In recent years, the U.S. auto production scene has changed completely, going from the place where cheap cars were produced, to that of luxurious models. It again reflects changing consumer tastes, corporate blueprints, and economic migrations. This is why we look into this history: the reason makers stopped making low-end products and the implications for American buyers.
American car market in the early 2000’s was full of reasonably priced cars. Banner Models in southern California were known to sell Chevrolets, Fords and Dodge types in a wide variety of models to meet the budget conscious. Offering basic features such as these vehicles allowed for a practical solution for families who could afford, students, and first time buyers. But the priorities of the manufacturers switched with the evolution of the automotive industry. Automakers were lured by the allure of higher profit margins available with luxury vehicles and gutted their entry-level offerings to accommodate.
By December 2017, data showed automakers sold 36 models that cost $25,000 or less. From that point forward in December 2022, this number dwindled to just 10. This stark decline highlights a broader trend in the industry: But the production of high margin vehicles has come at the expense of affordable options. The disheartening reality is that for buyers seeking cars priced under $20,000, the choices have dwindled to just five models: Kia Rio, Kia Soul, Hyundai Venue, Mitsubishi Mirage and Nissan Versa. The fact that Rio and Mirage are now borderline on being discontinued exacerbates the problem as consumers soon have very little option left.
Car Model Information: 2023 Kia Rio S
Price: $15,999
Exterior color: Clear White
Interior color: Black
Drivetrain: Front-wheel Drive
Transmission: CVT
Engine: Gamma-II 1.6L I-4 DOHC, variable valve control, regular unleaded
VIN: 3KPA24AD5PE582394
Mileage: 36,594 mi.
Summary: The Kia Rio is a subcompact car manufactured by Kia from 1999 to 2023. Body styles have included a three and five-door hatchback and four-door sedan, equipped with inline-four gasoline and diesel engines, and front-wheel drive.
The Rio replaced the first generation Pride—a rebadged version of the Ford Festiva—and the Avella, a subcompact sold as a Ford in some markets. A second generation was introduced in 2005 in Europe and in 2006 in North America, sharing its platform with the Hyundai Accent, a subcompact manufactured by its sister Hyundai Motor Company in South Korea.
In August 2023, the K3 was introduced as its successor in several markets such as Mexico and the GCC countries.
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Car Model Information: 2023 Kia Soul EX
Price: $18,513
Exterior color: Fusion Black
Interior color: Black
Drivetrain: Front-wheel Drive
Transmission: Automatic
Engine: 2L I-4 DOHC, D-CVVT variable valve control, regular unleaded, en
VIN: KNDJ33AUXP7855255
Mileage: 29,700 mi.
Summary: The Kia Soul is a subcompact crossover SUV manufactured and marketed by Kia since 2008. Often described and marketed as a crossover since its introduction, the Soul is a hatchback with a box proportion and tall roof, which are designed to maximize its interior space. Despite its SUV-like styling, the Soul was never available with all-wheel drive, instead it is exclusively a front-wheel drive vehicle.
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Car Model Information: 2024 Hyundai Venue SEL
Price: $19,620
Exterior color: Gray
Interior color: Gray
Drivetrain: Front-wheel Drive
Transmission: Automatic CVT
Engine: 1.6L I4 16V MPFI DOHC
VIN: KMHRC8A39RU307769
Mileage: 4,636 mi.
Summary: The Hyundai Venue is a subcompact crossover SUV manufactured by South Korean manufacturer Hyundai. The Venue debuted at the 2019 New York International Auto Show as Hyundai’s smallest global crossover, prior to the introduction of other smaller SUVs such as the Casper and Exter.
As of 2023, the Venue is positioned below the Kona or Creta, and above the Exter or Casper in Hyundai’s international crossover lineup. It shares its platform with the fifth-generation Accent.
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Car Model Information: 2024 Mitsubishi Mirage LE
Price: $17,300
Exterior color: Graphite Gray Metallic
Interior color: Black
Drivetrain: Front-wheel Drive
Transmission: CVT
Engine: 1.2L I-3 DOHC, MIVEC variable valve control, regular unleaded, e
VIN: ML32AUHJ6RH033810
Mileage: 5 mi.
Summary: The Mitsubishi Mirage is a range of cars produced by the Japanese manufacturer Mitsubishi from 1978 until 2003 and again since 2012. The hatchback models produced between 1978 and 2003 were classified as subcompact cars, while the sedan and station wagon models, marketed prominently as the Mitsubishi Lancer, were the compact offerings. The liftback introduced in 1988 complemented the sedan as an additional compact offering, and the coupé of 1991 fitted in with the subcompact range. The current Mirage model is a subcompact hatchback and sedan and it replaces the Mitsubishi Colt sold between 2002 and 2012.
