It’s been a disappointing sales quarter for most automakers in America. With volumes often declining or stagnant, interest rates remaining higher than many consumers grew used to, and people slowly realizing that slowing inflation is not the same thing as deflation, we saw a reduction in pace for the vast majority of the market. There is one notable exception though, and that is cheap new cars.
Yes, even though America hasn’t been historically a massive market for small, cheap cars, this genre saw some serious success over the last quarter, with some models seeing volume gains so substantial, they ought to send a message to boardrooms. Let’s get into a run-down on which models are winning and why that might be the case.
While all of Mitsubishi’s lineup had a positive third quarter, the biggest win was scored by the Mirage. Yes, the Mirage. This dirt-cheap subcompact saw a year-over-year Q3 sales increase of 152.28 percent, going from 4,028 sales in the third quarter of 2023 to 10,162 sales in the third quarter of 2024. More than half of all year-to-date Mirage sales happened last quarter, and it’s easy to see why. Here’s a car with air conditioning and an automatic transmission that someone can buy for less than $20,000, and confidently finance for a long time thanks to a 10-year or 100,000-mile limited powertrain warranty.
Over at Nissan, Versa sales are up 68.1 percent year-over-year, with the third quarter of 2024 seeing 11,490 of the little sedans leave dealership lots. Considering Infiniti as an entire brand only managed to move 14,540 units, and the fact that some Versa sales are likely eaten by the Kicks subcompact crossover, the Versa is really pulling its weight. As for the Kicks itself, quarterly sales are down slightly by 5.8 percent, but the third quarter of 2024 also coincided with a major model changeover, so it isn’t an apples-to-apples comparison. However, there is one subcompact crossover that did absurdly well last quarter.
At Chevrolet, overall sales for the quarter were down 6.4 percent, but that could’ve been a lot worse without the new Trax. The plucky, affordable crossover saw a 56.59 percent sales increase to 59,299 units, making it the best-selling non-pickup truck in the entire GM family and giving it its best sales quarter ever. Yes, this means the Trax is outselling the Equinox, making this affordable crossover a seriously brilliant move for GM.
Hyundai Venue sales are down by one percent, still clocking in at a piddly 6,472 units for the quarter. Why? Well, I have a theory — the bigger, more powerful, more refined Elantra sedan starts at less than $2,000 more than a base Venue and currently features substantially better subvented financing rates. We’re talking a national offer of 1.9 percent for five years on the Elantra SE versus 4.9 percent for five years on the Venue SE. With that in mind, it’s no wonder that Elantra sales were up 21 percent last quarter to 39,329 units.
Over the past ten years or so, automakers and consumers alike got acclimated to a near-zero interest rate central banking environment. See, with zero percent financing, shoppers could afford more car than they may have previously, and they could stretch those payments out, making it easier to buy high-margin models. Automakers liked this a whole lot, and small car sales waned to the point where many automakers simply gave up. No more Toyota Yaris, Ford Fiesta, or Kia Rio, subcompact shoppers could now afford compact cars. Unfortunately, the era of near-zero overnight interest rates came to a screeching halt after the COVID-19 pandemic first hit America, so any highly competitive captive finance rates you currently see on new cars are heavily subvented, or incentivized, by manufacturers.
The second issue is that the used car market is still all kinds of screwed up following the supply chain shock that came with pandemic lockdowns. We are now more than four years since the squeeze started, and that’s a problem, because the number of low-mileage late-model lease returns still hasn’t recovered, and might not for years. In February 2019, Cox Automotive reported a leasing peak, in which 34 percent of all new cars moved were leased. In the Spring of 2020, that figure fell to 25 percent before rebounding slightly through 2021 and then plunging through the floor. In July of 2022, fewer than 20 percent of all new cars were leased, and when you take into account the reduction in overall sales volumes during that period, that means substantially fewer off-lease compact cars for consumers to buy second-hand.
In times like these, good, affordable, practical little cars sell. Most people just need a car to get them to work, and with affordability at the forefront of consumers’ minds, it shouldn’t be surprising that some of the cheapest new cars in America are posting big gains. However, that leaves many automakers with a bit of a problem. See, the Mitsubishi Mirage is being discontinued at the end of this year, and Automotive News reports that the Nissan Versa will die in the Spring of 2025. Should both those things happen, two major players in the cheap new car arena would be down for the count.
Will the cheap car survive in America? Absent other options, it needs to. With the supply of off-lease cars still not looking like anything we’re used to, car buyers need affordable, reliable options on the new market. Thankfully, the excellent Chevrolet Trax is still near the beginning of its model cycle, but for buyers looking for a small sedan or hatchback, other options need to exist.
(Photo credits: Mitsubishi, Nissan, Chevrolet, Hyundai)
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Car Sales Sucked For Almost Everyone But Mitsubishi, Because Mitsubishi Sells Cheap Cars
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The Dirt Cheap Mitsubishi Mirage Is Dead For 2025 But You’ll Still Be Able To Buy One
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Only The Best Nissan Versa Still Costs Less Than $20,000
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The Mitsubishi Mirage Looks To Be On Its Way Out And I’m Not Happy About It
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The Surprisingly Nice 2024 Chevrolet Trax Is $21,495 Of Fundamental Goodness
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Small cheap cars are often better for some people than big used luxury cars. I know car website people are often “must buy used always” people but there are people that can handle a cheap new small car payment on a budget but not handle surprise repairs and uncertain quality of the used cars. Not everyone is a mechanical person with a home shop and lift. Often cheap new cars are cheaper to finance with lower rates than some aspirational used luxury car.
