Where in the world are Detroit's entry-level vehicles?

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Thread: Where in the world are Detroit's entry-level vehicles?

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    GMI Staff Member Premium Member nadepalma's Avatar
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    Where in the world are Detroit's entry-level vehicles?

    The article is a month old, but still worthy of a read. And discussion

    Where in the world are Detroit's entry-level vehicles?
    Henry Payne, The Detroit News
    Feb. 13, 2020 | Updated Feb. 14, 2020


    Since its development of the Model T in 1908, Ford Motor Co. has been synonymous with building affordable, entry-level vehicles for the working class. By 1924 the price of a Model T Runabout had fallen to just $260 ó the equivalent of about $3,900 in today's dollars.

    Fast-forward to 2020, and Ford does not offer a single vehicle for less than $20,000 when delivery fees are included. And Ford is not alone. As Detroit automakers increasingly abandon affordable sedans for higher-priced SUVs, Asian carmakers are only too happy to pick up those entry-level sales and possibly gain loyal customers for life.

    Among Detroit brands, only Chevrolet ó traditionally the value nameplate at General Motors Co. ó still offers vehicles below that $20,000 price-point: the subcompact Sonic at $17,595 and the wee Spark at $14,095, both with delivery fees included.
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    GMI Staff Member Premium Member nadepalma's Avatar
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    Re: Where in the world are Detroit's entry-level vehicles?

    In the absence of Detroit offerings, foreign manufacturers are filling the niche.

    Ford’s Dearborn backyard, for example, is home to Metro Detroit's largest Hyundai dealer, LaFontaine Hyundai. When the Focus exited the market, car buyers who otherwise might have shopped that car started looking seriously at the Hyundai Elantra, which carried an $18,120 price tag last year.

    "We've seen a lot of interest in the Elantra since Ford left the compact market," Lafontaine sales manager Steve Hunsinger told The Detroit News. Notably, the Elantra’s price has jumped to $20,105 for 2020, as Hyundai moves the Venue into the price slot below it.
    And that's one thing that gets lost in the strategy in shifting to "more profitable SUVs/Crossovers". It's great that you make bigger margin on larger/more profitable products. But ultimately (unless you're a luxury or specialty brand), you're handing the competition a customer that they may retain for years down the line.

    What's more, and I've said this before, part of what makes SUVs and Crossovers so attractive to manufacturers are their higher price point and margins. But when everyone makes the same shift to these categories, its logical to conclude that such margins will erode -- because everyone will offer them and the competition will ultimately drive down those prices. This happened in nearly every category that is saturated. You're already seeing it with products like the Hyundai Venue -- which is a solid "SUV" for little money.

    Once that becomes the norm, how do you keep that manufacturing apparatus afloat when the profits you were counting on will dwindle? Dealers can do this buy leaning on used cars; but manufacturers?

    The higher price of entry-level vehicles has sent more buyers into the used market, according to Cox Automotive. In 2018 and 2019, pre-owned sales were at their highest levels since the Great Recession, despite a healthy economy.

    Cox analysts say new-car affordability is a concern for the industry.
    This has been an issue for years and I'm surprised more journalists are talking about it. Mainstream cars are packed with technology and features -- that's great, but it gets pricey (which only makes used cars that much more attractive).

    Today, if you qualify and buy an expensive car, you can now get 72 and 84 month financing on some vehicles. Higher number of years typically means a higher interest rate, since the risk of the loan to the consumer is higher. If the company financing the purchase is the automaker's own captive finance arm, they're arguably making a healthy profits on a vehicle that they're pricing in the stratosphere. If that's the case, and until the number of quality used cars out there dries up, you could almost imagine a scenario where car manufacturers are incentivized to keep such numbers high (I don't make money on the car, but I'll make a good profit on the financing). In that way, it's almost like GM's business model with GMAC before the bankruptcy.
    Last edited by nadepalma; 03-12-2020 at 06:16 AM.
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    Re: Where in the world are Detroit's entry-level vehicles?

    They have ceded that market to foreign manufacturers.

