My 1972 AMC Ambassador is supposedly a ‘big car.’ It hails from the era of great American land yachts, and on the rare occasion that strangers stop me to talk, they usually comment on its size and say, “They don’t make ‘em like that anymore!” Except, the Ambassador doesn’t feel that big today. In the average parking lot, it’s dwarfed by scores of trucks and SUVs. It seems like almost all the small cars are gone, and even compact SUVs aren’t so compact anymore.
FCA (now Stellantis) canceled its compact Dodge Dart in 2016, followed by the midsize Chrysler 200 in 2017. Ford started killing off all its cars except the Mustang in 2018. Both claimed their resources were better spent on trucks and SUVs. Aside from Tesla and Lucid, GM is the only American manufacturer to sell traditional cars. It currently offers four, and none of them compact: the Chevy Malibu, Chevy Corvette, Cadillac CT4, and Cadillac CT5.
Although Japanese and Korean brands still offer small sedans and hatchbacks here, they’ve been trimming their offerings in favor of SUVs. 2020 was America’s last year for the Toyota Yaris and beloved Honda Fit. The Kia Rio and Hyundai Accent bowed out in 2023, and the Mitsubishi Mirage is slated for discontinuation here after 2025. Kia is replacing its small Forte sedan with the K4, which is notable for being a compact car that’s actually quite large.
What is happening to all the small cars?
The finger has been pointed at everything from gas prices to identity politics to the “SUV loophole,” to crash safety, to our insatiable demand for SUVs and trucks, but I think there are two major forces here that most overlook: inflation and interest rates.
Conventional wisdom usually links the rise (and fall) of small cars to the price of gasoline, which makes sense. With less weight to carry, less surface area to force through the wind, and smaller engines, small cars usually get better gas mileage than large cars. But to attribute our nation’s automotive buying habits solely to cheap gas is an oversimplification. Inflation and interest rates have a much larger impact on our car buying habits than often get credit.
The First Modern Compact Car
The first successful compact car sold in America was the 1950 Nash Rambler, which eventually grew from a model into a whole brand, after Nash and Hudson merged to form American Motors. Ramblers struck a chord with buyers because they offered almost the same room as a full-size car, but in a smaller, more maneuverable, and more efficient package. AMC president and CEO George Romney even coined the term “compact car” to separate them from the stigma of being “small,” which to Americans at the time equated to “cheap.”
“George wanted to make sure there was, in the buyer’s mind, a realization that there is a difference between a compact car and a small car,” explained my colleague Pat Foster during an interview for our documentary on AMC. “At the time, a Fiat was a small car. A Rambler was a compact car.”
Early Ramblers were loaded with generous standard features, ones that imports didn’t have and even Ford and Chevrolet charged extra for. By contrast, other small cars were sad, bare bones vehicles. The Kaiser Henry J, Willys Aero, and Hudson Jet all failed in part because they didn’t navigate the market as well as the Rambler.
“When the Henry J came out in ‘51, that car was stripped down so much. I mean, you’d find more features in an empty beer can,” chuckled Foster. “And it became known as a cheap car with a cheap price for poor people. Now who wants to be known for, ‘Oh yeah, you drive that poor person’s car!’”
[Editor’s Note: Interestingly, this is the same basic mentality that doomed the cheapest new car in the world, India’s $2500 Tata Nano – JT]
When the so-called “Eisenhower recession” hit in 1958, Rambler sales shot up as budget-minded Americans turned to lower-priced cars. Throughout this time, gasoline remained plentiful and affordable. Advertisements rarely mentioned gas mileage, and if they did, it was part of a laundry list of other benefits, not the focus of the ad. Ramblers (and later the Studebaker Lark) succeeded through their uniqueness because GM, Ford, and Chrysler had ignored this market niche and didn’t field their own compact cars until the early 1960s.
In the 1960s, Volkswagen proved that you could sell bare-bones small cars to Americans if they were reliable and well-built. VWs were low priced, high quality, fuel-efficient, and dirt-cheap to maintain, in addition to later becoming counter-cultural icons against overconsumption.
Two Fuel Crises Kickstarted The Small Car Revolution, But They Didn’t Kill Big Cars
The Beetle’s continued popularity, along with other European and Japanese imports in the late 1960s, led Detroit to enter the subcompact market next. The early ’70s brought us Gremlins, Pintos, and Vegas. But if you look at the graph, gas prices then were still low, even technically falling when you took inflation into account.
But inflation is the key word here. While gas remained cheap until 1973, inflation was squeezing the American economy. Material costs were going up, which meant car prices were going up. Troubled by increased traffic accidents, insurance prices were going up, too. All this bolstered the sale of compact and subcompact cars, which used less material and were more affordable to buy, drive, and insure. Then the first oil crisis hit.
The 1973 OPEC oil embargo over the U.S.’s support for Israel caused gas supplies to dwindle and prices to spike. In response, Americans bought small, fuel-efficient cars in record numbers. A lot of these were first-time buyers who, especially with Japanese cars, became repeat customers after experiencing the imports’ superior economy and reliability.
But while the ‘73 oil crisis boosted small car sales and helped the imports gain a foothold, it didn’t kill big cars. Instead, it caused the Big Three to develop “downsized” versions of their largest models. Their work accelerated in 1975, when in response to the oil crisis, congress passed Corporate Average Fuel Economy rules, requiring automakers to meet a “fleet average” of 18 mpg by 1978. (Which would increase each year.)
Automakers balked that this “unAmerican” attempt to regulate the market wouldn’t work, because people still wanted big cars, and forcing them to build smaller cars to meet fuel economy rules would be an economic disaster. However, when GM’s first downsized fullsizers hit dealers in 1977, they became a huge success. It seemed the old models contained so much bulk that it was possible to build a lighter, more efficient car without major sacrifices. The downsizing wave spread across GM and eventually to Ford and Chrysler.
By the late ‘70s, full-size and intermediate car sales were actually on the upswing (due in part to the enthusiastic consumer response to downsizing), a fact lamented by AMC management during the development of Eagle. With the end of Matador production, American Motors no longer had any large cars, although the new Wagoneer Limited proved an increasingly popular alternative.
Regardless of fuel prices, CAFE spelled the end for the largest of the land yachts, and buyers rushed to snap up personal luxury cars like the Lincoln Mark V before their downsized replacements arrived.
Then a second oil crisis hit in 1979, triggered by revolution in Iran and exacerbated by the greed of corporate oil producers. Gas prices shot up and fuel economy once again became the #1 priority for car shoppers. Small car sales predictably surged. A downsized Chevy Caprice was nice, but a 43 mpg Toyota Corolla was even better.
Fuel Prices Aggravated Inflation, The Cure Was High Interest Rates
But again, gas prices weren’t the only factor at work here. Throughout the ‘70s, the United States suffered from rampant, almost double-digit inflation, and the second oil crisis severely aggravated it. Increased energy costs translated into increased material and manufacturing costs, which translated into increased car prices. Automakers found themselves making quarterly adjustments to their MSRPs. Before he became an automotive historian, Pat Foster was an AMC/Jeep/Renault salesman, and he said it was brutal back then.
