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How The Small Car Died In America

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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.

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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.

Ford Fiesta Display
The Ford Fiesta, Focus, and Fusion on display at NAIAS 2017, shortly before Ford stopped selling them in America. (Ford)
Malibu Build2
The mid-size Malibu is the lone remaining sedan at Chevrolet.com.

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.

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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.

Joe Ligo
Radwood Philly, 2022. (Joe Ligo)

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!’”

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[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.

Nash Ad
1950 Nash full-line ad, highlighting the new Rambler compact. Note the emphasis on its low price and generous features, as well as fuel economy. (Credit Alden Jewell)

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

Dollars Per Gallon
A graph showing gasoline prices from 1929-2015. Note the spike in 1981 and the valley in 2015. (U.S. Dept of Energy)

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.

Vw Ad
A 1969 VW ad highlighting the Beetle’s lower MSRP and higher resale value vs the competition, as well as gas mileage. (Credit Alden Jewell)

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.

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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.

Standard Gas Station

Closed Station
Waiting lines and closed gas stations due to the 1973 oil crisis. (U.S. National Archives)

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.)

Hornet Sportabout Ad
A 1974 AMC Hornet Sportabout ad highlighting fuel economy. (Alden Jewell)

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.

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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.

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Reagan Meeting
President Reagan meeting with Fed Chairman Paul Volker in 1981.

“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.

Jeep Renault
Renault LeCars and 18is, plus some AMC Eagles, at Overland Park AMC Jeep Renault in 1981. (Alden Jewell)

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.

Chevette Chart

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Wagoneer Chart

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.

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“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.

Stingy
Saving money was one everybody’s minds, as evidenced by this 1983 Toyota Tercel Ad (Alden Jewell)

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. 

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“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.”

Renault Halloween
If you think Halloween is scary, imagine paying 10.9% on a Renault Alliance… ” (Kennedy American AMC Parts)

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.

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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.

Dollars Per Gallon
A graph showing gasoline prices from 1929-2015. Note the spike in 1981 and the valley in 2015. (U.S. Dept of Energy)

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.

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Hummer Dealership
Few brands exemplified pre-Great Recession excess better than Hummer. The brand was shuttered during GM’s bankruptcy but has now returned as an over-the-top EV. (Alden Jewell)

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.

Sonic Wolfys
A Chevy Spark media drive in 2013. (Chevrolet)

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.

Fred Chart
A graph of car loan interest rates since the 1970s. Note the spike in 1981 and the valley in 2015. (St. Louis Fed)

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.”

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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.)

F150 Chart

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.

Dont Touch Dart
The compact, fuel-efficient Dodge Dart was a key linchpin in Chrysler’s government bailout and Fiat’s acquisition of the automaker, but it was discontinued after just 4 years on the market. This photo with Craig Robinson is one of the only remaining images of the Dodge Dart on Stellantis’ media site. (Stellantis)

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.

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Transaction Prices
See the massive spike in new vehicle prices in late 2021, followed by a slight correction by January 2024. (Credit: Cox Automotive)

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.

2020 2024 Chart2

 

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.

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60 84 Chart

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.

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Bureaucrat
Jerome Powell was nominated to lead the Federal Reserve by President Donald Trump in 2017 and has continued in the position under President Biden.

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%.

Cadillac Ev
Cadillac

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!

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Chevy Test Drive
A Chevy Bolt EUV test drive event. (Chevrolet)

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.

Byd Seal
Affordable Chinese EVs like this BYD Seal are already on sale in Mexico, and local factories are now in the works. (BYD)

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.

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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.

Lightning Plant
Ford F-150 Lightnings undergo charging at Ford’s Rogue Electric Vehicle Center. (Ford)

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.

Joes Car

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Space
Space
13 days ago

That Chevy Malibu looks nice without aggressive lines and 52 fake vents. $25k isn’t too bad.

Handlebar
Handlebar
13 days ago

One of the concerns I have with small cars is the prevalence of land yachts throughout the country. Sure, safer for them, but less safe for others not in those behemoths.