    Surge In Sales | As Ford and Chevy exit sedan market, Asian makers gain a big share

    It's all about pushing the high-profit SUVs and Trucks.
    *Short Term - Quick-Buck, and lack of foresight

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    Re: Where in the world are Detroit's entry-level vehicles?

    With Sonic on the way out (already discontinued in Canada) GM's lone entry level car will be the Spark which is really weak.

    Asian companies are apparently going to completely own the next generation of young / low income buyers. Long term effects on Detroit based makers - negative in my view.
    Last edited by kool1; 03-12-2020 at 07:48 AM.

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    Re: Where in the world are Detroit's entry-level vehicles?

    If I was in the market for a small hatchback type vehicle, Iíd seriously consider the Venue at this point...if only because you can get it with (gasp) stick shift. Thatís no longer available with the Sonic. IMO the Sonic is still quite competitive but needs better MPG (updated engine/trannies) and updated interior to compete with the Koreans. From my experience, the ride/handling/quietness of my 2015 is up to par compared to other newer small cheaper vehicles.

    Chevy is building the Onix right now in Mexico, it could be offered in the US as a kind of Sonic replacement (assuming it could pass US crash testing which may or may not be true):

    https://www.chevrolet.com.mx/autos/onix-carro-sedan

    A hatch version is available in South America, it could be offered in the US.

    But kudos to Chevy for at least offering a $19,995 version of the new Trailblazer. The 1.2T gets a bit worse MPG than the 1.3T though.

    (It may just be me, but the link to the article didnít seem to work, here it is:

    https://www.detroitnews.com/story/bu...es/4623943002/
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    Next ride, post-pandemic: Keep driving the Sonic!

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    Re: Where in the world are Detroit's entry-level vehicles?

    The American manufacturers are a victim of their own success. As the automobile market grew in the US, GM, Ford, and Chrysler continued to enjoy high market share stands. That sustained high demand forced them to build automation into their lines while AT THE SAME TIME increase salaries and hourly wages to their employees. Inevitably, over a long period of time, the manufacturers were forced to focus their efforts up-market to sustain the requirements of their stakeholders (higher margins, increased revenue).

    The US government, in its infinite wisdom, tried trade wars (and still does), enabled global capitalism (thinking this would help US companies), and wage growth mitigation policies (for the working class) to stem the tide of foreign companies (with their one-sided trade policies, nationalism, and low wage) and...surprise...it didn't work.

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    Re: Where in the world are Detroit's entry-level vehicles?

    They never really wanted to sell that type of car anyway. Proven over the past 60 years. Their attitude has been: You want to ride in the cheap seats, you're going to get the cheap seats and wish you'd gone with our bigger better cars every driving minute.

    You mean the public might not want or be able to afford a $90,000 Tawhore or Expulsion ? Let them eat carburetors. The best car for them is a good used GM or Ford car or truck.

    Meanwhile ceding the market to Japan, Korea and probably China and India.

    Sorry: with all the tech and "progress" made in building cars over the years I don't believe there's no way a domestic car company cannot build a profitable entry level vehicle. They simply want to sell $50-100,000 trucks and SUVs for the easy money.

    I'll keep what I have then and my $$$$ [still as green and worth what anyone else's fiat is worth these days] in the bank and myself out of debt.

    Thank you for the article. But I think that ship has sailed and there won't be any going back. Cheap leases have put the entry level buyer into cars they couldn't afford through financing. Why buy a Spark when you can lease a Colorado or Malibu for three years and $99 down and $200 a month [being sarcastic] ?
    Last edited by Citation84; 03-12-2020 at 12:03 PM.

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    Re: Where in the world are Detroit's entry-level vehicles?

    Quote Originally Posted by dannyg View Post
    If I was in the market for a small hatchback type vehicle, I’d seriously consider the Venue at this point...if only because you can get it with (gasp) stick shift. That’s no longer available with the Sonic. IMO the Sonic is still quite competitive but needs better MPG (updated engine/trannies) and updated interior to compete with the Koreans. From my experience, the ride/handling/quietness of my 2015 is up to par compared to other newer small cheaper vehicles.