“People would walk into the showroom and they would see a Concord, and they’d remember, “Oh I saw that car two or three years ago… it was $5,000. And they’d come over and say, ‘My goodness, it’s $8,500 now for the same car?!”
To combat out-of-control prices plaguing everything from gasoline to groceries, Federal Reserve chairman Paul Volcker raised interest rates to unprecedented levels in 1980, then drove them up further in ‘81. Car loans peaked at 17.36%! Mortgages hit 18%!! Volcker was determined to bring down inflation by making money more painful to borrow, thus driving the economy into a recession and reducing spending. Unemployment surged as businesses laid off millions of Americans. (When people reminisce about how cheap houses were in the ’80s, it’s because nobody could afford a loan.) Unless you lived through it, it’s hard to understand just how brutal it was.
“I just heard a realtor on the news saying the reason why house sales are starting to slow down is, ‘Well mortgages are 8%. How does anybody afford 8%?’” Pat Foster said, shaking his head.
“Back in 1980, 1981, and 1982, mortgages were 18.5%! New car loans were 18.5%! It was very difficult to sell anything. That’s why car sales in the United States fell to their worst level since the Great Depression. It was a bloodbath… People could not afford it, and no one saw that coming.”
When money costs that much to borrow, people want to borrow as little as possible. Banks tried to ease payments by extending loan terms, but this only prolonged the agony of paying off the car. Sales tumbled, and those who were buying were very concerned about price and gas mileage. Jeep sales, which had been on fire, evaporated overnight.
How Inflation Impacts Pricing
To put this in perspective, let’s compare financing costs for a 1979 Chevrolet Chevette and Jeep Wagoner to their 1981 counterparts, during a period of massive inflation and rate increases.
In two years, the monthly payment for the same base Chevette increased by $40. That’s $130 in 2024 dollars! It’s interesting to see that Jeep actually raised the price of the Wagoneer less than Chevy raised the price of the Chevette, but since the Wagoneer was already so expensive, the effects of the rate increase are even more pronounced. The total cost of financing the Wagoneer jumped $2,570 in two years, or almost $8,500 in today’s money. But interest rates affected more than just the end customer.
“Most dealers finance their inventory; it’s called floorplan,” explained Michael Porter, who worked on the corporate side of AMC sales and marketing. “So every time the prime rate moves, the dealer’s carrying costs for those vehicles go up. So for interest rates to go up means you’re paying more every single day for that vehicle to sit there, and if sales slow down at the same time, the dealer is in a really really tough position.”
Focusing on small cars was one way to reduce floorplanning costs and lure in customers with low advertised prices. Unfortunately for Foster, AMC and Renault wouldn’t have a modern front-wheel-drive subcompact until the 1983 Alliance came along, meaning he was stuck selling the odd Renault LeCar and the more expensive AMC Spirit and Concord.
“We had a lot of pushback on pricing,” he told me. “So my boss, along with a lot of other dealers, both AMC and otherwise, tried to go light on content to keep the price down.”
His boss would order stripped cars without A/C, radios, wheel covers, whitewall tires (a big deal then), power steering, and even power brakes. It helped reduce sticker shock, but it also made the cars harder to sell.
“He would not order a car with a rear window defogger, even though we’re in New England, and everybody wanted a rear window defogger,” Foster said, rolling his eyes.
Automakers Push Lower Financing, Making Cars Affordable Again
Volker’s brutal rate hikes worked, and inflation finally cooled down by 1983, along with gas prices. Interest rates slowly receded, but even after the worst of it passed, customers remained hyper-sensitive. Around Labor Day of 1986, GM launched an aggressive program of deeply discounted 2.9% financing. Ford and Chrysler responded with 2.9% and 2.4%, respectively. Numbers like that seem common today, but back then that was about half the going rate. Desperate to move stagnant Renault inventory, AMC jumped in.
“We had 10,000 cars ‘against the fence,’ which means they were unsold to the dealer body.” remembered former AMC employee, Dean Greb.
“So it was up to the sales and marketing organization which I was part of at the time, to come up with incentive plans and promotional ideas. So we created this program called ‘0% financing.’ And that was the most amazing promotion that ever existed, not only for AMC but maybe for any manufacturer… It was just phenomenal.”
The fine print came with a lot of restrictions, but the headlines generated a sales bonanza . AMC CEO Joe Cappy got an hour on The Larry King Show just to talk about 0% financing.
“Customers were actually going to dealer showrooms, getting into cars and locking the doors, and saying, ‘I won’t get out of this car until you sell it to me,’” said Dean Greb with a smile. So that inventory disappeared within a couple of months. It was just unbelievable.”
A gasoline glut in the mid-80s caused the oversaturated subcompact market to tighten and big car popularity to rebound slightly, but by now, traditional V8, rear-wheel-drive sedans were becoming somewhat passe. Buyers were chasing after FWD cars like Ford’s mid-size Taurus and Chrysler’s exciting new minivans. As the ’80s transitioned into the ’90s, the Jeep XJ Cherokee and later the Ford Explorer kicked off America’s SUV obsession that lasts until today.
Throughout the ’90s and early 2000s, vehicles slowly but steadily grew, as each new generation added more room, more safety features, and more power. Even small cars were not immune to adding on bulk. Aware of the segment’s dwindling popularity and razor-thin profit margins, Ford and Chrysler slowly abandoned the tiniest, cheapest parts of the subcompact market to focus on more profitable pickup trucks and SUVs. Only GM remained, fielding the Chevy Aveo against cars like the Toyota Yaris, Honda Fit, Nissan Versa, and Kia Rio.
The Big Recession And The Lowering Of Interest Rates
The Big Three still maintained at least some economy cars in an attempt to offer a well-rounded lineup. But the Ford Focus, Chevy Cobalt, and Dodge Caliber wouldn’t be enough to save them during the 2007-08 Financial Crisis, which brought soaring gasoline prices with a simultaneous credit crunch. Unlike the early ’80s, car loans weren’t expensive; they were just impossible to get.
As the national economy imploded, so did truck and SUVs sales, taking the American auto industry with it. Like the 1970s all over again, the Big Three’s lack of fuel-efficient options led the public into the arms of small imported cars. I interviewed Derek Stone, a longtime Toyota and Mercedes sales consultant from Akron, Ohio.
“I sold cars during $4.30 a gallon gas in the summer of 2007,” he said. “You couldn’t give away a Tundra, Sequoia, or 4Runner. We were selling Corollas, Yaris, and Priuses at full MSRP.”
Desperate for help, GM, Ford, and Chrysler’s CEOs brought their dog-and-pony show to Washington, promising new gas-sipping hybrids and economy cars if the government would bail them out. Ford escaped bankruptcy by the skin of its teeth, but GM and Chrysler both went through Chapter 11 with heavy government involvement. In return for their investment, taxpayers got the 2011 Chevy Volt and 2013 Dodge Dart.
