The complete abandonment of budget models in the US is completely foreseeable from market dynamics and how the industry is structured.
1. Economies of scale are the only way to build a budget car.
2. The incremental costs of adding features are nearly zero. The vast majority of price comes from the basic costs of building a legal vehicle.
3. Buyers generally won't reject a car for having features they don't care about, but they'll frequently reject a car for lacking a feature they deem important.
4. Buyers have different preferences.
In order to sell at a low price, automakers have to sell as many as possible to hit massive economies of scale. In order to sell that many, they need to please a huge number of buyers, which means they add a whole bunch of cheap features to satisfy as many buyers as they can without cannibalizing their higher-tier offerings.
The other side of this is the price point that western OEMs can actually hit with economies of scale has climbed significantly in recently decades, in part due to inflation / wage pressures, but mainly due to massive institutional inefficiencies. Mary Barra's compensation alone adds several dollars to the price of each GM vehicle. Legally mandated dealer margins and fees add tens of percent to the price that consumers pay. The inefficiencies of spreading production for tax purposes across state and international borders adds more cost. So on and so forth, and the market feedback mechanisms to correct these issues are intentionally hampered by policy decisions to favor the current status quo.
Change in the market needs support at the regulatory level.
Don't forget the way we handle fuel economy standards in the US... or did, given the way those regulations are being repealed for some reason.
Petroleum is a critical resource and most countries manage its use in automobiles for fuel in a fairly direct way: They tax the living shit out of gasoline and diesel. If you use more, you pay more. You have incentive to buy a smaller, more basic car because they will ultimately cost you less.
But not here. We gave exceptions on light trucks because that's all the big three could competently produce back when fuel economy standards were being introduced and we were getting our brains beaten in by the Japanese. Making more fuel-efficient vehicles requires R&D, and R&D spend is money not sent to a shareholder. Since the bigger vehicles don't count towards CAFE and smaller vehicles do, guess which vehicles the big three push harder to consumers?
That's a factor, though it's worth pointing out that California and Canada both have fuel taxes substantially higher than other parts of North America and light trucks/SUVs continue to outsell sedans significantly. Fuel taxes aren't irrelevant (sedans sell relatively better there than in other regions), but it's overwhelmed by buyer preference.
In addition to this I think financing plays a huge factor. If an extra feature adds $2,000 to the cost of a car people will think twice. If it adds $5 to a car payment (that's already astronomical if you add it up, which they won't) they'll shrug and sign on the line.
> 3. Buyers generally won't reject a car for having features they don't care about, but they'll frequently reject a car for lacking a feature they deem important.
4. Buyers have different preferences.
Yup. I don't care about the radio, and you don't care about manual windows, but you care about the radio, and I care about manual windows.
If you care are about cost, you buy a used car -- not a basic model.
If you buy a new car, you're already paying a premium. If you're willing to pay a premium, you were probably not looking for a basic model in the first place.
Edit: I'd be interested in a more basic car, even new, not because of cost. But because I don't want my car to be a gadget that is outdated in 3 years.
I'll buy a new phone for the fun of it. Not a new car. So don't put a tablet in my car :)
Sadly, I'd suspect a tablet is actually cheaper than physical buttons.
My number one requirement is that any car that I buy is mine. No subscriptions. No calling back to the mothership. No spying on my activities or driving skills. I'd like to be able to repair it too, or at least be able to take it to the mechanic of my choice. This is a somewhat different desire than simply K.I.S.S.--and wasn't addressed in the article--though I wouldn't mind that either.
2006 Lexus IS350, 2007 Toyota Avalon, 2010 Toyota Venza. My in-laws have a 2000 4Runner that I still need to drive into the ground, but I'm not sure if I will be able to do it since it refuses to die (325k miles). All the vehicles are immaculate and have at least a decade or more left in them. I plan to drive them all, as long as they continue to sell gasoline.
Indeed. Aside from price, this is why I will never own a new car, or anything newer than roughly 2015 or so (depends on manufacturer). A car must absolutely not have any internet phone-home spyware connectivity.
