What's the lowest priced new 2021 car in the US? Would you believe $18,000?
Posted by freedomforall 3 years, 5 months ago to Economics
A new Toyota Corolla stickers for just under $19k. A Mazda3 lists for just over $20k.
The 2021 Honda Civic starts at $22k.
Chevrolet doesn’t sell a new car that costs less than $21k – because it no longer sells cars at all. The just-over-$16k Sonic has been cancelled, leaving the micro-crossover Trax as the lowest-priced new Chevy on the field.
It stickers for $21,400 to start.
Ford no longer sells an affordable car, either – having cancelled all of them, too – including the Fiesta and Focus. This leaves the EcoSport – another micro-crossover – as the lowest cost new Ford.
That one stickers for $19,995 to start.
There is nothing on the menu at Dodge that stickers for less than $27,500 – and that one’s a minivan. If you want a car from Dodge, you’ll pay considerably more. A new Charger sedan starts just under $30k; the two-door version of the same thing – a Challenger – is slightly less at just over $28k to start. They are both great cars but there’s nothing Beetle-analogous at Dodge – which once upon a time was an entry-level brand, a notch up from Plymouth – which is a brand no more.
As for VW, the People’s Car is now the rich man’s car, too. Or at least, the not-poor-man’s car. The lowest priced new VW – the Jetta – stickers for just under $19k to start. As in $5 under ($18,895).
Now, the Jetta is also a fine car. It is a Cadillac in comparison with the ’70 Beetle. But it also costs about $6k more than the ’70 did, in actual purchasing-power/adjusted-for-inflation dollars. This would be ok – a net gain – if the purchasing power of the average American had tracked upward along with inflation. If it had, the average American would be getting much more car for about the same money as the average American paid for a car back in 1970.
Instead, he is getting more car – and paying for it. Because he has less money. His income has not kept up with inflation, while his taxes – including those not styled taxes such as the now-mandatory health insurance mordita – have gone up.
A lot.
Since he can’t pay for his car, he finances it – routinely for six or even seven years as opposed to the three or four it took in 1970. And because this hiding of cost has become almost universal, there is less incentive for the car companies to offer actually affordable cars. It is easy to hide the $3k difference between a $15k Hyundai and an $18k Toyota over six years of monthly payments.
It’s just another $50 per month … easy!
Except it’s hard.
People just don’t see it – yet – because so long as they can finance and so long as they can make that monthly payment, the thing seems viable.
Until the day comes when it isn’t.
This has created its own self-sustaining feedback loop. The cost of entry-level goes up because most people are financing more – and for longer. It doesn’t make sense for a car company to sell a $15k car when they can finance the $20k car.
And the more who finance the $2ok car, the fewer $15k cars on the market. There is no longer an incentive to keep prices down when costs can be hidden.
This is why things like air conditioning and power windows and locks are now standard equipment in every new car. It used to be optional. The Versa was the last new car that let you skip AC and power windows if you didn’t want to pay for them.
But now you can’t avoid paying for such things because everyone else is financing them. And once you get accustomed to financing AC and power windows and locks, why not also an LCD touchscreen and an upgraded stereo, too? How ’bout a turbocharged engine while we’re at it?
And so, they do.
But for how long?
Meanwhile, it’s interesting to imagine what a car like the ’70 Beetle would cost today – if it could be built using modern manufacturing techniques and taking advantage of all the advances that have made it possible to build $15k cars with AC, power windows, locks and so on.
Probably, the 1970 Beetle could be built for less than $10k in today’s dollars, which would put it within reach of many people’s ability to buy in three years or less. But solvency and prudence are as out of fashion in Heliogabalus-era America as showing your face.
The 2021 Honda Civic starts at $22k.
Chevrolet doesn’t sell a new car that costs less than $21k – because it no longer sells cars at all. The just-over-$16k Sonic has been cancelled, leaving the micro-crossover Trax as the lowest-priced new Chevy on the field.
It stickers for $21,400 to start.
Ford no longer sells an affordable car, either – having cancelled all of them, too – including the Fiesta and Focus. This leaves the EcoSport – another micro-crossover – as the lowest cost new Ford.
That one stickers for $19,995 to start.
There is nothing on the menu at Dodge that stickers for less than $27,500 – and that one’s a minivan. If you want a car from Dodge, you’ll pay considerably more. A new Charger sedan starts just under $30k; the two-door version of the same thing – a Challenger – is slightly less at just over $28k to start. They are both great cars but there’s nothing Beetle-analogous at Dodge – which once upon a time was an entry-level brand, a notch up from Plymouth – which is a brand no more.
As for VW, the People’s Car is now the rich man’s car, too. Or at least, the not-poor-man’s car. The lowest priced new VW – the Jetta – stickers for just under $19k to start. As in $5 under ($18,895).
Now, the Jetta is also a fine car. It is a Cadillac in comparison with the ’70 Beetle. But it also costs about $6k more than the ’70 did, in actual purchasing-power/adjusted-for-inflation dollars. This would be ok – a net gain – if the purchasing power of the average American had tracked upward along with inflation. If it had, the average American would be getting much more car for about the same money as the average American paid for a car back in 1970.
Instead, he is getting more car – and paying for it. Because he has less money. His income has not kept up with inflation, while his taxes – including those not styled taxes such as the now-mandatory health insurance mordita – have gone up.
A lot.
