Huge (and expensive) trucks and SUVs have for many years been the best-selling vehicles on the market. But that may be changing – in part because they are so huge (and expensive).
Sales of the Mitsubishi Mirage – which is the smallest and least-expensive new car on the market – have increased by 85 percent over the past year so far. They have jumped from 5,316 in all of 2023 to 9,862 in the first six months of 2024. The numbers may not be huge – yet – but the percentages indicate they may soon be.
It’s not just the inexpensive Mirage that’s selling really well all-of-a-sudden. It is also other inexpensive small cars like the Nissan Versa, which you can buy for just over $16k to start (or about half what it costs to buy a Nissan Ariya EV). Versa sales are up by more than 60 percent.
The why ought to be obvious.
A diminishing percent of Americans can afford a huge and hugely expensive truck or and SUV – and forget an EV. Over the course of less than four years, the average price paid for a new vehicle has increased by about $15,000 to just shy of $50,000 – which is about 75 percent of the average American family’s annual income.
That, by itself, would almost certainly put the brakes on sales of huge trucks and SUVs – as well as EVs. It really doesn’t matter how much you like or want something if you can’t make the payments on it. And payments have already been stretched to about as long as they can be stretched – to about six years – because after six years, the depreciated value of the vehicle is likely to be less than what the borrower still owes on the vehicle. When that point is reached, the common sense incentive for the borrower is to stop making payments and leave the debt albatross parked in the driveway to be repossessed.
The lender loses – and that’s why loans on depreciating consumer appliances such as cars are limited to about six years.
But when you limit a loan to about six years, there’s no way to make those monthly payments on a $50k vehicle seem “affordable.”
Even assuming a zero percent loan, it costs about $700 per month to finance the purchase of a $50k vehicle over six years. That’s more than most Americans can afford – and that’s before you take into account what it costs to pay for a full-coverage insurance policy (mandatory when you are making payments on a vehicle you don’t own yet) which will typically add at least $2k annually to what you’re paying. Plus the “property taxes” that some states have that add another $1k (or more) annually that you’re on the hook for if you buy a new vehicle that’s valued at $50k or more.
Then add what it costs to fuel a huge truck or SUV now that it costs about twice as much to fill ‘er up as it did when Orange Man Bad. Plus the 30 percent (at least) uptick in the cost you pay for everything else, especially food.
It is not surprising that there is a surge of interest all-of-a-sudden in small, affordable – and efficient. A little car like the Mirage uses half as much gas each month as a huge truck or SUV – and that alone amounts to a savings of at least $100 per month for most people.
But there aren’t many small cars left to choose from.
The Mirage and the Versa are just two of the few. Ford and GM and Chrysler and Dodge no longer sell cars at all. This is a consequence of the decision to sell high-profit trucks and SUVs (and crossovers, which look like SUVs) rather than low-profit inexpensive small cars that it’s necessary to sell a lot of to make the profit the automakers would like to see.
But that only works when there are enough people willing – and able – to buy an expensive truck, SUV or crossover. More finely, it works only for as long as they are able to make the payments – and lenders have confidence they’ll finish making them.
We have probably already crossed that event horizon. All you have to do to confirm that death is in the air is to cruise past new car dealer lots and see for yourself how many huge trucks, SUVs and crossovers are just sitting on those lots. Then juxtapose that with how many Mirages and Versas are leaving the lots.
The Left – which is responsible for most but not all of this – is beginning to understand that reality has a bite. The government – which has become a tool of the Left – is almost entirely responsible for the $15k increase in the average price paid for a new vehicle and the increased cost of everything else.
But the car industry is responsible for deciding to focus on making as much profit per truck and SUV – rather than sell a lot of small cars and make a profit on volume, instead. The latter course of action was Henry Ford’s model – and it worked well for Ford and for Americans.
It can, again.
But it’ll take a Henry Ford (rather than an Elon Musk) to make it happen.
. . .
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A Symbol Of Everything Wrong With Cars Today – 1997 Ford Puma
We all want more efficient, less polluting cars, that are fun to drive right? Wrong.
Cars have become appliances, horrible overweight SUV’s and EV’s….
There is less driver’s cars around now…..maybe because there is less people around that care about driver’s cars….
https://www.youtube.com/watch?v=rfZZvoKT7Y8
Buying EV trucks is dumb again….
‘Bring A Trailer’ Data Shows Early Adopters Of EV Trucks Hammered By Price Plunge
from ZH comments…..
