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  • William Maley
    William Maley

    The Great Disappearance of Affordable American Cars

      And why that may pose a problem

    It is already tough for a number of people to afford a new vehicle as the average transaction price keeps rising. According to Kelly Blue Book, the average transaction price for November rose 2.1 percent to $36,978. This isn't being helped by American automakers deciding to stop producing cars due to changing consumer tastes. This was brought to light last week when General Motors announced that it would be cutting a number of cars including the Chevrolet Cruze. Most automakers and dealers believe consumers will move towards utility vehicles, but some dealers believe that consumers may defect from American automakers because they don't offer the vehicle they are looking for.

    Chad Martin, a Bowling Green, Ky., dealer tells Automotive News that consumers feel the "affordability pinch" when automakers decide to drop cars to focus more on utility vehicles. For the most part, consumers "generally seem to be shopping for a particular type of vehicle, such as compact cars." Remove them out of your lineup and consumers are likely going to look elsewhere.

    "What this is going to mean is, you're going to see a somewhat higher defection rate because you don't have the product lineup that particular consumer wants," said Martin.

    Another big hurdle facing consumers who want to stick with the domestics is pricing. Martin explained that there is more than a $5,000 difference in pricing between compact crossovers and compact sedans. 

    Obviously, the consumer is going to have to absorb that $5,000 difference," said Martin.

    The numbers from Kelly Blue Book tell the story.

    • Compact Car Average Transaction Price: $20,458
    • Subcompact Crossover/SUV Average Transaction Price: $24,210
    • Compact Crossover/SUV Average Transaction Price: $28,765

    Jeremy Acevedo, Edmunds' manager of industry analysis agrees with the sentiment said by some dealers that consumers loyal to a segment may look elsewhere.

    "It's easy for shoppers to move from a Cavalier to a Cobalt to a Cruze. But it's a whole different ballgame moving from a car to an SUV."

    Source: Automotive News (Subscription Required)

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    I am wondering if we will see new affordable CUVs in the subcompact segment from GM that are VOLT powertrain or EVs.

    I want to believe that GM is not going to truly abandon people looking for that 15-25K dollar auto.

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    Just now, ccap41 said:

    Volt powertrain and affordable haven't gone hand-in-hand yet. I don't see it coming too soon. 

    I expect a Volt Powertrain CUV to show up this year and then as they build, expand to other auto's while lower cost. I can honestly say I just do not understand how GM has not had a subcompact and compact plugin hybrid using this powertrain yet. Truly losing sales to Toyota.

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    Maybe we will see an EV CUV or Hybrid CUV at Detroit or NYIAS in 19.   Maybe something from Chevy and something from Cadillac? 

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    A Volt SUV would be $40k base, look at what other SUV’s cost.   Most car makers don’t care about the entry level, they want to sell high margin SUV’s only.  Then they can cut the workforce that builds the cheap cars and save even more money.

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    1 hour ago, ccap41 said:

    Volt powertrain and affordable haven't gone hand-in-hand yet. I don't see it coming too soon. 

    There is nothing technologically remarkable about the drive part of the Volt's powertrain, it's all in the batteries.  

    14 minutes ago, smk4565 said:

    A Volt SUV would be $40k base, look at what other SUV’s cost.   Most car makers don’t care about the entry level, they want to sell high margin SUV’s only.  Then they can cut the workforce that builds the cheap cars and save even more money.

    A Niro PHEV is $28.2k base and $36k absolutely loaded.  It should be the template for a Volt crossover.   The Volt would be a bit more expensive than the Niro though as it has more batteries and range.

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    18 minutes ago, Drew Dowdell said:

    There is nothing technologically remarkable about the drive part of the Volt's powertrain, it's all in the batteries. 

    Wouldn't that be a part of the system, as a whole? 

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    Just now, ccap41 said:

    Wouldn't that be a part of the system, as a whole? 

    Not really, no. The batteries can be increased or decreased in size as much as cost and space allow.  Chevy could drop the price of the Volt by making a LowVolt version with half the battery.  It would probably take $5k off the price in exchange for a 25+ mile EV range instead of a 50+ mile one.  That would put it pretty much in line with the Pruis Prime in both range and cost. 

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    The other problem with the lack of affordable small cars is that this part of the market is owned by Toyota, Honda and Hyundai/KIA.  Should GM and Ford do better? Yes, but those sales are not what they were five or ten years ago.

    A Volt CUV would be fantastic though.

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    27 minutes ago, A Horse With No Name said:

    How many states have legalized weed and do you live in one of them?

    Haha Canada has legalized weed but my vape has been in the basement somewhere for about a decade.  As bland as the Cruze is, it is still more palatable to me than a Trax.

     

     

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    37 minutes ago, frogger said:

    Haha Canada has legalized weed but my vape has been in the basement somewhere for about a decade.  As bland as the Cruze is, it is still more palatable to me than a Trax.

    Hail Canada, a Land we export weed too! :CanadaEmoticon:

    cheech and chong weed GIF

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    48 minutes ago, frogger said:

    Haha Canada has legalized weed but my vape has been in the basement somewhere for about a decade.  As bland as the Cruze is, it is still more palatable to me than a Trax.