Since he can’t pay for his car, he finances it – routinely for six or even seven years as opposed to the three or four it took in 1970. And because this hiding of cost has become almost universal, there is less incentive for the car companies to offer actually affordable cars. It is easy to hide the $3k difference between a $15k Hyundai and an $18k Toyota over six years of monthly payments.
It’s just another $50 per month … easy!
Except it’s hard.
People just don’t see it – yet – because so long as they can finance and so long as they can make that monthly payment, the thing seems viable.
Until the day comes when it isn’t.
This has created its own self-sustaining feedback loop. The cost of entry-level goes up because most people are financing more – and for longer. It doesn’t make sense for a car company to sell a $15k car when they can finance the $20k car.
And the more who finance the $2ok car, the fewer $15k cars on the market. There is no longer an incentive to keep prices down when costs can be hidden.
This is why things like air conditioning and power windows and locks are now standard equipment in every new car. It used to be optional. The Versa was the last new car that let you skip AC and power windows if you didn’t want to pay for them.
But now you can’t avoid paying for such things because everyone else is financing them. And once you get accustomed to financing AC and power windows and locks, why not also an LCD touchscreen and an upgraded stereo, too? How ’bout a turbocharged engine while we’re at it?
And so, they do.
But for how long?
Meanwhile, it’s interesting to imagine what a car like the ’70 Beetle would cost today – if it could be built using modern manufacturing techniques and taking advantage of all the advances that have made it possible to build $15k cars with AC, power windows, locks and so on.
Probably, the 1970 Beetle could be built for less than $10k in today’s dollars, which would put it within reach of many people’s ability to buy in three years or less. But solvency and prudence are as out of fashion in Heliogabalus-era America as showing your face.
1) Government regulations. Whether they are catalytic converters or safety standards, government regulations only make cars more expensive.
2) Union workers. There is a reason that cars depreciate 10%+ as soon as you drive them off the lot: that higher sticker price wasn't real value but the costs of union wages and benefits. A typical union worker barely has a high school diploma but with benefits makes six figures even as a starter!
3) Steel prices. The US imports much of its steel because it has failed to invest in better steel-making technology. My dad worked for a steel company while going to college and by the time it was my turn they'd been shut down for a decade.
4) Over-automation. Good grief. If the car doesn't have all the bells and whistles (power locks, power windows, good stereo, GPS built into the dashboard, USB ports in six places in the car and a DVD player in the back of the driver's seat, you can't even sell it. Not to mention the entire rack of motherboards in the engine compartment. What happened to a simple carburetor-driven vehicles with a manual transmission?
5) Maintenance costs. See #4.
Take me back to the old days where one could work on a car themselves and you didn't have five miles of wiring to worry about. But keep the LED lighting ;)
So you are spot on ;-)
I have been enjoying my '99 model since '14. I did replace the audio deck for $120 in '16 to play mp3's, but I don't miss any of the other 21st century features that many people must pay for.
There are a number of features that came on my '99 that I do appreciate that weren't available in the 70's. I like anti-lock brakes, 4-wheel disc brakes, electronic ignition, modern radial tires, better mpg, power windows/locks. I would have voluntarily paid for them all without government meddling. If I am careful I should be able to sell my car for as much as I paid since it is a limited production edition.
The biggest problem is keeping mice from eating the plug wires and nesting on the engine block in cold weather.
I have Never witnessed such disjointed design on wheels...might have been a page out of the GM worker that stole Cady parts over several year and then put them all together into one car!
I'm a small stockholder still in the company & really wish they could get this going...
BTW: My wife & I just purchased a 2018 Jeep Grand Cherokee Laredo E--Let me tell you this thing is an animal! Luxury appointments, and pretty dang good gas mileage in my book, rides like a dream & we saved almost $20K off the sticker price by purchasing used. We love our Jeeps...her last 3 vehicles have been Grand Cherokees. Now I'm driving the hand-me-down 2004 that I thought about trading in until the dealership offered $750 (WTF!!!) for this still decent vehicle.
great for the banks, but bad for consumers.
I watched too many get ensnared in leases before they understood basic finance.
I don't thinks so, you would have to factor in the additional costs of airbags, antilock breaks etc all mandated by government,
Best thing to do is buy a used Toyota 4 cylinder and lear how to swing a wrench. Also.....learn how to make do with a reasonable sized car....I cant tell you how many idiots I see driving a 4WD behemoth by themselves back and fourth to work in flat sun belt areas. Almost no one in the US really needs a 4WD SUV. A Toyota Camry will do almost everyone.
And YES to 5 year old Toyotas, Fords, Chevys, Hondas and lots of others being still very good cars with a lot of life left in them.
I agree with your comments on rational car size. In a free market people have free will to make decisions that don't make sense for us. Sometimes they are rational for their situation; sometimes they are irrationally affected by advertising and other factors.
I see that used car dealers are doing very well in this economy and private sales of used cars are practically non-existent. Almost no one has cash to buy a car outright and used car dealers offer financing - at insane rates of interest.
FWIW, I like the Corolla. Good little car. My wife used to have one. We sold it to the kid down the street when he went to college and I bet it's still running like a top...
A friend is very pleased with his '14 Hyundai mini-van. Very comfortable and economical.
There are so many government obstacles to entry in the new car business and they drive the cost up and limit competition- similar to the Pharma business.
It really amazes me that lots of folks entertain the notion of a 60, 72 or the mind-boggling 84 month car loan.