EV Truck Trade in Values for 2022 Models
Rivian R1S
$92,000 new
$52,000 today
Ford F150 Lightning Platinum
$93,000 new
$49,000 today
Tesla Model 3
$49,000 new
$21,000 today
Toyota ICE Corolla
$20,000 new
$15,300 today
Prices from KBB.com, 24k miles and Very Good condition
Check this out…
2014 (yes, 2014 @120k) Toyota Tundra Crewmax Limited Pickup 4D
$28,000 new
$23,000 today
https://www.zerohedge.com/markets/early-adopters-ev-trucks-hammered-price-plunge
Why is everyone so ill with Biden? When OM was in office, my gas tank only held $40.00 in fuel, now it holds $85.00 worth of fuel!
I like the Sentra SR Premium, and you can get 15% off and no adds if you shop around. It’s got sufficient power and an improved CVT as well. We just don’t need it, as I drive a pickup and my wife has a ’23 CX5 PP, an excellent car. Hard to beat the Mazdas.
If you are serious about the environment from the perspective of conserving, not wasting energy and resources and reducing pollution (I won’t go there with climate change), and if you are serious about saving money, then one of the best things you can do when it comes to your car is to buy a smaller car and keep it for as long as it’s worth fixing.
Cars like the Mirage and Versa take fewer resources and cost less to drive, obviously. But their environmental and financial impacts are also significant in their manufacturing and, well, disposal.
You don’t need a lot of iron, steel, aluminum, glass, and rubber to build these cars—and you don’t need the toxic rare earth metals that EV batteries use.
You can keep cars like these running for 10 years or more—and when they’re not able to be fixed, just about everything but the vroom-vroom can be recycled or disposed of properly.
But first, they’re not major profit generators for car companies, and second, it’s not about controlling emissions, it’s about controlling mobility.
I wish I could afford to have how many?, 20,000 nuclear weapons at the ready to annihilate humanity completely?
May they all be aimed at Israel and spare the rest of us.
At 300,000 deaths per nuclear device, it will take 60 hydrogen bombs to total 18,000,000 dead Israelis.
Three times six million equals eighteen million. Good enough for now.
The price will be worth it, Madeleine Albright had it right from the get go.
Have fun in the real world.
I was watching some NASCAR on the TV. Pretty soon Chevy won’t have a car to field. Maybe they can run their Corvette.
BTW; I was looking for information on the NASCAR engines. My search isn’t that good anymore because of old age. Could someone point out where I might find that information.
NASCAR is transitioning but we don’t know where. Electric, Hybrid or gas, what is to be the future.
Thanks
Just for laffs:
‘Second Gentleman Doug Emhoff has tested positive for COVID-19 after experiencing mild symptoms, his office announced Sunday. Emhoff spokesperson Liza Acevedo said in a statement that the second gentleman “is fully vaccinated and three times boosted.” — APe News
https://tinyurl.com/2vbccc6b
Anybody with three brain cells can draw a stunningly obvious conclusion about the effectiveness of the ‘vaccine’ [sic, LOL].
‘Covid-Vaxxed Children 4423% More Likely to Die Than Unvaxxed’
“The disturbing data reveals that triple-vaccinated teenagers are 136% / 2.35x more likely to die of Covid-19 than unvaccinated teenagers.
they are also 38% more likely to die of any cause than unvaccinated teenagers.”…
https://slaynews.com/news/covid-vaxxed-children-more-likely-die-unvaxxed/
I had a Studebaker Lark, no worries, little six cylinder, it went.
If I were Joe, I’d have raced it at the Indy 500 and taken first place!
A heater and a radio, Spartan interior. You got around, then went back home.
Can’t haul much in a Mirage, sheetrock won’t fit, a 55 inch HDTV will be a challenge. Have to have it delivered for a hundred dollars or more.
Dodge Dart was a cool car.
The Ford pickup does plenty, no worries.
I read it all, the Mirage looks like a good buy.
People are buried in debt, the economy is bad, inflation is out of control.
Car dealers can’t sell their $100,000 vehicles that their lots are full of, people want something cheap…
A look on dealer’s lots…..
https://www.youtube.com/watch?v=s0ozPtzMyE0
Shades of Dieselgate — here we go again:
‘General Motors will pay nearly $146 million in penalties to the federal government because 5.9 million of its older vehicles from 2012 through 2018 do not comply with emissions and fuel economy standards.
‘The penalty comes after the EPA said its testing showed the GM pickup trucks and SUVs emit over 10% more carbon dioxide on average than GM’s initial compliance testing claimed. The problem stems from a change in testing procedures that the EPA put in place in 2016, GM said.