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Car Model Information: 2024 Nissan Versa 1.6 SV
Price: $19,999
Exterior color: Super Black
Interior color: Graphite
Drivetrain: Front-wheel Drive
Transmission: Automatic
Engine: 1.6L I-4 DOHC, variable valve control, regular unleaded, engine
VIN: 3N1CN8EV8RL904893
Mileage: 10 mi.
Summary: According to a Nissan press release in 2008, “versa” is short for “versatile space” meant to imply the spaciousness of the interior and configurable cargo arrangements. The Versa is one of the few remaining subcompact cars left on sale in the North American market, with most automakers dropping small cars from their lineups to focus on crossovers and SUVs.
Get more information about: Nissan Versa
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Reasons for this shift
This shift is multi-faceted, deeply rooted in the complexities of the automotive market. Consumer demand was one critical factor. The number of Americans who have been purchasing vehicles at or above the $25,000 level has increased significantly over the years. New cars in the $60,000 plus category jumped 163% in sales – but new vehicles in this price range dropped 78 percent between 2017 and the end of 2022. This shift began to change consumer behavior around which automakers had to adapt their production strategies, towards producing models with higher profit potential.
But more than anything else, the consumer credit landscape has changed dramatically. Many potential buyers are now being thwarted by high interest rates, which have become a dizzying obstacle keeping them from becoming new vehicle owners. Autos can get away with unaffordable high prices on a car because — for now — only high income earners are capable of navigating the tightening credit landscape. As a result, the average price for new vehicles has soared, resulting in cheap options being pushed even further out of reach for the average American.
Curiously, automakers might assume that American consumers are fed up with cheap vehicles, but recent market developments point in a different direction. That the Ford Maverick, a relatively inexpensive pickup truck, has such strong sales is a good sign that low cost vehicles have a market. Toyota’s Andrew Gilleland adds that requests for the Corolla are larger than expected while car shoppers crave affordable entry level options. The mere existence of a car manufacturers market demands some serious questions about how the strategic choices made by manufacturers differ from how consumers perceive they should be.
Toyota ranks last among its rivals with a mere six day supply of its Corolla in the US, way short of the 60 day supply the sector usually sees. This even applies to Toyota, after Volkswagen saw a major commercial run for its entry level Taos and Jetta models. Similarly, Chevrolet’s redesigned Trax subcompact SUV, with a $25,000 or less sticker, has exceeded expectations — selling 38,000 units so far this year, well above the sales of such luxury brands as Cadillac. This data, combined with the fact that automakers shelved the cheaper vehicle segment long ago, underscores the contradiction that consumers still want these vehicles.
This trend is of great importance. Currently marketed options are becoming fewer, and if manufacturers do not include an affordable option, they risk alienating a big part of the American market. As the types of vehicles available to consumers’ decreases, whether for economic or other reasons, the consumer is also lessened, as the primary barrier to purchase and equitable transportation is rendered more difficult.
In the light of these changes there is need to consider what broad cultural and societal implications are at play. Progress, opportunity, the freedom of mobility — there is no doubt that the American automotive industry has always been something of a symbol of that. However, the market’s shift toward luxury now threatens the cardinal promise of accessibility and affordability with it. It raises an essential question: Manufacturers, on the one hand, have to reconcile their focus on profitability with the pressing need for affordable options, yet good for a diverse consumer base.
Its implications
The automotive industry has been not only one of innovation and progress for the United States, but also from a cultural standpoint, in fact. Cars are about so much more than they are machines. They embody freedom of movement, opportunity to work wherever you want, to join with others and so much more. The demise of affordable vehicles could set back this essential part of American life, and with it, raise tough questions about equity and access in a country that is proud of giving everyone a chance.
The dynamics of the demand on the consumer side and the market trends show that the automotive industry must make a radical transformation. Automakers have a chance to increase profit potential not only due to reconsidered production strategies but also through creating a relationship with those they want to sell to through a renewed emphasis on affordability. The future of transportation is at risk unless the industry adapts and innovates to keep the dream of affordable vehicles alive as demand for affordable vehicles continues to grow.
Sales stats aside, the US’s love of all things economical is an advocacy for cars that are equitable and afford access, fortunes as much as they are the valorization of society’s ideals. Unmet demand for affordability in the evolving consumer demand profile is spotlighted. This is a challenge that the auto sector must solve — acknowledging & filling this need and creating a diverse market in which every American has access to a reliable means of transportation. One of those, even though, exemplifies the country’s own ideals of mobility & opportunities for all, regardless of finances.
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Americans Want Cheap Cars. Automakers Don’t Make Many
China makes cheap electric vehicles. Why can’t American shoppers buy them?
Why Cheaper New Cars Aren’t Making Car Ownership More Affordable