    Chevy is building the Onix right now in Mexico, it could be offered in the US as a kind of Sonic replacement (assuming it could pass US crash testing which may or may not be true):

    https://www.chevrolet.com.mx/autos/onix-carro-sedan

    A hatch version is available in South America, it could be offered in the US.

    But kudos to Chevy for at least offering a $19,995 version of the new Trailblazer. The 1.2T gets a bit worse MPG than the 1.3T though.

    (It may just be me, but the link to the article didn’t seem to work, here it is:

    https://www.detroitnews.com/story/bu...es/4623943002/
    I really like this and could be persuaded to go into debt [shudder] to own one, DannyG. Bring it. I've loved my Chevrolets [An 84 Citation and because of it my first new car a 99 Cavalier] and would like another one.

    Thanks for the links

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    Re: Where in the world are Detroit's entry-level vehicles?

    They're gone because they haven't been good for a while...the Dart isn't worth mentioning, Focus/Fiesta never overcame the DCT fiasco, and the Cobalt/Cruze have always been also rans...great used "college cars" but nothing more than that. if you were buying brand new w/ your own money, the Civic was always the best way to go...even at its worst it was still better than any of the Big 3s offerings.
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    Re: Where in the world are Detroit's entry-level vehicles?

    You can get a Colorado for under $20,000 pretty easily.

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    Re: Where in the world are Detroit's entry-level vehicles?

    If the Detroit Automakers can fill their plants with more profitable vehicles, isn't that a laudable goal? Just because there are customers in a segment, that doesn't mean you have to be there. The very last segment you want to be in over every other segment are cheap entry-level cars. Until the customer is more profitable than the product (like some areas of the tech industry), there is no reason Detroit has to be at the bottom.
    Last edited by BORG; 03-12-2020 at 04:03 PM.

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    Re: Where in the world are Detroit's entry-level vehicles?

    Quote Originally Posted by sdotjeezy View Post
    They're gone because they haven't been good for a while...the Dart isn't worth mentioning, Focus/Fiesta never overcame the DCT fiasco, and the Cobalt/Cruze have always been also rans...great used "college cars" but nothing more than that. if you were buying brand new w/ your own money, the Civic was always the best way to go...even at its worst it was still better than any of the Big 3s offerings.
    +1
    Among GM and Ford cars in that segment, only the Chevy Sonic and certain high performance variants of the Fords (Fiesta ST; Focus ST & RS) are worthy of mention as truly competitive entries.

    Honda's design philosophy with the current generation Civic, according to Honda of America development leader Gary Evert, was to "build the best compact car in the world". That's why it's such a well rounded product. Like a decathlete, it does everything well.

    By contrast, GM and Ford designed their entry level B and C segment cars (with the exceptions noted above) for the U.S. market primarily to comply with fuel economy standards - not to provide a great ownership experience for customers.
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    Re: Where in the world are Detroit's entry-level vehicles?

    Quote Originally Posted by wallus13 View Post
    You can get a Colorado for under $20,000 pretty easily.
    can get a Sierra for $19990 if you are NOT choosy and dont need 4 doors OR 4WD

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    Re: Where in the world are Detroit's entry-level vehicles?

    The end of cheap money won't be pretty.

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    Re: Where in the world are Detroit's entry-level vehicles?

    Quote Originally Posted by sdotjeezy View Post
    Cobalt/Cruze have always been also rans...great used "college cars" but nothing more than that. if you were buying brand new w/ your own money, the Civic was always the best way to go...even at its worst it was still better than any of the Big 3s offerings.
    Just gotta pick the right one.
    The gutless Civic gets it's ass handed to it by the Mk1 diesel Cruze.
    Lots of torque, great mileage and even somewhat luxurious. Plus it's emissions legal without cheating!

    Too bad few people were aware it even existed.
    I get some interesting looks from passersby that hear it running.
    Last edited by eaton53; 03-12-2020 at 09:12 PM.
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