RedR58
RedR58
14 days ago

I’ve been driving my 2013 MINI Cooper Coupe since buying it new in December 2012. The car is 148″ L x 66″ W x 55″ H. I love it and have absolutely no desire for anything much bigger, certainly not an SUV. I have plenty of storage in the back despite carrying a full-size spare in there. I don’t need or want a 4-door or a 4- or more seater. It’s absolutely perfect for me.

DadBod
DadBod
14 days ago

Following the timeline of this article, it really drives home how Ronald Reagan waltzed into the White House to take credit for a massive boom

Joe Ligo
Joe Ligo
13 days ago
Reply to  DadBod

That might be an oversimplification. He was elected into some of the worst economic conditions the country had seen since the Great Depression, and there was no guarantee things would have worked out the way they did. There was no promise the economy would recover and gas prices would go down again, anymore than Obama could have predicted how things would go when he was handed the economic mess of 2008.

Although Volker’s changes to the federal interest rates may have been beyond the president’s influence, Reagan (for better or worse) made major changes to the U.S. economy. Depending on who you ask, he either gets too much credit, or not enough, but he was not a passive observer.

DadBod
DadBod
12 days ago
Reply to  Joe Ligo

Oversimplification is the American way! Also Ronald Reagan sucked.

Shinynugget
Shinynugget
14 days ago

Bought my ’21 Corolla hatch 6MT two years ago on the used market. Love it and no regrets. I’ve always loved small cars. That may be because that’s what I could afford as a teenager and drove well into my mid-20’s both in Japan and stateside.

More fun to drive a slow car fast, than a fast car slow.

Eric Davis
Eric Davis
14 days ago
Reply to  Shinynugget

I have a ’19 Corolla SE hatch (nothing special, auto, just enough comfort and features) and I have a blast driving it. I never feel out of control even when I’m wringing the sucker out.

Robot Turds
Robot Turds
14 days ago

I find it annoying that seemingly everyone else out there wants Giganto-sized trucks and SUVs these days. I have always loved small cars and trucks and the small Tacoma I own is perfect and yet Toyota stopped making small Tacos over a decade ago and the new ones that just came out are 75% as big as the Tundra.

Waremon0
Waremon0
14 days ago
Reply to  Robot Turds

And 95% as expensive. 5k difference between the TRD off-road Tundra my coworker bought and the TRD Off-Road Tacoma I was looking at. MSRP vs MSRP

Theotherotter
Theotherotter
14 days ago

Excellent article. I look forward to more like this.

CPL Rabbit
CPL Rabbit
14 days ago

When people reminisce about how cheap houses were in the ’80s, it’s because nobody could afford a loan.

It’s more that Median home price was 3x Median family income (which continued after rate cuts). They are now 5x.

Squirrelmaster
Squirrelmaster
14 days ago
Reply to  CPL Rabbit

This. The house my parents had back in the 80s was, at the time, roughly $73k. Accounting for inflation, that 4 bed, 2 bath, 1800sq/ft starter home should be roughly $200k today. However, the house went on the market and sold last year for $480k, looking basically the same as it did in the 80s (minus the bright green shag carpet). When a starter home is pushing a half-million, especially in an area where the median income is just under $70k, it’s pretty easy to reminisce about the old days.

Joe Ligo
Joe Ligo
14 days ago
Reply to  CPL Rabbit

The point I was trying to make was that at least part of the reason WHY the median home price was lower in the 80s was because rates were so high that nobody was buying, so sellers had to lower prices to attract customers. So yes, asking prices were low, but actual monthly payments were still painful. That’s a key part people leave out when reminiscing about “the good old days of cheap housing.”

That said, the housing market today is completely out of control. We could go on and on about all about wage stagnation, restrictive zoning, and the million other things that impede people from affordable housing. But that’s outside my area of expertise.