‘The enforcement action involves about 4.6 million full-size pickups and SUVs and about 1.3 million midsize SUVs, the EPA said. The affected models include the Chevy Tahoe, Cadillac Escalade and Chevy Silverado. About 40 variations of GM vehicles are covered.
‘GM will be forced to give up credits used to ensure that manufacturers’ greenhouse gas emissions are below the fleet standard for emissions for that model year, the EPA said. In a quarterly filing with the SEC, GM said it expects the total cost to resolve the matter will be $490 million.‘
https://tinyurl.com/bdc6php3
Half a billion gone, owing to quibbles over a test procedure from eight years ago. GM dare not sue in the EPA’s ‘prosecutor, judge and jury’ administrative courts. So it pays the shakedown, and passes the costs on to its hapless customers.
It’s another big ‘gotcha’ for Red Guard Regan, trying to extract as much payola as possible before getting booted out in six months. He did a lot to us.
If GM wasn’t so whipped they would tell the EPA to get bent based on the recent Supreme Court ruling that smacked down the administrative agencies. Not holding my breath.
“Event horizon” was 21 January 21. 11 thousand pipeline jobs instantly gone. Then it got incrementally worse by the day. Deny at your own risk.
Something to add to the article – almost everyone buys on credit. If you do, you must buy insurance, which is also way up. I bought a motorcycle with cash, thus I do not have to buy insurance, since the dealer got their money and do not care about it any longer. But if I had bought on payments, they would make me pay insurance.
And then there is credit in the age of the Federal Reserve – which is not federal and has no reserves – when you borrow money to buy, your signature on the loan is monetized and like magic that amount of new money just magically appears on the lending banks account, via the Fed. That creates price inflation, and as you can imagine, it is the inflation engine making everything more expensive. Now imagine if the Fed’s creative money power ended (like in nuclear war – which they seem to be begging for) – and everyone had to pay cash – how low prices would go.
I’ve been wondering how this system of credit ends for 40 years and finally came up with a realistic scenario how inflation could turn into deflation. Interest rates refuse to fall, but instead go up, “to the moon” as I love to say. Just like late 1970’s and early 1980s when they hit 20%, but this time even higher, perhaps much higher, like what you see in banana republiks.
The US of Amerika hegemon is borrowing 1 trillion every 90 days – but the world hates the hegemon and wants a new system – so BRICS was formed. As the transition to an alt system takes place, nations like Russia and China, who are being punished by the mad small hats, sell Treasuries. Russia sold them all. Why would you own US Treasuries when they are trying to wipe you off the map?
Thus as we go forward, one way or another the free ride of zero interest rates gives way to secular higher rates – and the incentive to borrow for consumers is killed. And it is worse for used cars, whose rates are usually much higher. Well see how the system ends, but surely it will end – no nation can print money forever and get away with it.
The largest class of investors, the original 401(k) participants, are nearly all at or near retirement age now. Most of them are still clinging to their S&P 500 index funds, either because they’re perma-bulls or just too stupid and lazy to rebalance to something a little less risky. The S&P always goes up, just like real estate. Until “animal forces” take over, but that’s not going to happen, not when Powell can buy stocks with Fed fun dollars.
All those tricks and levers in the box, including pushing up interest rates, mean everything is awesome! Don’t you worry your little head about what those mean old bears say, Powell will keep the plates spinning ad infinitum. Because he’s one of those experts the courts said can’t rule us anymore.
So keep buying on credit, keep ignoring the warning signals. Just keep going along to get along and enjoy yourself. Interest rates are too high! Except that they should be even higher, given the demographic make up of our great nation.
Lenders should be loaning out to the younger generation of new borrowers, and assessing risk accordingly. And who are the lenders and borrowers? Well, I know I got a loan from my parents when I was starting out, at very reasonable terms, to get on my feet after college. Of course mom forgave it after a time. If I hadn’t gone to them, well, the bank would probably have wondered why I didn’t get the loan from them, and priced the risk accordingly. Then further down the ladder, to Household Finance Corporation, or the loan shark, each charging higher rates of interest. After all, if your own mother won’t loan you a buck, what does that say?
Someone needs to mop up the mess. If things are going so well, why not let the interest rates reflect reality, and let the boomers move their money to stable and safe investments? Interest rates on CDs were once well over 15%, and mortgages were over 20%, and we not only survived, we got the go-go 80s. And new new investors went after real businesses with real products, not the current cavalcade of Hollywood-style investments where most of them lose and VCs look for summer blockbusters to prop up the rest.