In the wake of the crisis, American automakers gathered up small cars from their foreign divisions and brought them here. The Ford Fiesta returned, the Chevy Aveo was upgraded to the Chevy Sonic, we got the itty-bitty Chevy Spark, and Chrysler helped Fiat re-enter the U.S. It seemed like the automakers had learned a valuable lesson and the consumers benefited with a small car renaissance.
But this time, buyers weren’t dealing with double-digit interest rates. In an effort to restart the economy and spur business spending, the Federal Reserve lowered rates and kept on lowering them.
By the late mid-2010s, the national economy was strong and gas prices were falling to record lows as new fracking technology led to a boom in domestic oil production. With cheap gas and cheaper loans, U.S. consumers now shifted en masse to pickups and SUVs.
Pickup trucks offered increasing luxury and passenger-focused interiors. Sedan sales gave way to crossovers, with America’s perennial best-selling car, the Toyota Camry, being usurped by the RAV4 in 2017. One huge factor in the transition was the exploding popularity of crossover SUVs, which provided improved comfort and (moderately) better gas mileage over their body-on-frame predecessors.
“A Highlander was getting 17 city to 24 highway,” said Derek, referring to selling cars in 2008. “Today a Highlander does 21 city and 28 highway. It’s made small cars less desirable, because you’re getting numbers with crossovers that you were getting with cars a few years ago.”
Average transaction prices for new vehicles kept climbing to eye-watering new highs, but the Fed hesitated to raise rates, because overall the economy was healthy; inflation on other consumer goods seemed under control. Crazy car and truck prices weren’t scaring away buyers because low rates meant buyers could just get longer loans.
Low Interest Rates Make Big Vehicles More Affordable
From 2015 to 2019, the price of a Ford F-150 Lariat Supercab V8 increased $6,500. But if you go from a 60-month loan to a 72 month loan, the monthly payment difference is just $5. Unlike the 1980s, lower rates meant that buyers could hide the pain of rising prices by just stretching their loan terms. (Instead, the pain came at the end when you still owed money on a 7-year-old vehicle.)
Rather than field uncompetitive entries in dwindling market segments, automakers began to abandon sedans for good. Station wagons and hatchbacks were hastily lifted, covered with body cladding, and marketed as SUVs. Entry-level economy cars were displaced by cheap, cynical subcompact crossovers brought from international markets, which lacked the refinement, fuel efficiency, and lower prices of the cars they replaced.
The Covid-19 pandemic supercharged this, as the Fed panicked and dropped rates while bored Americans flush with government stimulus checks all decided to buy new vehicles at the same time. Faced with a global supply chain crisis, automakers strategically focused resources on building their most-profitable products: trucks and large SUVs. As mentioned earlier, even the Japanese and Koreans thinned their small car offerings. The average new vehicle transaction price soared, fueled in part by ridiculous dealer markups. Despite falling volume, discontinued models, and factory closures, automakers reported record profits.
But, every party has to end. After years of avoiding it, the U.S. was wracked by record-breaking inflation in 2022, which seemed to ignite a vicious cycle of corporations raising their prices simply because “people will pay it.” In response, current Fed chairman Jerome Powell raised rates 11 times to cool the economy.
Returning to our math one last time, let’s hold price constant, and compare when rates were at their lowest in Nov. 2020, vs their current peak in January of 2024.
You can always stretch the loan term to reduce your monthly payment, but it results in a higher total cost and a lot of wasted money on interest. Higher rates cause the total cost of the loan to balloon, greatly increasing the buyer’s chances of ending up “underwater” with an old car that’s worth less money than they owe on it. The effect was less pronounced in 2020, but by 2024, a vehicle financed over 84 months costs $4,500 more than one financed for 60 months.
Where We Are Today
When I asked Derek Stone how interest rates have affected sales, he told me buyers are adjusting, but it’s not like the doom and gloom of the 1980s.
“As a generality, your average car buyer lives and dies by monthly payment. You really haven’t seen as much of a reduction in demand as people thought, because the car market was so screwed up by lack of volume, and people put off purchases,” he said.
“But what you do see is, if people had leased before, and leases are now $200 more a month, they’re looking at buying out their old lease or buying a pre-owned car. Or they look at purchasing a less expensive car; they’re looking at a Highlander instead of a Sequoia… It’s a behavior switch. It does make things more challenging. And you’re seeing more manufacturers come out with incentives for interest rates.”
So far Powell has managed to raise rates without triggering a bloodbath of a recession like Volker’s, and thankfully, it didn’t require paying 15% interest on a Renault LeCar. It seems Americans are finally getting the message that our Age of Easy Money is over. Bargain incentives are returning, dealer markups are disappearing, and the average vehicle transaction price actually fell slightly. With supply chains smoothing out, sales of small cars like the Honda Civic are actually on the rise.
But the timing has proved pernicious for the automakers, who are now in the thick of an expensive transition from internal combustion to electric vehicles. At present, EVs still cost more than their gasoline counterparts. To counter this, most automaker’s EV efforts started with low-volume, high-priced luxury vehicles that could absorb development and manufacturing costs. However, these high-priced EVs are now being launched into a very different market than when they were conceived five years ago. Sales have been disappointing. Toward the end of 2023, there was a lot of hullabaloo that the “EV transition had stalled” and dealers were pushing back against manufacturers.
But the real story is less about resistance to electric cars and more about resistance to high prices. Sure, plenty of buyers will never buy an electric vehicle and that’s fine; internal combustion will be sticking around for a long time. But there are many buyers who would like to buy an EV today; they just don’t want to finance a $75,000 Cadillac Lyric at 8.5%.
Could High Interest Rates And Electrification Bring Small Cars Back?
On the subject of EVs, Stone said that Mercedes customers typically are less price-sensitive than most, but when an EQB costs $10,000 more than an equivalent gasoline GLB, it can push a monthly payment out of reach.
“I can’t speak for other brands,” he mused. “But EVs from what I can tell are primarily lease driven. I think that manufacturers are subventing (subsidizing) leases like crazy on these things.”
2023 was actually a record year for EV sales, but the biggest growth came from affordable models. Tesla slashed prices and set records, with the Model Y becoming America’s 5th most popular vehicle. In a classic “GM Move,” Chevrolet temporarily canceled its popular Bolt EV in favor of more expensive models, just as the little hatchback started to outsell the competition. GM probably hopes buyers will up to a Chevy Blazer EV, but that’s a $20,000 jump over the Bolt!
While the rest of the world struggles to build low-priced EVs, one country is already doing it: China. After decades of government subsidies and investment, Chinese automakers have become world leaders at making fun, affordable, small EVs, and they are salivating at the prospect of breaking into the American market. Even Tesla CEO Elon Musk is scared of them.
At present, a 25% tariff keeps most Chinese-built automobiles away from our shores, although some sneak through disguised as Volvos, Polestars, and Buicks. To circumnavigate this obstacle, Chinese carmakers are already planning factories in Mexico with intentions to ship cars north. And if you think fickle American consumers won’t flock to cheap Chinese imports the same way they did to Korean cars in the 2000s, Japanese cars in the 80s, and Volkswagens in the ’60s, I’ve got a beach house in Arizona for you.