Freelivin1327
Freelivin1327
15 days ago

Awesome article and great work…I’m looking forward to the AMC Documentary this year- when is it coming out? Nice Ambassador! Interesting learning about the “Compact” vs. “Small car” yeah, it’s funny since I’ve always considered it one of the “bigger” cars among AMC. My brother used to have a couple of Eagles including an SX/4 which I really want to get eventually- the design is just awesome and fun.
I’ve always loved how the 79 Mark V held on til the last minute before downsizing in 80 after most had already been downsized. I’ve never been a Ford person besides the classics but lately I’ve grown to love the Mark V and want one SO BAD! I want to experience a huge, classy, luxurious couch on wheels that you can steer w/ a pinky; I want to ride like I’m on a cloud w/ a humongous V8! Would also take a Chrysler New Yorker boat/land yacht
It’s funny since I do actually like small cars too…I really want a CRX and 3rd gen Prelude, an old VW Rabbit GTI like I used to have- that was so fun to drive, and I love Accords too- used to have a couple of 3rd gens w/ stick and pop up headlights

Last edited 15 days ago by Freelivin1327
B3n
B3n
15 days ago

I would love to get a second, fuel efficient small runabout car for our frequent ~20 mile groceries-preschool-home triangle, but we can only afford one car payment.
And that one car then has to do everything well: have 7 seats and space for luggage when we have family visiting, comfy for long road trips, tow the trailer for dump runs, tow the family camper, be decent in snow.
So, a full size SUV it is for us.
I bet lots of other families are in a similar situation, using a single “does-it-all” vehicle out of necessity.

Joe Ligo
Joe Ligo
15 days ago
Reply to  B3n

Absolutely. I think that’s a big part of decision-making for families. Better to have one vehicle that does it all than multiple specialized ones.

B3n
B3n
14 days ago
Reply to  Cheap Bastard

Yeah, anything here in NH 12-15 years or older will be too rusty to pass inspection. And I can also buy a lot of gas for $4-6k, plus extra insurance, registration, plus whatever maintenance items a second beater will need.
The math doesn’t really work out.

Last edited 14 days ago by B3n
Cheap Bastard
Cheap Bastard
14 days ago
Reply to  B3n

Well then continue to curse the darkness. When you’re ready to light a candle the used market will be waiting.

Last edited 14 days ago by Cheap Bastard
Torque
Torque
13 days ago
Reply to  B3n

When shopping for my last (my wife’s current daily), I couldn’t find what I was looking for locally (clean 4-7 yr. old 3rd gen plug-in prius), so I looked nationally and found the best one in OH.
I Flew there, had it inspected by a well rated local indy shop that specialized in Toyotas. Satisfied with the results of the inspection and drove it 12 hrs. home. Although it would have sucked, I was 100% ready to walk away if I needed to.
Working full time, I had to make the trip on a weekend too.
All told (flight, hotel, ppi, fuel) I spent roughly $700 and two days of my time.
I would do it again, though I 100% understand people that find a car a long distance away, remotely have a ppi completed and have it shipped to them, at the time I wasn’t willing to buy w/o driving it myself.

Ecsta C3PO
Ecsta C3PO
6 days ago
Reply to  Torque

Similar situation here, Prii here are guaranteed sell for MSRP+ for the first 5 years and 100,000 km of their life.

Ecsta C3PO
Ecsta C3PO
6 days ago
Reply to  B3n

In literally 1 minute I just found a clean Golf coupe in your state for $6k. 2 doors might be a deal breaker for you, but with a bit of effort I’m sure you can find something for even cheaper that meets your needs. It’s okay to like big vehicles and I don’t know your parking situation, but don’t come onto the Small Cheap Cars are Good (TM) website and claim there aren’t good cheap cars out there.

B3n
B3n
6 days ago
Reply to  Ecsta C3PO

$6k is considered cheap now? That’s like 3x my budget for a local runabout car.
The math does not work.
$6k buys ~1800 gallons of gas. If that Golf did 30 mpg, I would have to drive it ~56k miles to break even, even against our gas guzzler 15 MPG Armada. And again, that’s not counting maintenance, registration, insurance for the extra vehicle.
In 2017-19 I drove a $1k car that was not rusted to shit and passed inspection twice.. Let’s double that amount because inflation to $2k.
Where are the non-rusted $2k beaters?

Austin Vail
Austin Vail
15 days ago

Great writeup! I think another part of this is the misguided assumption that technology will improve steadily forever. It won’t, and hasn’t, but is being held to unrealistic standards by policies formed under the assumption that it will.