People who would buy such data don’t care about getting it for every individual. They’re perfectly happy if they can get it for merely 99.999% of people, and that they can do with cellphone app data.
So they don’t need car data. My car maker does not sell its data nor does it link car locations with car owners. Although it could do so, but not without some bad PR or legal risks of doing it secretly after having made assurances that it doesn’t do it.
But that gets back to who would buy it? Nobody. They already have all the data they need from phones.
Yeah, this. I drove my daughter's 09 Pontiac Vibe and trying to flip the mirror, accidentally hit OnStar and they answered, even though she never had a subscription.
After all the niceties and "no, I hadn't been in an accident", I was afraid to touch the mirror after that.
I generally agree. I have an 8 year old work trim truck that doesn't have much tech in it. Im dreading the day I'll need to replace it. Hopefully I'll get another decade or so out of it.
BTW, if you want to get a hint at what shenanigans are going on with "your" vehicle, read the privacy policy. That they even have one is itself a sign of the times.
It has been my experience that people who talk about cars are lying to themselves.
They say they want one thing, but buy another.
They claim they want a manual transmission and then buy a RAV4.
They claim they want a sports sedan and then buy a RAV4.
They claim they want a station wagon and then buy a RAV4.
They claim they want a base, cheap, simple, vehicle and then they drop $55k on a fully-equipped RAV4 Hybrid.
Be weird. It's ok. Do the dumb thing and follow your desire.
And you can hedge your bets. I bought, used, a manual transmission convertible sports car, a sports sedan (red, even!), and capacious station wagon for all of my Home Depot needs all for less than the price of RAV4 Hybrid and between the three I always have at least one functional vehicle!
I think a lot of people do want these things, but car buying is not always up to just one person. It's often a decision made in the context of a family or group who will share a vehicle or otherwise have input on the buying decision.
These studies should be surveying these groups instead of individuals I think. Sometimes the "group" will just be one person, and that's okay. But I wouldn't want someone's opinion if they're making it on behalf of a group without the groups input, because that's not realistic
Exactly. And this is the "magic" behind the Jeep Wrangler. It's the person driving it who you have to please but buyers have all these other spurious "requirements" forced upon them.
So they went out and built a 2dr jeep with a shitty 2nd row so people can pretend like it's optimized for people hauling and sell the "lifestyle car" they really wanted to their SO. They retained the soft top and manual at non-insignificant cost to appeal to additional swaths of buyers and then added a hybrid option as a checkbox exercise.
Can't recommend enough this approach of multiple older cars. Between the extremely high cost and steep depreciation new cars make no sense unless you're so rich money is not a consideration.
I have multiple sports cars (all over 30 years old), a truck for towing and utility (over 20 years old), a minivan for kid and family duty (~15 years old). All that together is cheaper than a single new car. And having bought them depreciated, the value barely goes down. In fact a couple of the sports cars are appreciating now, worth more than my cost.
> And you can hedge your bets [ with multiple vehicles ]
In many countries that's unaffordable. In the UK I pay £350 per year car tax, £480 insurance and £50 mandatory roadworthiness testing. Best part of a grand before I've even driven a mile - and the UK is considered cheap in Europe. In Ireland the tax alone would be over £1000.
My partner pays about the same for her 20 year old petrol Honda SUV. Ironically if she chose the filthy, carcinogen-spewing diesel model she'd pay just £40 in tax, so it's little wonder that people compromise.
And then there is storage/parking and maintenance cost and time. This is really why the SUV is so popular in the US. It has OKish cargo space for dump runs, family trips, etc even if it is oversized for the daily commute. But the base cost of a vehicle is so high you might as well get one that can get all the jobs done.
> I own 6 cars. I didn't pay more for all of them combined than the cost of one new car.
Seven but we have 3 drivers. Cars are 1961-2011 and 63, 96 & 2011 are current daily drivers. Every so often something under 40k mi shows up on FB marketplace under $2k and we grab it.