And so history has come to repeat itself yet again. Automakers that abandoned small cars (or refused to take them seriously) have found themselves dangerously exposed. As Stone explained, many customers are loyal to a type of vehicle rather than a brand, and they will shop elsewhere.
“When you look at companies like Ford, GM, and Chrysler, these manufacturers aren’t offering the cars that people bought in the past, and that affects things. 15-20 years ago when GM was getting rid of their traditional cars at Oldsmobile, I sold a ton of Camry XLEs and Avalons in the years after Oldsmobile was gone. Those people didn’t know what to buy. You’re going to see that now, too.”
This time at least, the tariff has given automakers a few years to correct course. Just the other week, Ford CEO Jim Farley announced a skunkworks team is developing cheap EVs to compete with China and Tesla. GM CEO Mary Barra said the Bolt is coming back. And with the Cybertruck finally here, Tesla is again talking about the affordable EV for the masses it’s been promising since 2006. Meanwhile, Hyundai and Kia have been quietly building some interesting, affordable, award-winning EVs, and there are at least a few interesting designs brewing with the German and Japanese. Perhaps we can expect another small car revival.
The Federal Reserve has stopped its rate hikes for now, and economists are optimistic that they may even lower rates this summer if inflation doesn’t heat up. But during his recent 60 Minutes interview, Jerome Powell hinted that the basement bottom rates of the 2010s aren’t coming back. He wants to leave a little wiggle room to juice the economy if a future recession does hit.
What’s Next?
What this means long-term for the auto industry is difficult to predict. Big trucks and SUVs remain by far the most popular and profitable segments in America, and it seems those are the segments automakers are most eager to convert to EVs. Again, the wider margins there make it easier to absorb the high development and manufacturing costs. Plus, the U.S. government has again put its finger on the scale in favor of large vehicles by placing an MSPR cap on the new EV tax credits of just $55,000 for cars but $80,000 for SUVs, trucks, and vans. Whether traditional automakers in America will hold their own against Chinese companies or capitulate and retreat upmarket remains to be seen.
Internationally, the fate of small cars looks in question too, as SUV popularity has spread around the world. The one dissenting voice is Citroën’s CEO, who said that the EV transition means “the world of SUVs is done,” because their weight and aerodynamics will always make them less efficient than passenger cars, meaning EV cars can use smaller batteries than SUVs and thus have significantly lower prices, which could tip sales in their favor.
Ultimately, the history and future of small cars in America is very, very complicated. I like to think of the U.S. car market like a forest; it’s healthiest when it’s filled with a wide variety of different creatures, and any time one goes extinct, it’s a loss for all of us. I hope the automakers learn that there is still a market for affordable small cars in the U.S., regardless of gas prices or fickle consumers. Perhaps the events of recent years will remind them of that lesson before it’s too late. Personally, I look forward to the day my Ambassador is no longer the smallest car in the parking lot.
Totally ignored two huge issues imo.
1) These small cars also make a lot less money for OEM’s, and are harder to make large profit off of.
2) Safety. With the large size of all the trucks and SUV’s, no one feels safe in a low car anymore. So why would they buy one?
Think about smashing into a F-250 with your little Bolt. Ouch, if you survive the crushing. I know they got alot better in the last couple of decades with safety tech, but still. Physics matter.
All that said, they don’t even fucking try. Every small car looks like ass inside these days and they are mostly designed and made to appeal to teenagers and young cheap drivers. Give us some nice stuff you see everywhere else, and maybe we will buy small cars again.
Both good points. I did mention that trucks and SUVs typically had much higher profit margins, which motivated automakers to focus on those.
The safety of big vehicles (real or imagined), is a big factor in buying habits, too. Thank you for mentioning that!
“2) Safety. With the large size of all the trucks and SUV’s, no one feels safe in a low car anymore. So why would they buy one?”
Because if the driver of a 2015 Altima can walk away from being inside that car as it’s folded over and crushed by a semi its probably safe enough for most day to day use:
https://www.motorbiscuit.com/nissan-altima-driver-miraculously-survives-worst-crash-weve-ever-seen/
“Think about smashing into a F-250 with your little Bolt. Ouch, if you survive the crushing. I know they got alot better in the last couple of decades with safety tech, but still. Physics matter”
Tell that to the Altima!
Money is money. Certainly if the prevailing interest rates are low, financed vehicles are less expensive. However, 0% financing from an automaker is a gimmick. If they are giving you a cheap loan or lease they have to make up that profit somewhere, probably in the purchase price.
High quality writing, thank you. One tip – the hyperbole in the article is distracting when the core content is objective. Suggesting loans were not available in 2008 or greed driving the late 70s oil prices are unnecessary lines and make me question the research that went into the rest of the article.
Thank you for reading! I apologize for getting carried away. Loans were not “impossible” to get in 2008, although Derek Stone did mention during our interview that it was significantly harder to get customers approved for financing.
As for the second oil crisis, both contemporary news reporting at the time as well as historical analysis partially blame the rise in oil prices on greed, as oil producers and processors raised prices far higher than the drop in the demand should have dictated. OPEC claimed “shortage” yet made record profits in 1979 and 80.
It stuck out to me because you wrote “greed of corporate oil producers”, but from your reply you should have written “OPEC *countries* coordinating to restrict supply to drive up profits”. Greed always exists, but only sometimes does it lead to successful strategies to raise prices and profits at the same time.
Excellent article!
Thanks for reading!
I’ll echo the other commenters who have already stated that this was a really engaging, well researched read.
This is really well done. I came into this just assuming the answer was “profit margins,” but it really is more complex.
I do wonder if the price increases at the entry level, regardless of vehicle size and footprint, are sustainable.
Once customers stop buying (or somebody builds a cheaper car), suddenly it seems like automakers CAN afford to sell cheaper cars. Just look at Tesla’s massive price cuts.
This is an excellent article, well researched, very informative and fantastic read. Thank you
Thanks for reading!
As a truck driver, I don’t understand why everyone wants big vehicles. They are a pain to drive. My personal vehicle is a yaris. Why? After spending all week planning every move I make to avoid running over things, it is nice to just be able to throw my car at a parking space and still be in the lines
Hahaha, that’s a really good point! Honestly, it sounds silly but that was a huge marketing ploy for the Nash Rambler. Imagine trying to park one of those vs a 1950s land yacht. It really would be a lot easier, and I think some buyers were getting fed up with cars growing longer and wider every year.
Hmm, I figures small cars in the US were disappearing because Americans are getting older, fatter, even more self centered (safety wise) and stinger on infrastructure preferring to spend money on “tough” vehicles marketed under the illusion of not needing any infrastructure at all.
That’s certainly a big part of the cultural reason, but cheap loans are part of what allowed us to get away with it, financially.
I’m not so sure – cheap loans are easily offset by price gouging and as we have seen recently autosellers are happy to gouge customers for all their worth.
*stingy*, not stinger.
Damn autocorrect..
Great write-up! I always love reading in-depth analysis pieces on automotive industry.