     

     

    I would agree!

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    1 hour ago, dfelt said:

    Hail Canada, a Land we export weed too! :CanadaEmoticon:

    cheech and chong weed GIF

    My wife had a weed stock ETF for about 4 months this year, it went up 20% in that time but has gone down since legalization went national and suppliers had trouble fulfilling.  So many greenhouses have converted or are in the midst of being converted..

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    30 minutes ago, frogger said:

    My wife had a weed stock ETF for about 4 months this year, it went up 20% in that time but has gone down since legalization went national and suppliers had trouble fulfilling.  So many greenhouses have converted or are in the midst of being converted..

    Lots of growth ahead I expect. LOL

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    This is a real problem.  The domestics NEVER paid much attention to compacts and subcompacts.  The Japanese and Koreans own that market already, and now it will only entrench foreign automakers even more into U.S. culture... because the cars they build are introductory... if they can build a good, cheap car, then they have a customer who will check back with them first... for their subsequent vehicular needs.  Then there are those that have only bought small cars, even as their incomes grow.  These people are being kicked to the curb by FCA, GM and Ford... the foundation for a bleak future.  High-priced electrics with built-in range anxiety are not the answer.

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    41 minutes ago, ocnblu said:

    This is a real problem.  The domestics NEVER paid much attention to compacts and subcompacts.  The Japanese and Koreans own that market already, and now it will only entrench foreign automakers even more into U.S. culture... because the cars they build are introductory... if they can build a good, cheap car, then they have a customer who will check back with them first... for their subsequent vehicular needs.  Then there are those that have only bought small cars, even as their incomes grow.  These people are being kicked to the curb by FCA, GM and Ford... the foundation for a bleak future.  High-priced electrics with built-in range anxiety are not the answer.

    Sounds like you have been drinking the MB Koolaide where one company will rule it all from entry to ultra luxury.

    We are a Multicultural Society of Global Products Globally sold and the days of US Empire building are gone along with the English Empire and everyone else that thinks singularly in the world.

    Globally is the planet you live on.

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    ocnblu

    Posted (edited)

    1 hour ago, dfelt said:

    Sounds like you have been drinking the MB Koolaide where one company will rule it all from entry to ultra luxury.

    We are a Multicultural Society of Global Products Globally sold and the days of US Empire building are gone along with the English Empire and everyone else that thinks singularly in the world.

    Globally is the planet you live on.

    So sick of your BS, Felt.

    Edited by ocnblu

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    2 hours ago, ocnblu said:

    This is a real problem.  The domestics NEVER paid much attention to compacts and subcompacts.  The Japanese and Koreans own that market already, and now it will only entrench foreign automakers even more into U.S. culture... because the cars they build are introductory... if they can build a good, cheap car, then they have a customer who will check back with them first... for their subsequent vehicular needs.  Then there are those that have only bought small cars, even as their incomes grow.  These people are being kicked to the curb by FCA, GM and Ford... the foundation for a bleak future.  High-priced electrics with built-in range anxiety are not the answer.

    Not true.  The domestics did build compacts and subcompacts.  They just never put the effort into them that Japan Inc and Korea Inc did for one simple reason:  in the 1970s small cars are mostly what they built domestically and then they exported small cars to the USA.  Corolla and Civic and the Mazda 3 and the Sentra and the small Hyundai/KIA cars ARE their bread and butter.  That has not been true of the domestics since the 1920s.  The domestics want you to buy large sedans and pickup trucks for the high margins.  This is why the domestics MAY have a bleak future: GM and Ford and FCA want margins and not necessarily small car buyers since those buyers do not fill the coffers anywhere nearly as well as BOF trucks and midsize CUVs (and at one time, large sedans).

    Worse yet, it has not been proven that a Cruze driver buys an Impala or Traverse in 5-7 years.  So the domestics say: why bother?

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    2 minutes ago, riviera74 said:

    Not true.  The domestics did build compacts and subcompacts.  They just never put the effort into them that Japan Inc and Korea Inc did for one simple reason:  in the 1970s small cars are mostly what they built domestically and then they exported small cars to the USA.  Corolla and Civic and the Mazda 3 and the Sentra and the small Hyundai/KIA cars ARE their bread and butter.  That has not been true of the domestics since the 1920s.  The domestics want you to buy large sedans and pickup trucks for the high margins.  This is why the domestics MAY have a bleak future: GM and Ford and FCA want margins and not necessarily small car buyers since those buyers do not fill the coffers anywhere nearly as well as BOF trucks and midsize CUVs (and at one time, large sedans).

    Worse yet, it has not been proven that a Cruze driver buys an Impala or Traverse in 5-7 years.  So the domestics say: why bother?

    "Not true" and then you proceed to agree with everything I said.  WTH are you talking abote?

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    Certain automakers do some things better. The domestic makes nowadays are expected to make massive profits in a growth and peak economic cycle.

    But even truck sales are tied to housing starts and other things. In a bad economy, I’m pretty sure that GM Ford and FCA are not making cars anymore because even now they're not viable

    And now they all have some form of cheaper pickup or base model utility that is better equipped tech wise (not luxo power everything) than the high trim cars sold 10 yrs ago

     

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