Just a year ago the stock bulls were convinced of imminent Fed pivot. Pivot was near, buy more stocks, cause the Fed is going to drop rates again. But pivot never materialized. No matter – stocks just keep marching higher. Like home prices. It’s the bigger fool theory in action.
There is a theory that the Fed does NOT actually control rates.
https://elliottwaveuniversity.com/interest-rates-win-again-as-fed-follows-market/
If, some day, interest decide to go up higher (because of risk) and let’s say 30 year mortgage rates go up to 8% or higher – that could be a shocker that topples the house market. I am old enough to remember buying my first home, the rate was 18%.
A standard valuation of a home price is the monthly rent x 100. So if the monthly rent is $1500, the home is 100 times that in worth, or 150,000. Well I can tell you if that is true then most homes out west are 3 to 5x overvalued.
So it is understatement to say the housing market could correct substantially – and that would send most banks under. Anyone who is leveraged in stocks or real estate can lose big with just a 10% market correction. In 2006-9 many house dropped 90% in value.
Whoever inherits the White House and tries to reign in deficit spending could cause a serious decline – so of course they won’t dare stop spending. Thus something has got to break – like increased inflation that sends rates higher.
If the Chins do over the next 10 years what the Japs did from the 70s to the 90s, then US auto industry will be reduced to completely State supported entities. Moreover, If the Chins build plants in Mexico so they’re cheap cars are NA made, it’s all over for virtually all US auto makers. Look no further than failed makers AMC and the like…
YMMV…
A large part of why the auto market regulations are the way they are, and a large part of why they keep changing every few years, is to keep the Chinese auto manufacturers out of the NA market.
Because once they get a toehold, it’s lights out for Ford, GM, and Chrysler/“Stellantis”. And everyone knows it.
The U.S. car industry died a long time ago, and has been propped up by the government for quite some time. Probably because no none wants to be the president who killed GM, or whatever.
In case anyone needs a chuckle, here’s more on nascar’s summer fling with eeeveees:
https://www.jayski.com/2024/07/06/nascar-abb-reveal-ev-prototype-and-launch-electrification-innovation-partnership/
Arrrgh, listen to this woke gibberish:
‘Eric Nyquist, NASCAR SVP and Chief Impact Officer, said “ABB is an industry leader and will help in efforts to decarbonize our operations as we pursue achieving net-zero operating emissions over the next decade.”
‘NASCAR Impact [is] an umbrella platform launched to shepherd sustainability, community engagement, and other social initiatives. At the core of NASCAR Impact is NASCAR’s plan to reduce its own carbon footprint to zero across its core operations by 2035.’
ABB is a decades-ago merger of Asea (Swedish) and Brown Boveri (Swiss). They offered me a job one time. Glad I turned down those woke Eurotards. Otherwise you might see me out there bare-chested, with purple hair and a man-purse, pimping EeeVee racers. SAD!
NASCAR is done. When channel surfing, I stop for few minutes when a “race” is on. The cameras are always focused on the cars. But, every now and then, you’ll catch a glimpse of the spectator area and will see empty seats everywhere. It’s only a matter of when, not if that they go bankrupt and cease to be. Go woke, go broke.
If I attend a race in person at all anymore, I go to a local race. It’s nearby, affordable, fun, and there’s no woke BS. Besides, you might get to see a driver on his way up; I watched Martin Truex, Jr. when he was racing the #56 modified at Wall Stadium back in the late 1990s-early 2000s…
US annual light vehicle sales exceeded 16.5 million during two brief golden ages: 1999-2006 and 2015-2019. In 2023, sales were 15.5 million. Chart:
https://tinyurl.com/346bzbk5
Even dim-witted auto makers grok that something is wrong with this picture. America’s population has increased by 60 million since Golden Age I in the year 2000. But light vehicle sales are DOWN, a generation later.
What’s it mean? A saturated market, for one thing. Also, sinking affordability because of govco regulation and more pounds of materials in each vehicle. There is no Wegovy to blast away the metabolic syndrome of fat-bottomed cars. 🙁
During the recession year of 2009, annual sales fell to 10.4 million, the lowest level since the recession year of 1982 — and 40 percent down from the year 2000 peak. This sales crash bankrupted GM and Chrysler, and provoked Barky O’Bummer’s idiotic cash-for-clunkers program to reduce supply (and, concomitantly, hike prices).
All the ducks are in a row for another epic smash in vehicle sales, like 1982 and 2009. Wall Street is more overvalued than in 1929. Trump has a tariff plan on deck which resembles the Smoot-Hawley tariffs of 1930. Auto makers are still in EeeVee La La Land, while strapped Americans just crave basic transport — as evidenced by soaring sales of Mitsu and Nissan econoboxes.