Hybrids. In 1984, if you wanted great MPG from a Toyota, you bought a tiny, tinny Tercel. 30 city, 35 highway. Today, you can buy a Corolla Hybrid that’s neither tiny nor tinny, and gets 53 city/46 highway.
I’d say this is a good example of cherry picking data. If you wanted great MPG in 1984(and weren’t stuck on Toyota), you’d buy a diesel VW Rabbit or similar and get the same ballpark as that 53/46mpg. Maybe more like 46/53.
Maybe by 1984 loosey-goosey standards of measurements:
https://www.fueleconomy.gov/feg/comparempg.shtml#id=26786
The EPA’s website shows the updated metrics for the 1984 Rabbit diesel as 35/43 vs the 2024 Prius at 57/56.
https://www.fueleconomy.gov/feg/Find.do?action=sbs&id=26786&id=47243
2024 standards of EPA measurement are pretty loosey goosey too. All I know is that back in the day and now, diesel Rabbit owners usually report highway fuel economy in the 50s. Which really makes sense comparing to other vehicles. Toyota, Datsun, and Isuzu diesel pickups from the early 80s normally get highway economy in the 40s despite significantly worse aero compared to a Golf. Later Volkswagen diesels routinely get highway fuel economy in the high 40s to 50s.
In my own experience the modern EPA numbers are dead on. Back in the day though it took a tailwind and downhill to do so.
Cars, especially those earlier Datsuns, Toyotas and Isuzus with carburettors and cheap tires were harder to keep in the top tune needed to come even close. I recall having to help a friend fear down his Corolla engine to remove the carbon buildup because it was getting about 12 mpg. Small wonder, the valves had a thick crust on them.
My experience is that they’re all over the place. I exceed the EPA numbers in my 1991 and 1992 Accords, and fall short with others. I’ve heard similar from lots of folks. My impression is that they’re pretty much random numbers
As they say YMMV. I can exceed those numbers too on summer gas if I stick to the right lane at 10 under on the freeway and slightly over inflate my mpg oriented tires.
I can also easily fail to meet them if I speed.
The Fuelly website is very handy for finding out what real drivers get with their vehicles.
As long as people tell the truth.
The rabbit diesel on Fuelly is showing anywhere between 29 and 55 mph. So 35/43 is a creditable average.
But if you tried to accelerate to 60 mph in that diesel VW Rabbit on the way home from the dealer, you’d still be trying to get there when the 2024 Corolla Hybrid was available for purchase. It’s not relevant at all, but I thought I’d throw it out there.
Good news is everything else was slow too.
That’s a good point. I briefly mentioned that about crossovers. Once crossovers could give you 75% of the MPG of a sedan, instead of the 50% MPG a body-on-frame SUV offered, switching from a sedan to a crossover was a lot less painful. Not to mention, they were easy to drive.
But yeah, if gas mileage is your ONLY concern, why buy a Kia Rio when you get a much more comfortable Prius?
Nice Ambassador! Sadly, I don’t think I’ve seen one on our streets for a decade or more. But I do get to occasionally see a local lady in her Hornet wagon (brown, of course), and that always makes me 🙂
We have a local 1970 Hornet in copper with a cream vinyl roof that plies our neighborhood. Makes me smile, especially since we owned a Sportabout bought new in 1971.
The Malibu mentioned in the article may be Chevy’s last mid-size car — but even it has been the victim of embiggening. When the Malibu name was first re-introduced, it was a compact, replacing the Corsica sedan, which was also a compact.
The Corsica was always a rather big compact, or at least felt like it. It looked and felt more like a mid-size car. It had plenty of interior legroom, although it was a bit narrow, so it was probably pushing the limits of “compact” dimensions. The two following generations of Malibus did seem more like compacts in terms of how they presented themselves and their interior space. The current gen Malibu is definitely bigger than its two predecessors; at a glance it’s often hard to tell apart from the larger Impala.
And it’s always enlightening to park a modern “small” car like a Corolla next to any “small” car from the 80s. Or even next to a mid-size or large car from the 80s. The modern “small” cars are huge.
A 2024 Civic is larger in every dimension than my 1991 Accord. Interestingly, the footprint is also larger than an Astro van.
The Malibu has kind of ping ponged over the years. That first ’97 was firmly in the midsize camp, with more room than the Camry of time that was in midsize territory, if smaller than a Taurus. Of course, most models like the Camry walked the line between compact/midsize at the time, while now they walk the line between mid/full size status.
The ’04 Malibu was still ‘upright’ but dimensionally was a tad small compared to where other midsize nameplates had grown to; the ’08 lengthened the wheelbase but still lacked in width. The 2013 added width but shrunk the wheelbase and rear legroom shrunk, then the current one moved it back up to be about the same as the others.
Thanks Joe! This is one of the best and most concise articles I have ever read about this subject. Just an excellent job here.
Yeah my Mom built a new home in 1979 or 80. I remember seeing her cry after paying 18% interest rate . With perfect credit. Amazing.
Having not lived through that era, it still blows my mind to hear about it. One can only imagine how fast small cars would come back if we had 18% interest today. (I’m thankful we don’t, though!)
Concise! Haha. I was afraid it was too long… Thanks for reading!
Seriously, thanks Joe. Really good stuff.
Just the fact that the Malibu is the only normal main stream sedan made by the big three blows my mind.
It’s wild, isn’t it?
Yeah, if I had to pick 10 years ago I would have said Fusion because it seemed like everyone wanted one
Using the word “Car” in referring to 4 wheeled automobiles my answer is simple:
The Chicken Tax and the Footprint rule.
It’s not our fault that almost universally noone sells small utility focused cars in the US, it’s the damn government’s fault that we have the Chicken Tax and the Footprint rule.
I’d love to rock something Daihatsu Midget 2 sized but a new automobile that size would have to get over 55 MPG to be sold new in the US and over 67 MPG by 2026, all due to the footprint rule.
To be honest, 55mpg seems like a reasonable goal for something half the size of my Accord which gets 26mpg. Some people do better than that in a 3000lb four door Jetta.
But smaller cars tend to be aerodynamically inferior, and diesel small cars are all but banned in the US.
It would be much more than 55MPG, it’s just that the CAFE chart doesn’t go lower than 35ft², and considering how drastically the MPG requirements increase relative to the reduction in size for the automobile it wouldn’t surprise me if if was over 70 MPG currently, and over 90 mpg by 2026
Great article! Having lived through the entire period as an adult, one observation for the cause of the 70’s malaise is that automakers tried to keep prces close to the same in spite of rising costs (catalytic converters, other smog equipment, 5mph bumpers, etc). Once they figured out they could raise prices quality slowly improved.
Huh, that’s an interesting observation I never thought of! But it makes sense. They were scared of raising prices and had to cut costs elsewhere.
This is well researched and thorough, but you probably could have stopped at the point about small cars having a poor person reputation.
The commentariat of this website aside, virtually no one chooses a small car unless compelled to. And as long as used cars are lasting longer, there’s less reason than ever for a financially strapped buyer to settle for a new small car.