The CAFE standards were formed with good intentions and worked for a while, but are now doing more harm than good as they assume economy cars will always get more efficient when in reality they’re reaching a sort of plateau, and can only make tiny incremental improvements.

If the regulations were updated to make reasonably efficient economy cars easier to homologate, they’d suddenly become a lot more profitable, affordable, and common.

Joe Ligo
Joe Ligo
15 days ago
Reply to  Austin Vail

Good point! I should have also included, companies will always try to find “loopholes” to avoid obeying the spirit of the law, if it will mean saving them money. Thus, we have millions of blobby hatchbacks we call “crossover SUVs” so they aren’t held to the same regulations as cars.

Phuzz
Phuzz
14 days ago
Reply to  Joe Ligo

The glaring example is how trucks don’t have to meet the same CAFE requirements as cars, and so are wildly popular in the US.

Baja_Engineer
Baja_Engineer
14 days ago
Reply to  Phuzz

even worse, midsize and compact trucks have to meet stricter CAFE requirements than full-sized trucks. That’s why the OG Ranger, S10 and Hardbody sized trucks don’t exist anymore.

Slow Joe Crow
Slow Joe Crow
15 days ago

I may be part of the problem. 25 years ago I had a small sedan and a compact truck that was ultimately replaced by a second small sedan. Now my daily (more or less) is a midsized crossover and I have a full sized truck. Offsetting this, due to telecommuting we drive less than ever, basically errands and trips with the occasional client visit.
I definitely blame the “footprint rule” and the chicken tax for the lack of compact trucks. The disappearance of small cars is likely down to profit seeking and lack of incentive for small cars in the US. What I consider a small car is midsized by European standards, a Ford Escort or a Saturn SL2 still has a 1.9 liter engine and a C class footprint.

First Last
First Last
15 days ago

Great article. Great comments.

Underreported here, imo, is that the 80s/90s saw a massive improvement in vehicle reliability, which resulted in used cars becoming a good alternative to brand new compact cars. The economic segment of compact car buyers is as big as it ever was, but now those buyers can choose a 5-year-old midsize SUV and the economics of it are about the same. That new car smell only lasts a few months, but the legroom, creature comforts, safety and capability of a bigger car easily outweigh that for a lot of people.

Joe Ligo
Joe Ligo
15 days ago
Reply to  First Last

That’s a good point! I hadn’t thought of that. A 2 year old car in 1979 basically had one foot in the grave. Now, a decently-maintained 10 year old car still has plenty of life in it.

I remember around 2009 when MotorTrend ran a comparison between the two cheapest cars sold in the U.S., a Hyundai Accent and a Nissan Versa, and for the winner they said, “Just buy a pre-owned Corolla.” hahaha.

DadBod
DadBod
14 days ago
Reply to  First Last

I still have trouble shaking the idea that a car with 100K miles is done for

Stig's Cousin
Stig's Cousin
15 days ago

This is well written, but having read it twice, I think it ignores a major point. The default position is that buyers will chose larger, more comfortable vehicles unless there is a reason not to.

Buyers in other parts of the world have very good reasons to choose small cars. Small cars have obvious advantages in areas that developed before the automobile. In those places, rural roads are often narrow and winding. Cities are often dense and have narrow, haphazardly arranged roads with no room for parking. A large SUV or pickup would be a bad choice to drive there. Although, with that being said, I can’t help but recall the high-end vehicles I saw in rich parts of London. It appears rich Londoners like large Bentleys, Rolls-Royces, and Maybachs, even if they are poorly suited to the local infrastructure.

In contrast, in most of the US (aside from New York and a handful of other cities), we have a ton of space, and as a result we have wide roads and ample parking. You can blame city planning for our infrastructure being set up this way, but realistically, people seem to like this. I see no evidence to support the notion that people want public transportation and walkable cities. People might claim to want this in polls, but the same people vote with their wallet in favor or car-dependent neighborhoods. If nothing else, people voted for the governments that created this infrastructure. I suspect if Europe developed today, their infrastructure would be similar to ours and larger vehicles would be more popular among the masses.

