Is the era of cheap cars fading into the past?
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Is the era of cheap cars fading into the past?

According to Motor1, soon there won’t be a new car in the US priced under $20,000.

By the end of next year, there may not be a new car in the US priced under $20,000 (equivalent to 493 million VND).

Notably, they will be just the names following dozens of other car models in the under $20,000 segment that have disappeared in the US since 2019.

Motor1 said that one of the main reasons is the COVID-19 epidemic.

The Ford Fiesta and Chevrolet Cruze were both phased out at the end of 2019. Smart withdrew from the US market entirely that same year.

Is the era of cheap cars fading into the past?

Nissan Versa

“This is not a new phenomenon,” said Tyson Jominy, Vice President of Data & Analytics at J.D.

`In fact, the discontinuation of the cheapest models started a few years before Covid,` he said.

He said some brands, such as Honda, are re-introducing cheaper versions of the car (but with reduced equipment) as the market improves.

Meanwhile, the Honda Accord in the US now costs $28,000 — an increase of $4,000 compared to 2019, while the new CR-V SUV model does not cost less than $30,000 (equivalent to 739 million VND).

Is the era of cheap cars fading into the past?

Honda Civic version sold in the US market

This is completely consistent with the increase in the average price of car transactions in the US, which is $46,000 (equivalent to VND 1.13 billion) in 2023, a sharp increase of 36% compared to 2019.

But with the median income in the US in 2023 being just under $60,000, that means the majority of Americans are still below the threshold of being able to buy a new car, especially when interest rates and car prices are low.

In 2019, the average income is better at $68,000 and the interest rate is only approximately 2%.

However, the US auto market still has bright spots.

`J.D. Power forecasts new vehicle prices will decrease by an average of $1,100 throughout 2024 to $44.9k,` Jominy shared with Motor1.

The used car market in the US is not so lucky as it is still affected by the decline in sales starting in July 2021 and lasting throughout 2022. According to forecasts, the number of used cars advertised

“The total supply of used vehicles no more than five years old was 16.3 million vehicles before Covid,” Jominy said, “but 2024 will be the fourth consecutive year to record a decline, with

Is the era of cheap cars fading into the past?

As low-cost vehicles become more rare, that doesn’t mean there’s no longer room for new products priced under $30,000 in the market.

`There’s enough room for any automaker to dominate the sub-$30,000 price segment, which has been largely abandoned to the used car market. Before Covid, 47% of auto sales

While many major automakers are not interested in providing products priced under $30,000, there is an incredible source of supply that is stepping up to bring low-cost car models to America: China.

Chinese automakers such as BYD, Chery and Hongqi are making a mark on the European auto market with more than 400,000 vehicles delivered to customers in the region in 2023. Current market share

Is the era of cheap cars fading into the past?

Chery Arrizo 5

Chery—one of the largest automakers in China—wants to enter the U.S. market in the next few years.

`The US market is very important for us. We have a specific plan on how to approach it, but unfortunately I cannot share more about this strategy,` Wu said in an interview.

Chery tried to realize its ambition to sell cars in the US in 2005, then in 2020, but both times failed.

`I don’t want to repeat the same story,` Wu said.

With the new car segment under $20,000, Motor1 commented that this type of vehicle probably no longer has a place to live in the US.

Notably, sales in the country reached 15.5 million vehicles last year and show no signs of slowing down.

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