they same across 4 years? Also why is the 2012 one a bolt pattern 5x105 - a size and pattern never used again or previously? Because fuck you, consumer, we needed them to be scarce so the price stays at $300 per rim. (Personal experience I had in 2017). A civic, and any other long life car model could be cheaper, but they’re not because car makers insist on convoluted systems and “innovation for innovation sake” so a new car is always full of new R&D they need to pay for.
Also cars are covered in touchscreens now. Do you know why - touchscreens are just a TV with a digitizer like your phone. And we have been making those for 20 years so they ARE cheap as dirt. Touchscreens are so popular in the face of consumers wanting buttons because they’re so cheap to put in and make a UI for. In fact the UI doesn’t even have to change, it just needs to look new every few years and anyone with some computer knowledge will tell you how far changing a jpg image for a button goes to fooling people you did a lot of work.
No, they made cars nearly unfixable to most mechanic shops and you, the consumer with computerisation/combining parts (climate controls are built into the radio unit on mustangs) and own the market on tools to fix their brand. Most Dealerships state parts/maintenance make big bucks. If your car is new enough Chevy and Dealerman are making bank by selling you, for example, a radio head unit that specifically fits around that climate control system, for $500 and then $70/hr in labor.
Not just the consumer, they also get to rake shops across the coals because they make parts that need a unique tool to access and then charge the shop $500 for the tool to prevent them getting their value out of its use. No shop will get $500 of use out of a cube tool that resets the brake caliper of a Kia Sedan in 2006, 2007, and 2008. So shops didn’t buy it. Where does that bring you but back to Kia Dealerships. (Or attempting it with needle nose pliers)
The number in OP was $25k
Yes, inflation is a problem. That’s a different discussion.
Manufacturing costs go down but also there is an increase in technology, fuel efficiency, and especially safety.
No one is doing that. Just because it has the same name doesn’t mean it’s even remotely the same car as it was 20 years ago…
Because backup cameras were mandated in 2016.
For electric cars yes. (As opposed to the civic question). The reason I would posit is a culmination of my points. Companies love to over engineer these systems to justify high R&D to allow prices (and margins) to go up.
Not something you or I could answer, but are these costs truly matching inflation? In this era I am hard pressed to believe profits are still only 10% that is listed online.
Many parts do the exact same stuff they used to. A radio head unit nowadays is the same head unit 3 and 5 years ago in a new shell. Bluetooth, USB, Apple/Android carplay, am/fm. And now they’re hooked up to the touchscreens. Why change what already works in a new facelift year, except for no reason other than to intentionally prevent parts from becoming commonplace. The rims I mentioned. No one will notice when buying a car if those rims were reused those 4 years.
A friend owns a 2019 Ford Fiesta that has a backup camera on the installed screen that’s 5 inches tall to 6 inches wide. It’s incredibly minimalist and I know most people do enjoy an infotainment system now. That doesn’t change my point here that brands embraced putting an iPad in your car, and won’t give you buttons back because the ever increasing size screens are incredibly cheap compared to the radio/climate/headlight buttons you see people bemoaning they want back. It also feeds back to the “you can’t fix it yourself” problem that car brands have manufactured for consumers.
Doesn’t matter. The entire point of the article was that EVs can’t be made inexpensively because there’s not enough profit in inexpensive vehicles. I brought up the vehicles I did because it disproves that theory.
Probably not. Still nothing to do with EVs.
That doesn’t mean they’re the same part.
No.
“Improved”?
If you actually think that’s true, then I have a subscription to your seat belt to sell you.
I’ll be sure and write that on your gravestone.
Your prices are way off. The only car that can be bought brand new for less than $20k in the USA is the Mitsubishi Mirage, and from experience it sucks to drive. A Malibu and a Civic are both like $29k, but actually Chevy just quit making Malibu’s this year.
Not sure what country you’re from but my prices are direct from the US OEM website, but maybe you can let them know they need to update them.
Most cheap cars do. You want cheap? That’s what you get. That has nothing to do with the author’s claims that the OEMs have no interest in selling them.
Wouldn’t CAFE standards push them to smaller more efficient cars, or am I misunderstanding what CAFE standards are?
As for affordable cars, I think it’s fairly easy for the auto industry to just raise prices while extending financing terms longer and longer and advertise $299/mo (with 180 mo financing, $6k down, at 8% interest excluding taxes and fees).
The car companies went huge, they made their standard vehicles so big and heavy they qualified for EPA standards meant for work trucks.
Just blatant fuck you to regulations and people’s health.
I think what they’re saying is that CAFE standards just encourage companies to make and market vehicles where those standards don’t apply, or at least are less strict, such as “light trucks”
Yes, exactly. CAFE carves out exceptions for bigger vehicles, so they just stopped making small ones altogether.
Ohhh that makes sense.