Our car insurance includes a $200/mo FU charge for living in FL. We're at no risk of flooding and carry liability-only. The forever-skyrocketing costs of repairing other drivers' new cars - this is a force multiplier on our premium costs.
Is it like coffee? People say they want a coffee with a strong flavor but they then proceed to mask the coffee flavor by adding milk and sugar (or plant-based creamer and artificial sweetener).
I think there is definitely some self delusion happening on the customer side, but automakers absolutely shape your purchasing choices away from what might be your ideal vehicle to things that are good enough vehicles for more people.
More people naturally want a RAV4 than a manual station wagon, but the automakers would prefer that even the folks leaning towards the manual station wagon leave the dealership with a RAV4 so they can just make the RAV4. So manufacturers offer nicer features it would make sense to offer in any vehicle exclusively in models they want to steer customers towards, like nicer seats, better sound systems, advanced safety features, etc. Subaru sells both the Impreza hatchback and the Crosstrek, which is literally just a lifted Impreza. But if you want non-cloth seats, roof rails, or even a spare tire, your only option is the Crosstrek. The conclusion that everyone wants crossovers is driven in no small part by the fact that buying a crossover is often the only way to get features customers want that should be, but are not, model agnostic.
For an article about keeping cars simple they don't mention some really big things.
They present it as a choice between manual or electric seats, manual or electric buttons, etc., which are indeed valid items of discussion ..
But what about other expensive, complicated, things I want a choice to get rid of, major things I don't want to pay for, like .. auto stop-start, or the ability for the car to slam on the brakes by itself, or the ability for the car to decide to steer itself if it thinks I've strayed from the middle of the lane. Heck, I don't want a rear camera or blind spot monitoring, I'll check my blind spots myself. They're even working on mandating some sort of monitoring in the next few years to "detect" whether you might be drunk.
What are the costs of all those sorts of things? All the sensors? All the computers? All the design/coding? The costs for maintaining all of it? The cost of the extra complexity? No mention of any of that?
(Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
Almost all of the other things you want to get rid of are legal requirements in some regions. Auto start-stop is generally to meet emissions targets. European safety regulations have made all of the following required on all new vehicles sold since mid 2024: AEB detecting cars/pedestrians/cyclists, intelligent speed assist, lane departure assist, reversing camera or sensors, drowsiness warning and a few others. For any car or platform that will at some point end up on the European market you can thus expect manufacturers to make all of these standard.
There's a cost attached to them, but it was decided that that cost is worth the significant benefits in road safety for both the people in the vehicle and the people around the vehicle.
The costs were always there, just externalized in the form of needless vulnerable road user injuries and deaths. Society pays a huge price for old, unsafe, polluting vehicles.
Emission regulations have reduced the cost of cars, if you count the health and environmental cost that manufacturers and drivers simply externalized onto the pulic.
Yes, it became more expensive for the polluter, but rightfully so.
> But what about other expensive, complicated, things I want a choice to get rid of, major things I don't want to pay for, like .. auto stop-start, or the ability for the car to slam on the brakes by itself, or the ability for the car to decide to steer itself if it thinks I've strayed from the middle of the lane. Heck, I don't want a rear camera or blind spot monitoring, I'll check my blind spots myself. They're even working on mandating some sort of monitoring in the next few years to "detect" whether you might be drunk.
What are the costs of all those sorts of things? All the sensors? All the computers? All the design/coding? The costs for maintaining all of it? The cost of the extra complexity? No mention of any of that?
Depends. The rearview camera thing? Probably not that expensive at this point; development costs have been amortized. Sensors probably are a bit more expensive.
The thing that chaps my ass about it is that there's so little commonality among parts between models and makers. We're 40+ years into the microprocessor revolution and ECMs are still mostly bespoke designs that have closed code running on them. Why? One way to deal with the design/coding costs would be to simply spread it across more automotive manufacturers, because at the end of the day, most of them are trying to achieve the same goals with regards to the function of the component. It's like looking at the different lug nut patterns between automakers... there's only so many ways to mount a wheel on a hub and you could reduce the tooling cost to make those wheels if you shared it with someone else.
