Name: Why Cheap Cars Are Disappearing
Uploaded: 2021-05-14T13:07:21.000Z
Duration: 11 min 44 s
Description: VoiceTubeの動画で発音を聞きながら英語表現を覚えよう！学べる英語：

There are about 40 different car brands in the United States, there are

American brands and imports, trucks, SUVs, sedans, sports cars and of

There are pricey cars and perhaps more affordable cars.

But one kind of car that appears to be disappearing is the cheap car.

Auto industry analysts say sales of very inexpensive cars these days,

meaning any new car with a starting price somewhere below 20000 dollars

are declining. In fact, they have fallen off a cliff.

Historically, about one fifth of new vehicle sales would have transacted

But in the last few years, those have completely dried up.

New cars are becoming more expensive, and it's unlikely those cheap cars

Buyers who love them may be left out in the cold.

The nascent years of automotive manufacturing were dominated by what we

would today think of as coach builders, basically shops that hand assemble

This was the way horse drawn carriages or coaches were built and

automotive manufacturing adopted both the assembly line and the name.

Industrialists such as ransom olds and Henry Ford changed all that by

introducing assembly lines and interchangeable parts, dramatically

Ford's Model T was one of those early vehicles in Europe.

There was a movement to develop inexpensive cars for the masses, which

In fact, German automaker Volkswagen's brand name translates to people's

Practical, affordable and dependable cars has long been a key goal of

automakers. Affordability was a key ingredient in legendary and extremely

strong selling cars, such as the original Volkswagen Beetle, the Ford

market in the latter half of the 20th century, in part by selling

Typically, the most affordable cars are the smaller ones that would fit

into the so-called compact and subcompact categories.

Some midsize vehicles can also start at prices below twenty thousand

included cars such as the Honda Fit, Hyundai Accent Aryo

Vehicles in this segment are typically priced below twenty thousand

dollars, a cutoff point for what auto industry analysts consider the

The 2020 Nissan Versa, for example, starts at a price of around fifteen

thousand dollars. Cheap cars have a problem that might seem rather

Automakers, like any company, have certain fixed costs built into their

business models. They have to build factories, keep the lights on, pay for

product development and pay workers and executives.

Many of these basic costs exist whether the product they are selling is

So an automaker basically has two choices sell a little of something

The problem for automakers is that relying on volume to make money can be

hard. Margins can be razor thin, and any challenges or missteps can eat

Automakers can try to protect against this, in part by spreading costs

across a range of vehicles, a pricey car might share some parts with a

cheaper one. Obvious examples of this or the Ford Mustang, Dodge

Challenger and Chevrolet Camaro, the cheapest versions of the start in the

But the most expensive versions, which share a lot of the same basic

But at least in the U.S., the overall market appears to be moving away

Why do they matter? Well, the short answer is young people, mostly younger

They can be people as young as teenagers, but also folks in their 20s and

even 30s. Most of the consumers that are in the subtree space tend to be

And so it's a very critical demographic for getting new customers into the

industry in general, but into your brand in particular.

So as consumers get their first jobs, establish a career going to family

and they're looking for a new car, they're in that twenty thousand dollar

space. In spite of the fact that cheap cars are less profitable,

automakers are still keen to lure younger buyers who likely have many car

Selling cheap cars creates the possibility of building brand loyalty in a

Even luxury makers such as BMW and Mercedes have moved into the lower end

of the market in recent years in the hope of boosting volumes and getting

So there's a lot of risk here in that first time buyers now are having to

And so now you're kind of allowing the risk there that these first time

consumers will rely more on Uber, will live urban life and not even need a

car. So we as an industry could be making a lot of long term actions here,

long term implications from moving the first time buyers either back or

Despite the risks of selling cheap cars, they historically made up a

considerable share of the new car market.

This appeared to be the case even in recent years, as the U.S.

economy recovered from the financial crisis of 2008 and 2009.

Cheap cars made up a good sized slice of the auto market prior to 2018.

The segment was about 20 percent of the industry pretty consistently and so

on. On the retail side, we're talking in excess of about two million sales

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Why Cheap Cars Are Disappearing

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