Finally, a ‘72 Ambassador is 77” wide, as long as a Tahoe, and is not dwarfed by any modern SUVs other than in height.
I guess you missed the Suburban, which dwarfs a Tahoe and all Tahoe-sized objects in length? And a new Grand Wagoneer is an entire 5″ wider than that Ambassador.
A Suburban or GW is 6% longer than a Tahoe. If you consider that “dwarfing” it, so be it, but I certainly don’t.
Okay, “dwarf” might be an overstatement, but 15″ is generally considered to be a pretty big difference when it comes to any dimension of a car. And that doesn’t change that there are 202r model year SUVs significantly larger than a 72 Ambassador in every dimension.
Man, I just don’t get the mentality of so many of my fellow Americans these days. Driving a full-size pickup daily, without the need to tow or haul? Why drive a big, dumb, sluggish, thirsty vehicle when I can drive something more agile that also doesn’t eat gas like it’s 1970? If somebody I don’t know thinks I’m “poor” for driving a compact car or crossover – who cares!
If someone need a truck, 30-60% of the time, and can only afford 1 vehicle, they are buying a truck.
Sure, some people never use it for “work”, but they might like to do weekend trips and camping that a car can’t get to and they don’t want an suv. Maybe they don’t want to rent a truck for the 5 times a year they know they will use it. There are literally hundreds of reasons to own a truck. Also, the quality and ride in most trucks is as good or better than cars these days, so besides the very real issue of making it hard to park, its just as fast, comfortable and probably better equipped than the car next to it. Welcome to the 2000 20’s.
What I can’t get is the mentality of so many Americans who can’t emphasize or think outside of their own personal situation or feelings.
“5 times a year” is NOT “30-60% of the time”!
I agree, that if you can only afford one vehicle, compromises do need to be made. Unfortunately, the thinking among (too?) many buyers is that the “Swiss army knife” answer is the only and best one, to buy a vehicle that can “do everything”, even though many “things” only happen once or twice a year, if they happen at all.
Those were separate scenarios.
If people were comfortable with mini vans, and weren’t made to feel emasculated by driving them, I think you’d see a lot more around. Mini-Vans almost seem to be coming back, I hope they do.
Every guy I know who drives a mini-van loves it, and it can tow a small trailer that would handle most uses of a truck bed. If not just use the back area and ditch the trailer.
This all has me thinking. Are ALL big vehicles bad, or just trucks. A minivan might be close to as long, probably not as wide. Work Vans are about the same footprint. I feel like this needs a more detailed dive and group poll.
A minivan is MUCH shorter and narrower than a crew cab f150.
No, it really isn’t.
https://www.carsized.com/en/cars/compare/ford-f150-2017-4-door-pickup-supercrew-5.5-raptor-vs-toyota-sienna-2010-minivan/front/
That raptor is 13cm (5in) wider than a minivan, and the raptor is as wide as they make them.
Longer, yes, by a bit over 80cm or 2.5 feet. But I was surprised on that width.
Newer minivans are quite wide, but the minivans I’m used to(grand caravans) are much narrower than the 80″ of fullsize pickups. They’re also much shorter, as you noted, and approximately one Volkswagen Beetle lighter.
Which means that minivan will probably fit in the garage.
The truck, maybe not.
“Sure, some people never use it for “work”, but they might like to do weekend trips and camping that a car can’t get to and they don’t want an suv.”
If we’ve learned anything from Mercedes’s Gambler 500 adventures it’s that shitbox cars can get to those places just fine if not better than a $80k truck with shiny paint and chromed rims.
Yeah, pickups are inherently not very good at offroading, especially giant crew cabs. My Honda will go places my f150 won’t, and forget about a Subaru.
“Why drive a big, dumb, sluggish, thirsty vehicle when I can drive something more agile that also doesn’t eat gas like it’s 1970?”
I presume this is a rhetorical question, but I can give you an honest answer. I like driving my F250. I find it far more comfortable than any vehicle I have ever owned. It has tons of interior room and great visibility. It has no downsides as a daily driver. It can be difficult to park in dense urban environments, but I don’t care since my driving is almost exclusively in low density suburban or rural environments. Fuel isn’t cheap, but I can afford it. It doesn’t handle well, but I couldn’t care less since I drive slow (I’m paranoid about getting a ticket or causing an accident). I don’t want or need a vehicle that handles well.
I should say that I split my daily driving duties with a Tesla Model 3, but that is only because I am also interested in EVs (although I like giant diesel pickups, I also am a bit of an environmentalist) and can afford multiple vehicles. If I could only have one vehicle, I would sell the Tesla and drive the F250 exclusively.
Many people assume pickup enthusiasts are assholes who are trying to compensate for something, but some of us just like pickup trucks. I don’t think someone is “poor” for driving a compact car. Nor do I don’t see what is wrong with someone choosing a cheap car if that is what they can afford (I see that as being responsible and making good fiscal decisions). I generally don’t make assumptions about people’s character based on their vehicular choices. I’m not sure why others can’t do the same.
“It has no downsides as a daily driver.”
Maybe not to you. Everyone else however…
“It has no downsides as a daily driver”
“it can be difficult to park”
“fuel isn’t cheap”
“it doesn’t handle well”
I get it, I also daily a fullsize pickup, but that immediate self contradiction was funny.
I don’t see any of that as a contradiction. For the driving I do, ease of parking, fuel costs, and handling don’t matter. Therefore, it has no downsides as a daily driver for me.
However, things like interior room and visibility do matter. I drove a Honda Civic for 11 years. It was a very nice car, but it was small enough to be a problem at times. Headroom was limited (I had to tilt my head slightly to the right to fit in the car) and lateral room became a problem if I someone was sitting in the front passenger seat. Also, it could be hard to see over things like other cars, pedestrians, and obstructions on the side of the road. Gas bills were low on that car, but it came at a cost.
Those things may not matter much for you, but paying more for fuel definitely affects you negatively.
Honestly, fuel economy hasn’t been that bad. I average around 16 in local driving and 22 on the highway. It is not exactly a Prius, but I spend about the same on fuel for the F250 as I did on the Jeep I previously owned.
Back in the days when I worked for one of the “Detroit 3” automakers, I often drove full-sized pickups from the fleet at work. I have a lot of respect for the way that a 2500 diesel 4×4 effortlessly tows a trailer. If I were still involved in endurance racing, and if I had a place to park the thing, I’d probably own a pickup for the towing/hauling capability. I don’t think I’d use such a pickup as a daily driver, since (among other issues) the unloaded ride quality of the 2500 4x4s that I drove was punishing. Has that meaningfully improved since the 2011 model year? They certainly aren’t any smaller now. My happy medium for the past dozen-plus years has been my wife’s 2008 Grand Caravan SXT 4.0/6-speed. It wasn’t ideal, but I did tow the racecar around with it quite a bit – even over California mountain passes.
I can’t compare to 2011 model year vehicles but I’m used to newer long wheelbase 3/4 tons riding VERY smooth.