Now that auto making is as regulated as banking, it attracts the same low caliber of managers: cautious conformists with no guts and no vision. These high-paid bunglers are now backed into a corner they can’t get out of. Let the bloodletting begin.
On occasion I go to GMC’s website & build my fantasy truck. 3/4 ton with trailering package. That’s about it. The price tag still takes my breath away. GM/GMAC/Ally whatever offers financing for 7 years. 7 years! Same as an indentured servant in colonial times.
One problem with small cars is that there small. I’ve driven everything from Chevettes and Bugs to 1 ton trucks and it’s safe to say bigger cars are roomier. That’s part of the reason larger cars are better than smaller until you have to pay for them or park them that is.
Say what you will about the K-car it was reliable enough and roomy enough. Sadly current regulations would make building one again impossible. A rectangular looking vehicle might not look very sporty but the trunk is a lot more usable and headroom in the back seat is more usable.
Some days I wonder how much having 8 airbags instead of just two along with all the high tech nanny hardware a new car has compared to what you bought twenty years ago costs. I’m guessing the article on the Hilux we can’t have explains that.
The Mirage and Versa seem like wise purchases in this economy. But the one thing that stop me from buying is the fact you can’t get a manual transmission and the only one that is provided is the crappy CVT.
Allen,
The Nissan Versa can be had with a 5 spd. manual in the base version. The Mitsubishi Mirage used to offer one too, but the dropped it a year or so ago.
One would think that the US car makers would have taken the hint that the VW Beetle gave and built cars of similar models. They did not. And then the FedGov put its thumb on the scale and outlawed them doing so, even if they were inclined to. Which they apparently are not. Eric’s two examples are imports. One might think US makers don’t care about making money. They prefer the Big Payday from selling big and expensive to the daily sales of small and affordable.
John,
It costs the car companies about the same to build a small car as it does a truck or SUV. However, the truck or SUV offers thousands more in profits than the small car does. What do YOU think they’ll build, all considered?
The mark up doesn’t matter if you don’t make a sale.
Transport is more expensive on larger, heavier vehicles. Much more.
The original Mustang was actually shorter than the prototype, so they could get one more car on the transport.
I think we’re at another disillusionment moment. Last one was in the 1970s. The moon landing second season was a dud, Vietnam didn’t work out, Disco sucked, and cars were just whatever sold last year with “er” tacked on to the end. Bigger! Sexier! Wider! Longer! (Look just buy the damn thing, we’ve run out of adjectives)
Not to say the big 3 didn’t try. The Vega comes to mind. The car was designed around the idea of delivering them via specialized rail cars. Tons of “innovative engineering” went into getting the car from the factory to the dealer. Styling? Useful transportation? Nope, but look how cool it looks when you unload these things! They actually had to design the windshield washer fluid reservoir so that it didn’t spill out when the car was vertical in transit. So much wasted talent!
Much like EVs. Sure there’s a lot of engineering that goes into the typical EV. How much is necessary? What could have that talent done if not tasked with polishing the turd of electric transportation? Or self-driving cars? Is anyone really asking for them, or have the marketing types created a demand that wouldn’t exist by overhyping the not-ready tech?
So this fall, when Tim Cook introduces “The best iPhone we’ve ever made,” just remember that moment in the 1970s when America sat down and waited. We got through that moment, and we’ll probably get through this one too. Back then it took Japan to kick us into the next big thing. This time will it be the Chinese? The Indians? Or maybe a dark horse Russia?
RK, et al,
There are patterns as you observe, but the government of the U.S. has become so big, powerful and inefficient not to mention captured by big {whatever} as to have passed the tipping point for recovery. If we survive the potential nuclear conflagration, we Americans are in for a really nasty patch on the road to recovery. (notice, I do not conflate America with the government). It can be done but it will not be pleasant. Look at Russia post collapse of the U.S.S.R….seriously. The best we can hope for is dissolution of the government into small units with more transparency and less power. Well, pass the popcorn it’s gonna be an interesting ride.
WRT Tim Cook and Apple, once they lose their regulatory capture status, the Chinese, especially Huwei will eat their lunch…..the surviving market will not support overpriced, non-functional, crippled devices that support the invasions of privacy and lack of security cooked into Apple devices. The people who are addicted to Apple and similar devices after the fall will not have the financial wherewithal to keep up that addiction…IMO…as always, YMMV