> (Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
You didn’t talk about the biggest cost saver: not buying oversized SUVs. Cars got expensive because everyone was buying giant SUVs and smaller sedans and hatchbacks which usually covered 20-30k market, became less popular and therefore profitable to sell.
Safety/emissions features are a much different animal than giant 15-inch touchscreens, seat warmers, persistent mobile data uplinks, and 25 buttons on the steering wheel.
Most of the things you listed are both a good idea and legally required.
Automatic braking systems are only a good idea if they are 100% reliable, and everyone here will attest that no technology is ever 100% reliable. I'll reserve my judgement about whether it's a good idea until the first class-action lawsuits for spurious braking have been settled.
Simple cars don't make money... well, all of the available money.
The complex ones do.
You can get John Q. Public to buy a basic, efficient, safe compact car with cloth seats... or you can use that same production line to build a full-sized truck with tons of non-essential electronics that costs three times as much, which then requires the buyer to take out a loan from your financial arm for 84 months.
Which one returns more value to the shareholders?
EDIT: "non-essential electronics" should be seen as huge displays and the like, not things like emissions controls or safety equipment.
Disclosure: I work for General Motors, this is solely my own opinion and experience.
> Which one returns more value to the shareholders?
I think the 'shareholder primacy' era of American capitalism has had some particularly dumb and bad effects... unfortunately I can't change that just by being angry and anxious about it. The market loves tech companies right now, which really distorts the valuation of other companies.
I think that people still vastly underestimate how difficult it is to make a physical product, how much time and attention it takes.
I saw a presentation for assembling the Chevy Cruze in Lordstown, Ohio. There was a planned market size, production volume, etc, etc. The closest it got to the estimates (if I recall correctly) was about 1/2 to 2/3 the planned production volume. After the first couple of years of production, volume dropped more.
At 1/2 volume, the plant would never make money. The fixed costs simply eat too far into revenue. The lower the volume, the longer it takes to pay off things like engineering costs - not just for the OEM (GM, Ford, etc), but also for the suppliers. Suppliers often book substantial losses for the first couple years of a new product.
> Simple cars don't make money...
They really don't make money. On the very best day, a $30,000 simple car might make $1,000 net profit to the OEM, maybe another $500 to the dealer. On a median day, the initial sale might be a small loss.
Under capitalism, there is strong pressure to move upmarket. Under communism, most people never even got the simple car, and those who did get the simple car had to wait for many years.
And yet, other companies are able to stay in business while making these vehicles, sometimes in countries with even more onerous business and labor environments than the United States.
A big part of this is economies of scale, the reason your cheap compact gets a digital guage cluster is that the cluster has already been engineered and tested and it's just cheaper to slap that in there instead of re-engineering.
But while it makes it cheaper for the manufacturer and ultimately cheaper for the buyer on the lot, it makes for much more expensive repairs. I'm looking at you Ford with your $1200 taillights.
Most people with a < $30,000 budget buy a used vehicle. They get a lot more car for the same amount of money. So the market for a cheap new car is pretty small.
Which screws up the market for those who have a $10,000 budget for a car. Most of them would likely prefer a 5 year old $20,000 car than a 15 year old $50,000 car, but the market has very few of the former.
Do they not want those conveniences? Or are they tempering their expectations based on their budget and perceived cost?
If, let's say, a typical $30k car means a large EV SUV with all the luxury gadgets and conveniences, plus fridge, massage chair, full camping setup, etc. Would 30k car buyers not expect those things?
I can afford an suv. That’s not the issue - I just find it ridiculous to move that much metal for a small family or one person. A regular sedan would do.
I used to think that way (small car is best) until I had a family. yes in theory you can fit a small family in a sedan but in reality - not being able to fit a suitcase + stroller + kids bike (or whatever) into the trunk at the same time, or having your wife strain her back bending down to strap the toddler into their seat - gets old quickly!