My 2021 F250 actually has a fairly smooth ride. I haven’t driven a 2011-ish full size pickup, but I have driven several full-size trucks from the late ’90s and earlier. My 2021 rides like a Buick compared to trucks from the ’90s or before.
Although, my previous daily drivers were a Jeep Wrangler, a ’77 F250, and a lowered Civic, so my opinion of a smooth ride might be skewed.
Lots of people like driving trucks and large vehicles, myself included.
“Dumb” and “sluggish” are value judgments that in no way describe modern trucks to their owners.
Sitting up high has a lot more value to me in a daily driver than “agility”, and I’m an enthusiast! I live in a place where roads are straight and flat. A small car offers me basically no value and a lot of downsides.
To be clear though from my first post, I don’t see people driving small cars as poor per se, just that I agree with the author that they had and still have that reputation.
You have raised another downside to big, tall, and/or lifted trucks: People can’t see around the damned things when driving a normal car! It’s hard to be a defensive driver when I can’t see far down the road, so I often find myself passing such trucks – on the right if necessary. I’m grateful that, here in California, trucks with 3 or more axles and vehicles towing a trailer are prohibited by law from driving in the left-most lane except where posted. So that just leaves the tall pickups…
My dude, people of means do in fact buy smaller cars. The average income of a Honda Fit buyer in 2014 was 72k a year. And the Scion xb was infamous for having being the car of choice for middle class retirees. Higher incomes directly correlate increased density. Increased density direct correlates to higher demand for small cars. Just look at Lake Nokomis neighborhoods in South Minneapolis or even Edina, it’s a field of Crosstreks as far as the eye can see.
My wife and I are each at 6 figure salaries at this point and I go out of my way to buy small, affordable cars. I could go drop $60,000 on an X5 or something if I really wanted to, but why would I? We live in the city and it’s dumb as hell to have that much of our money tied up in a depreciating asset.
My parents live in one of the most expensive parts of town, and while you’ll see a decent amount of German luxury cars the vast majority of what you’ll see are Civics, Priuses, Model 3s, Accords, Camrys, GTIs, stuff like that. The biggest cars you’ll see are usually mid sized unibody crossovers.
One of the not so well kept secrets is that the vast majority of well off people don’t sink much money into their cars. Of course there are exceptions, but almost every $40-100,000 luxury vehicle you see on the road is leased…and often by middle and upper middle class people stretching their budgets to try to look wealthier than they are.
The truly ridiculous stuff like 911s, AMG GTs, etc. are almost never leased or financed. That demographic of buyers is wealthy enough to pay cash/on another level compared to what most people consider to be well off. There’s a reason why Porsche doesn’t really offer competitive leases or financing outside of their SUVs…they don’t have to.
Anyway I’ve gotten off track here. I also disagree that people who can afford big cars won’t willingly choose smaller ones. I think it varies based on location, demographics, etc. If you’re in a rural area where space isn’t an issue and people are judged by how nice of a truck they have then sure, I don’t think many folks are buying Corollas.
But in an urban area? Almost everyone is, even the people who can afford to drive something nice.
The new-car buyer who needs (or at least can justify) something the size of a Camry/Accord or RAV4/CRV may very well be stretching their real budget to get it – or not, because once you get past that level of car, the returns on additional spending (other than status, of course) diminish pretty rapidly.
These days the refinement and space of a C-segment car almost make the mass-market D-segment equivalent superfluous. It’s just that it costs nearly as much to make a small car to a given standard of refinement as it does to make a larger car, and larger cars have more perceived value. SUVs and trucks are even more so, because it doesn’t cost much more to build a crossover as it does a sedan on the same platform, and the perceived value is all profit. Trucks can cost less to build than cars (and again, size increments within the traditional body-on-frame truck class add little additional cost) and have a much larger economy of scale in the US and its northern suburbs, so there’s a whole lot of perceived value just waiting to be sopped up.
Location is by far the largest detriment in choice. Second is political identity and your neighbors. Income is a pretty poor detriment expect at the extreme ends, do to restricted/ unrestricted access. This gets a bit interesting with social mobility, as people who have moved upclass can often preference larger extravagant things. Mental health can also be an oddly accurate detriment, for example Males with clinical anxiety often prefer larger trucks while females prefer small sub-compacts. But there’s a variety of possibilities to cause there.
Overall though, saying only lower incomes preference small cars is naive and empirical not true. Choice is a complex decision involving a variety of financial, macroeconomic, social and personality factors.
I don’t know about 2014, but in 2024, I’d guess that 72k/yr is the absolute lowest income of any new car buyer.
That would be about 94k in 2024 money. And the average income of a car buyer in 2024 is 59,504. But to go back to 2014, the average income of a 3 series buyer and Fit buyer was within a grand of each other.
Survey sample of one: I retired well at 59 and still drive the Fit I bought then 10 years ago. I happen to just prefer a small car.
The original point about small cars having a poor person reputation was the author’s, not mine, and I was merely agreeing with it.
I’m aware the reputation is not always accurate.
I see plenty of Yukon Denalis and Navigators when I’m in Edina, but it’s true that Subaru has a big presence too.
I did not say, nor do I agree, that small cars have a poor person reputation. That was a quote from our interview with Pat Foster, who–incidentally–doesn’t believe that either.
What he was arguing was that the American public, especially in the 1950s-70s, carried the negative stereotype that small cars were for poor people, and what made the Nash Rambler so successful is that it overcame that negative stereotype.
The perception of “small car” equals something shitty for poor people in the USA from 1950s – 1970s
Hence why Nash of all companies came up with the higher ( perceived or actual) “compact car” was a learning for me.
Personally I have always thought of small car vs. compact car as more of synonyms for each other
If no good small cars are offered then of course, sales will be non existent. I’ve nearly always had a small car in my fleet. Having child seats was when we briefly went bigger. I drove an Astra stick for 8 years and then a Volt for 5. I could have gotten something bigger, but those were what I wanted. It’s so hard to find a nice small car now. We have a 330e, which I would still consider a small car, but it didn’t have a small car price. At least with the steep depreciation curve, it was an OK used car purchase. When we are ready for something new in 5-6 years, I hope there are still some good car choices left.
This was a great read! Excellent work!
The only thing I remember about the late 70s gas crunch was the car we had. Dad bought a 1967 Lincoln Continental from a limo company for next to nothing. They couldn’t give cars like that away.
He bought it because he was provided a truck and gas by his work, so the Continental was for my SAHM to drive. Basically, it took my sister and I to school, mom to the grocery store, and all of us to church. It was a gas hog, but it never got driven much.
One more bonus to that beast: it had a high compression V8, so it ran on super unleaded. Sure, it was more expensive, but it was also the last to sell out at gas stations.
Another bonus: every time we went anywhere in it, we looked like SOMEBODY.
Ha, the final line of your story made me smile! That’s certainly true about those big old Lincolns.
Something a didn’t include, one of our interviewees shared the story of how in 1980 a customer traded in a 70’s Continental for an AMC Concord, claiming he was spending too much on gas. The salesmen tried to point out that he was going to take a bath on the Lincoln and loose way more on his trade-in than the Concord would ever save him in gas money, but the man was so concerned about being *seen* as wasteful for driving a gas guzzling Lincoln, that he didn’t care about the actual economics of how much money he’d loose on the trade. Consumer herd mentality is a wild thing.