With our space and infrastructure, the only reason to buy a small car in the US is when bad things happen. As this post states, small cars became popular here during recessions, fuel shortages, and times of exceptionally high interest rates. In the absence of those conditions, people chose larger, more comfortable vehicles. Also, people like to blame lax/loopholed fuel economy regulations (CAFE or whatever), but fuel economy regulations are artificial political incentives that favor some vehicles over others. I am not taking a position on whether fuel economy regulations are good or bad; I am just acknowledging they are political incentives/disincentives as opposed to natural factors that influence vehicle choice.

Incidentally, I don’t buy the argument that small cars are the domain of the poor. I have never seen a strong correlation between low income and small cars. From what I have seen, poor Americans tend to drive older, rougher used cars, and not small newer vehicles. In less well-off parts of the world there may be strong correlations between low income and small cars, but I would argue that has more to do with what is available on the second hand market in this areas, and whether a strong second hand market even exists. Those areas don’t have the unending supply of old, cheap, large used vehicles we have in the US, so cheap large vehicles are literally not an option.

I guess I don’t care that small cars are dead in the US. Small cars died when manufacturers responded to demand created by the economic and infrastructure conditions we have here. It is not a conspiracy. Honestly, if small cars were only popular when times are bad in the US, I don’t want to see them come back. It is time to stop mourning the death of the small car – is good riddance as far as I am concerned.

Joe Ligo
Joe Ligo
15 days ago
Reply to  Stig's Cousin

These are good points! I didn’t mention it in the piece, but I agree; Americans like buying the most car they can afford. It’s our nature. I think my focus was more on the circumstances that either encourage or discourage that behavior, like gas prices and interest rates (or in rare cases, advertising or novelty.)

I didn’t argue that small cars are for poor people; rather that was is a stereotype (especially in the 1950s-70s) that they were “poor people cars,” as Pat Foster said during our interview. Yet, the point of the Nash Rambler was that it convinced buyers that this stereotype was untrue.

It will be interesting to see if higher interest rates continue to change buying habits. As Derek Stone said during our interview, it’s not like customers are all rushing back to Corollas, but he is seeing people opt for lower trim packages or perhaps downsize one model, say from a Sequoya to a Highlander. Part of this is also due to the fact that a Highlander has grown to the point that’s can provide the average customer with almost equal size and comfort to a Sequoya for less money.

Cheap Bastard
Cheap Bastard
15 days ago
Reply to  Stig's Cousin

“I suspect if Europe developed today, their infrastructure would be similar to ours and larger vehicles would be more popular among the masses.”

A lot of Europe was bombed into rubble in the 1940s, then rebuilt well into the era of the car so outside of medieval city centers that argument is a bit weak. France, Germany and other countries have highway systems that in many ways are superior to ours with similar or higher speed limits. Even countries spared the war aren’t that in car friendly. For example Sweden has a road system not so different from California.

The difference is they have much better, cheaper public transit for longer trips and operating costs scale greater with vehicle size. The factors you mentioned are real but only part or the picture.

SaabaruDude
SaabaruDude
14 days ago
Reply to  Cheap Bastard

My theory with Europe (and the costal areas of Asia) is that density of population centers shifts the economics of mass transit: high-speed/high-availability Chicago-NYC passenger rail could catch only a handful of cities and like 50M people, where that same distance in Europe or Asia covers 2-3x the people. When affordable inter-city transit is handled that way, the need for a “road trip” car is reduced, and a “city car” (with matching city planning) becomes a realistic choice. For a family of 4 in Indianapolis, who regularly visits relatives in Detroit and vacations in Nashville, a do-it-all vehicle is the only realistic option.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  SaabaruDude

And yet America built the transcontinental railroad – the blindingly fast high speed rail of its day – a hundred and fifty years ago when very few white Americans lived east of the Rockys. Other rail lines too.

Clearly population density is not the only main motivation.