So in practice what happens if that if you have a family and can easily afford an SUV, you get the SUV to alleviate these painpoints,
Well you're in luck! There are numerous regular sedans like a Nissan Sentra or Hyundai Sonata available at your local dealers. If you want one you can buy it and drive it home today.
Or a small hatchback, e.g. a Fit, Golf, Matrix, Yaris, etc. They might not be the most attractive looking vehicles but darn if they aren’t practical. Better cargo space than much longer sedans while being short enough to park almost anywhere.
It’s so disappointing that they’ve disappeared from the US market almost entirely.
When I was a teen I wanted to install electric windows in this vintage car I wound up with. My father said, “That‘s just one more thing that can break,” and yes it sounds kind of glib but I really took that to heart and let it shape my life in a direction of dependable simplicity.
I got out of car culture around 25 years ago, and every time I ride someplace in a modern car I'm just bewildered by all the bullshit. Do grown adults really need to be "pampered" with heated seats? How can you stand carrying around those "fobs" in your pockets — they make jeans look ridiculous, like a person is packing two sets of their junk.
Readit News
1. Economies of scale are the only way to build a budget car.
2. The incremental costs of adding features are nearly zero. The vast majority of price comes from the basic costs of building a legal vehicle.
3. Buyers generally won't reject a car for having features they don't care about, but they'll frequently reject a car for lacking a feature they deem important.
4. Buyers have different preferences.
In order to sell at a low price, automakers have to sell as many as possible to hit massive economies of scale. In order to sell that many, they need to please a huge number of buyers, which means they add a whole bunch of cheap features to satisfy as many buyers as they can without cannibalizing their higher-tier offerings.
The other side of this is the price point that western OEMs can actually hit with economies of scale has climbed significantly in recently decades, in part due to inflation / wage pressures, but mainly due to massive institutional inefficiencies. Mary Barra's compensation alone adds several dollars to the price of each GM vehicle. Legally mandated dealer margins and fees add tens of percent to the price that consumers pay. The inefficiencies of spreading production for tax purposes across state and international borders adds more cost. So on and so forth, and the market feedback mechanisms to correct these issues are intentionally hampered by policy decisions to favor the current status quo.
Change in the market needs support at the regulatory level.
Petroleum is a critical resource and most countries manage its use in automobiles for fuel in a fairly direct way: They tax the living shit out of gasoline and diesel. If you use more, you pay more. You have incentive to buy a smaller, more basic car because they will ultimately cost you less.
But not here. We gave exceptions on light trucks because that's all the big three could competently produce back when fuel economy standards were being introduced and we were getting our brains beaten in by the Japanese. Making more fuel-efficient vehicles requires R&D, and R&D spend is money not sent to a shareholder. Since the bigger vehicles don't count towards CAFE and smaller vehicles do, guess which vehicles the big three push harder to consumers?
If you buy a new car, you're already paying a premium. If you're willing to pay a premium, you were probably not looking for a basic model in the first place.
I'll buy a new phone for the fun of it. Not a new car. So don't put a tablet in my car :)
Sadly, I'd suspect a tablet is actually cheaper than physical buttons.
Only way then to increase revenue is to sell more car.
Indeed. Aside from price, this is why I will never own a new car, or anything newer than roughly 2015 or so (depends on manufacturer). A car must absolutely not have any internet phone-home spyware connectivity.
So they don’t need car data. My car maker does not sell its data nor does it link car locations with car owners. Although it could do so, but not without some bad PR or legal risks of doing it secretly after having made assurances that it doesn’t do it.
But that gets back to who would buy it? Nobody. They already have all the data they need from phones.
After all the niceties and "no, I hadn't been in an accident", I was afraid to touch the mirror after that.
They say they want one thing, but buy another.
They claim they want a manual transmission and then buy a RAV4.
They claim they want a sports sedan and then buy a RAV4.
They claim they want a station wagon and then buy a RAV4.