Gah, preach. Bring back more sedans and hatchbacks that aren’t on frickin’ stilts. Not everyone wants an SUV.
I would have bought at least one Mirage RALLIART if they sold it with a manual.
:'(
That existed well before the Fiesta returned, before the last two generations of Rio were introduced, and so on. GM had 0%/72 going on leading up to their bankruptcy. They also boasted coming out of the recession that that they could now build small cars profitably in the US (see Chevy Sonic). Ford and FCA said similar as they rolled out more new small cars in the early 2010s coming out of the recession.
The Versa’s best sales year was 2015, when Nissan was already offering 0%/72 on Altimas and up to 60mos on Rogues. Versa sales fell every year after that, but they still gave it a new generation. It’s only now that some of the small cars are on the chopping block.
The Versa vs. the Sentra is much like the Venue/Elantra example given. Versa sales were up 68% in the quarter…but it’s still a third of Sentra volume (itself up a hearty amount for the year). The 5k spread in base MSRP is cut in about half once you add a CVT (where the volume is) to the Versa. The Sentra typically has more cash on the hood or better financing rates that narrow it further.
Such was the case at Toyota, the Yaris was often within a grand or two of the Corolla in MSRP, but the latter was close in fuel economy and had more margin and more cash on the hood or better financing.
Seems more like consolidation of the small car offerings into just having something at the price point. The Trax shows that it doesn’t have to be a small car, and even the Soul years ago did similar that it didn’t have to be a sedan. People assume smallest = cheapest, but the buyer looking for a cheap car is not necessarily looking for the smallest car, they are going in with a payment in mind, or concerned about getting approved because of their credit, etc. Few are going to be impacted by Nissan dropping the Versa, the Sentra can meets most of the same criteria, but it will be more impactful if there is no offering at all at that entry level price point. That’s a risk for Mitsu which does move volumes of the Mirage. But something like that seems more like being dropped for production reasons or emissions/safety regs. “Lack of demand” or “buying SUVs” are more like red herrings in the PR pieces.
No wonder they’re so threatened by the Chinese. Everyone else abandoned the segment, leaving a hole wide open for China to come in.
We’re still doing phrasing right?
Just to keep some perspective here:
The Mirage is on pace to be near its average sales from 2015-21.
The Versa is on pace to sell less than 1/3 of what it did in 2015-16.
The Elantra regularly sold over 200,000 units from 2012-18, and has sold barely 100,000 through 3/4 of the year this year.
Even the Kicks is not going to equal its sales from 2021 this year.
What is happening here is not a renaissance in small sedan sales, but some reversion to the mean after pandemic shortages made manufacturers prioritize sales of higher margin stuff.
These large percentage sales increases are from very small bases in 2022-23.
Yep. I think a lot of sales increases are due to more supply on the low end of the price scale. It’s quite possible that the Trax is eating into Equinox and Trailblazer sales, since those are both down in the quarter and YTD (Equinox is entering a model changeover too).
I think the most powerful thing domestic auto manufacturers can do is create a product that competes with China on price. I know that’s easier said than done, especially with the UAW strikes, but the market is going to tilt heavily toward Chinese cars if they end up being the cheapest option for most of the world.
And Stellantis owns the some of the most popular economy cars in Europe (Lancia, Fiat, Opel). If they’re trying to turn their company around, they need to focus less on Jeep Wagoneers and more expanding their offerings for the bottom end of the market.
The caveat here is that the cheapest European market cars are currently VWs, and we all know what direction they’re heading. It might be wishful thinking, but some legacy platforms, pared down to essential features, might do well in the current market. I’m not in the car manufacturing world, but I’ve been a manufacturing engineer in the past, and I know the “jelly beans” (cheap, easy to manufacture) products can be traded on volume. And with the cost of living becoming ridiculous, it would be nice if there were some relief in the form of transportation that doesn’t break the bank.
I haven’t driven a Trax but every review I’ve seen has been very positive so I’m not surprised they are selling. My neighbour picked one up a few months ago to replace her Soul and seems to be happy with it so far.
Tata needs to get here now
Or Malcolm Bricklin needs to set up Tata America, either way
Cheap cars are also available in fun colours.
Why can’t I have a bright colour without paying another premium for the pleasure of non-grey-shade?
Right. I was looking at a Lexus TX months ago. White, gray (two shades I think), silver, black, blue. Oh boy. They are making me yearn for the old days of golden beige.
“You can have the premium ‘platinum sonic grey’ for an added $1200 if you want to stand out from ‘solarslate grey’ which comes standard”
This would be the perfect time…
https://www.theautopian.com/this-is-how-to-make-a-16000-electric-car/
This sort of car was possible 25 years ago.
Around here, the moment interest rates went down, dealers cranked up the prices.
I’ve been shopping for a used crossover in the $20k space, with under 60k miles. As an example, a month ago I had 5-10 Honda HR-V to choose from. Now there are zero.
Around here, the moment interest rates went down, dealers cranked up the prices.
Insert shocked Pikachu face here