No mention of the footprint-based changes to CAFE in ~2012 that heavily disfavored small cars?
Ahh, that’s a good point. I should have mentioned that. Low interest rates may have fueled demand for trucks/SUVs, but the CAFE changes definitely made it even more tempting for automakers to abandon small cars.
This is great work. There are a couple of other factors that warrant consideration. The main one being the number of miles driven by the average car user. The price of fuel is also relative to how much of it you use. These days I often hear people tell me they commute 50 or more miles in a day. I bet many of those are in bumper to bumper freeway traffic. That was not so common 30+ years ago before housing costs drove (pun intended) people to the hinterland. There is also a changing mix of single car v.s. multiple car households. One big fancy one is economically more feasible than two when you add up all the related costs of insurance etc.
Sort of related, I saw my first F150 EV yesterday and got to talk to the driver. It was interesting. He was quite vocal about how little he liked it and couldn’t wait for the lease to be up. The reason was a bit surprising. He hated driving a truck. I can relate to that, but I’ve never heard a pickup driver lament that. He basically explained that he does a lot of urban driving and has always had compact sedans like Accords. He really wanted to go the EV route for his use case but the only option available during shortages at the time he had to replace his old vehicle was this one. He said the product was solid, though he didn’t like the interior much. The problem was having such a huge vehicle in his said urban driving use and not needing anywhere near all the extra girth for anything. He even said that he has two teenage kids and still didn’t see the point in a vehicle so big.
I told him he should maybe find something big to tow. I hear that’s an important manly thing to do these days. LOL
Huh, the story about the F-150 Lightning is interesting. I wonder how many Lightning buyers are first-time pickup drivers VS how many are repeat truck buyers. If you’ve driven sedans and crossovers all your life, switching to a Lightning would be a big change! Especially if you live in a city, it makes driving and parking a lot more inconvenient.
I heard some folks who haven’t bought a truck in a while are shocked when they go to dealers and see how big the new trucks look and feel. Maybe the size is finally becoming a turn off.
sounds like someone who bought a car he really shouldn’t have.
That said, I know a lightning owner and I think he likes it, but probably won’t get another. The battery and other things don’t stack up to his kids R1 and he isn’t doing tons of towing. Engineers doing construction type jobs and site visits.
Great read, really enjoyed it. I will admit to being a holdout for a decent hybrid or phev offering with a good sized battery. Until that unicorn arrives I will soldier on with my paid off Accord.
Sounds like an economically wise choice!
This is an awesome deep dive into the factors driving the market back then. I kinda remember what it was like then but I was born in 67, so for the most part, everything is filtered through the understanding of a ten-year old. One thing that sticks out for me is the backlash against imports at that time. I can remember my father and his friends all swearing they’d never buy one because it was unamerican. That held until 1985 when I got my Celica GT :). Thanks for putting this together!
What a great memory! It was interesting how many “I’ll never buy an import” types suddenly became lifelong converts because of the oil crises.
VW’s decision not to bring the ID3 GTX to the US will always be an absolutely baffling missed opportunity. The thing could become the poster child for the reasonable and sporty EV, which is exactly what the GTI was.
Now that there are no EVs that aren’t cheap cars, it’s an especially stupid decision.
The bean counters that decided it wasn’t worth the investment in the American market needs to be fired yesterday.
Outside of the diesel scandal, all I keep hearing year after year, decade after decade is how VW just can’t find growth in North America. It’s all “nobody wants nice small cars, only big bland boats”. You’d think by now they would have bumped into at least one business person to point out the missed opportunities they will upon themselves. Classic ‘definition of insanity’ example.
I feel like VW has been “5 years away from really figuring out what the U.S. market wants” for the last 30 years.
This reminds me there’s a good YouTube video by “connectingthedots” about how at some point in the early 1990s the big 5 German auto companies began colluding with each other instead of competing with each other…
Given German cars of past approx. 30 years apparent 2x appetite for parts and maintence this makes a lot of sense. German cars are absolutely designed perfectly well to the specifications given to their engineers, i.e. maximize tolerable return visits to the dealers for expensive maintenance
https://youtu.be/TOEbs2SzYBo?si=RJDAu95rUD2PzDNR
But aren’t VW’s EVs lamented for having terrible interiors filled with shitty touch buttons? No thank you.
If it makes you feel better, their ICE offerings are also filled with shitty touch buttons.
Isn’t that… all new cars?
Many new cars have SOME, yes (though many companies are now backtracking on that and putting more physical buttons back in) – VW, especially has been ridiculed for their terrible UI touchscreens and touch buttons for EVERYTHING in theirs of late.
Right! There is a big subset of EV-curious consumers that want 3 simple things:
200+ mile range
Easy to charge
Under $30,000 (after tax credit)
But nobody can deliver it.
Doesn’t the ID3 start in Europe at like ~$35k before VAT? I thought the Chinese and Tesla were slaughtering VW’s EV sales, even in Germany
Based on the last 5-10 years of VW, I think more than their bean counters need to canned….
I’ve said it before and I’ve said it again, over the last ~10 years or so, VW has completely lost the plot in America. Unless you want a GTI or Golf R, I can’t think of a genuinely compelling product they offer. The Jetta/GLI is okay I guess, but it’s pretty big these days and not as good to drive, from what I’ve read. Otherwise it’s three SUVs that look like the same car hit with a shrink ray. And the ID.4 which is as interesting as wallpaper paste. It all feels so phoned in, like they couldn’t be bothered to try and create a compelling product for the US market
VW’s issues here go further back than ten years. They were the first modern-era foreign automaker to open a plant in the US, which lasted six years. Although the easing of the fuel crisis didn’t help VW sales in the early ’80s, Toyota, Nissan and Mazda were cranking out C-segments all over the place, and Honda dealers were managing to get sticker price or better for Civics, so that’s not much of an excuse. European carmakers tended to extend product cycles, which worked there at the time and worked here for the Beetle for quite a while. but wasn’t a good strategy by the ’80s. Neither were VW’s quality issues – . the Wikipedia entry on the Westmoreland plant cites Consumer Reports (or, actually. this 1983 article from the Pittsburgh Post-Gazette, which looks like the entry’s primary source) stating that gas-powered Rabbits from 1977 to 1979 had worse than average quality, including oil burning – although the first Rabbit came off the Westmoreland assembly line in mid-1978. And customers and reviewers alike complained that Rabbits built in Pennsylvania were too Americanized (I distinctly remember a line from a Car and Driver review of an early US-built Rabbit complaining that the side mirror adjustment control was a Detroit-style chrome stick with a ball on top). VW-brand sales recovered from the late-’90s onward but haven’t passed the recent peak set in calendar 2012 after the Atlas and cheapened US Passat were launched, let alone the 1970 all-time high (although that was a time when new cars in general made up a larger share of the market, especially at the lower end.)