They claim they want a base, cheap, simple, vehicle and then they drop $55k on a fully-equipped RAV4 Hybrid.
Be weird. It's ok. Do the dumb thing and follow your desire.
And you can hedge your bets. I bought, used, a manual transmission convertible sports car, a sports sedan (red, even!), and capacious station wagon for all of my Home Depot needs all for less than the price of RAV4 Hybrid and between the three I always have at least one functional vehicle!
These studies should be surveying these groups instead of individuals I think. Sometimes the "group" will just be one person, and that's okay. But I wouldn't want someone's opinion if they're making it on behalf of a group without the groups input, because that's not realistic
So they went out and built a 2dr jeep with a shitty 2nd row so people can pretend like it's optimized for people hauling and sell the "lifestyle car" they really wanted to their SO. They retained the soft top and manual at non-insignificant cost to appeal to additional swaths of buyers and then added a hybrid option as a checkbox exercise.
It's kind of beautiful if you think about it.
Can't recommend enough this approach of multiple older cars. Between the extremely high cost and steep depreciation new cars make no sense unless you're so rich money is not a consideration.
I have multiple sports cars (all over 30 years old), a truck for towing and utility (over 20 years old), a minivan for kid and family duty (~15 years old). All that together is cheaper than a single new car. And having bought them depreciated, the value barely goes down. In fact a couple of the sports cars are appreciating now, worth more than my cost.
In many countries that's unaffordable. In the UK I pay £350 per year car tax, £480 insurance and £50 mandatory roadworthiness testing. Best part of a grand before I've even driven a mile - and the UK is considered cheap in Europe. In Ireland the tax alone would be over £1000.
My partner pays about the same for her 20 year old petrol Honda SUV. Ironically if she chose the filthy, carcinogen-spewing diesel model she'd pay just £40 in tax, so it's little wonder that people compromise.
Seven but we have 3 drivers. Cars are 1961-2011 and 63, 96 & 2011 are current daily drivers. Every so often something under 40k mi shows up on FB marketplace under $2k and we grab it.
Our car insurance includes a $200/mo FU charge for living in FL. We're at no risk of flooding and carry liability-only. The forever-skyrocketing costs of repairing other drivers' new cars - this is a force multiplier on our premium costs.
Deleted Comment
I think also in life your opening line can be generalized to:
It has been my experience that people .. are lying to themselves.
More people naturally want a RAV4 than a manual station wagon, but the automakers would prefer that even the folks leaning towards the manual station wagon leave the dealership with a RAV4 so they can just make the RAV4. So manufacturers offer nicer features it would make sense to offer in any vehicle exclusively in models they want to steer customers towards, like nicer seats, better sound systems, advanced safety features, etc. Subaru sells both the Impreza hatchback and the Crosstrek, which is literally just a lifted Impreza. But if you want non-cloth seats, roof rails, or even a spare tire, your only option is the Crosstrek. The conclusion that everyone wants crossovers is driven in no small part by the fact that buying a crossover is often the only way to get features customers want that should be, but are not, model agnostic.
They present it as a choice between manual or electric seats, manual or electric buttons, etc., which are indeed valid items of discussion ..
But what about other expensive, complicated, things I want a choice to get rid of, major things I don't want to pay for, like .. auto stop-start, or the ability for the car to slam on the brakes by itself, or the ability for the car to decide to steer itself if it thinks I've strayed from the middle of the lane. Heck, I don't want a rear camera or blind spot monitoring, I'll check my blind spots myself. They're even working on mandating some sort of monitoring in the next few years to "detect" whether you might be drunk.
What are the costs of all those sorts of things? All the sensors? All the computers? All the design/coding? The costs for maintaining all of it? The cost of the extra complexity? No mention of any of that?
(Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
There's a cost attached to them, but it was decided that that cost is worth the significant benefits in road safety for both the people in the vehicle and the people around the vehicle.
Deleted Comment
Emission regulations have reduced the cost of cars, if you count the health and environmental cost that manufacturers and drivers simply externalized onto the pulic.
Yes, it became more expensive for the polluter, but rightfully so.
Depends. The rearview camera thing? Probably not that expensive at this point; development costs have been amortized. Sensors probably are a bit more expensive.
The thing that chaps my ass about it is that there's so little commonality among parts between models and makers. We're 40+ years into the microprocessor revolution and ECMs are still mostly bespoke designs that have closed code running on them. Why? One way to deal with the design/coding costs would be to simply spread it across more automotive manufacturers, because at the end of the day, most of them are trying to achieve the same goals with regards to the function of the component. It's like looking at the different lug nut patterns between automakers... there's only so many ways to mount a wheel on a hub and you could reduce the tooling cost to make those wheels if you shared it with someone else.
> (Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
It's nice to have breathable air, no?
Most of the things you listed are both a good idea and legally required.
The keyboard you typed your message had a cost, yet apparently that was worthwhile so that all of us could contemplate your points.
The complex ones do.
You can get John Q. Public to buy a basic, efficient, safe compact car with cloth seats... or you can use that same production line to build a full-sized truck with tons of non-essential electronics that costs three times as much, which then requires the buyer to take out a loan from your financial arm for 84 months.
Which one returns more value to the shareholders?
EDIT: "non-essential electronics" should be seen as huge displays and the like, not things like emissions controls or safety equipment.
> Which one returns more value to the shareholders?
I think the 'shareholder primacy' era of American capitalism has had some particularly dumb and bad effects... unfortunately I can't change that just by being angry and anxious about it. The market loves tech companies right now, which really distorts the valuation of other companies.
I think that people still vastly underestimate how difficult it is to make a physical product, how much time and attention it takes.
I saw a presentation for assembling the Chevy Cruze in Lordstown, Ohio. There was a planned market size, production volume, etc, etc. The closest it got to the estimates (if I recall correctly) was about 1/2 to 2/3 the planned production volume. After the first couple of years of production, volume dropped more.
At 1/2 volume, the plant would never make money. The fixed costs simply eat too far into revenue. The lower the volume, the longer it takes to pay off things like engineering costs - not just for the OEM (GM, Ford, etc), but also for the suppliers. Suppliers often book substantial losses for the first couple years of a new product.
> Simple cars don't make money...
They really don't make money. On the very best day, a $30,000 simple car might make $1,000 net profit to the OEM, maybe another $500 to the dealer. On a median day, the initial sale might be a small loss.
Under capitalism, there is strong pressure to move upmarket. Under communism, most people never even got the simple car, and those who did get the simple car had to wait for many years.
Still rolling in 2005 Toyota. Fuck modern cars! Excuse my French.
But while it makes it cheaper for the manufacturer and ultimately cheaper for the buyer on the lot, it makes for much more expensive repairs. I'm looking at you Ford with your $1200 taillights.
Those are not base equipment. But yeah the price is absurd.
Which screws up the market for those who have a $10,000 budget for a car. Most of them would likely prefer a 5 year old $20,000 car than a 15 year old $50,000 car, but the market has very few of the former.
If, let's say, a typical $30k car means a large EV SUV with all the luxury gadgets and conveniences, plus fridge, massage chair, full camping setup, etc. Would 30k car buyers not expect those things?
So in practice what happens if that if you have a family and can easily afford an SUV, you get the SUV to alleviate these painpoints,
Or a small hatchback, e.g. a Fit, Golf, Matrix, Yaris, etc. They might not be the most attractive looking vehicles but darn if they aren’t practical. Better cargo space than much longer sedans while being short enough to park almost anywhere.
It’s so disappointing that they’ve disappeared from the US market almost entirely.
I got out of car culture around 25 years ago, and every time I ride someplace in a modern car I'm just bewildered by all the bullshit. Do grown adults really need to be "pampered" with heated seats? How can you stand carrying around those "fobs" in your pockets — they make jeans look ridiculous, like a person is packing two sets of their junk.
I can't imagine buying a car built after 1990.