Last edited 14 days ago by Cheap Bastard
Aaron
Aaron
14 days ago
Reply to  SaabaruDude

By this logic, most airline routes are non-starters. With proper planning, infrastructure, and support, regional HSR could be a very viable option and a boon to the American economy. If you look at the busiest airline routes in the US, most of them tend to be between major cities. The NYC-Chicago route, for example, is good for 4M+ airline passengers per year and it’s a 2hr flight. The equivalent HSR route would take about 7 hours. That is a 3.5x increase but the rail trip would not require nearly the security or commute time for passengers – especially those who would be able to embark en-route (and would otherwise be missed by the flight or have to catch a connecting flight).

In your proposed scenario, there is enough of a potential demand for travel between each of these cities and they are all close enough that rail routes between them would be viable. I could easily see a “Midwest Triangle” between Chicago, Indianapolis, and Detroit, for example. I’d also see it as pretty likely that there’d be some fairly direct route between Indianapolis and Nashville (probably by way of Louisville). Then, if there were decent public transit options locally or readily available car rental/car share options, you wouldn’t have as much need for a road trip car.

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Cheap Bastard

Europe was not bombed into rubble in the 40s. Sure, a lot of European cities suffered substantial damage, but many buildings survived and the street grids were not redrawn. That is a very different situation than how the US developed, where many large cities barely existed before cars were common.

Your comment about Sweden also caused me to go down a bit of a rabbit hole about what cars are selling the best in various European countries.

The top 5 best selling cars in Sweden are: Tesla Model Y, Volvo XC 40, Volvo XC 60, Volkswagen ID.4, and the Skoda Enyaq, all of which are small to midsize SUVs.

The best selling cars in Germany are: Volkswagen Golf, Volkswagen T-roc, Volkswagen Tiguan, Opel Corsa, and Volkswagen Passat. The T-roc and Tiguan are SUVs and the Passat is a relatively large sedan.

The best selling cars in the UK are: Ford Puma, Kia Sportage, Nissan Qashqai, BMW 1 series, and the Mini. The Puma (at least the one sold today), Sportage, and Qashqai are small to medium size SUVs.

The best selling cars in France are: Renault Clio, Peugeot 208, Dacia Sandero, Citroen C3, and Peugeot 2008. The French actually do like small cars.

I’m starting to think the death of the small car is more of a global phenomenon than something unique to America. The more I read about this issue, the more I am convinced that larger, more comfortable cars are a universal preference. Aside from the French. I don’t understand the French.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

That those cities COULD have been rebuilt with cars in mind but were not is my point. The buildings that werent flattened may have been standing but were burned out, looted husks of their former selves. Many of the NIMBYS were casualties of the war. The population was dramatically reduced so the room was there. The buildings may have been standing but were burned out, looted husks of their former selves. And it wasn’t just the bombers. Many narrow streets were opened up to make way for Tigers, Sherman’s and T-34s. Plenty of room for a minivan.

“Aside from the French. I don’t understand the French.”

Must be the nukes.

Last edited 14 days ago by Cheap Bastard
Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Cheap Bastard

I don’t think rebuilding postwar Europe is a valid comparison to new cities developing in the US. New cities developed in the US during times of prosperity. As a result, people had the option to either live in dense, urban environments or less dense, car dependent environments. Most saw the latter as more desirable.

In postwar Europe, most people were poor and didn’t have the option to buy a car. It would not have made sense to rebuild cities to accommodate cars since car ownership was not an option for most people. I suspect Europe would look very different if somehow the immediate postwar period was very prosperous.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

“As a result, people had the option to either live in dense, urban environments or less dense, car dependent environments. Most saw the latter as more desirable.”

I certainly do. To me urban apartments are cramped, noisy, annoying, filthy gross Petri dishes of sad, powerless compromise. They may be space and energy efficient but its not how I’d prefer to live. Give me Versailles any day!

Which is kinda weird because I do prefer smaller vehicles. Handling and agility isn’t really a thing for apartments though.

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Cheap Bastard

There is nothing wrong with smaller vehicles. They aren’t my preference, but I can see why some people like them.

DadBod
DadBod
14 days ago
Reply to  Cheap Bastard

There’s a reason our public transit sucks, and arguably it’s because Americans don’t want to help poor people
https://www.vox.com/2015/8/10/9118199/public-transportation-subway-buses

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  DadBod

That might be true, but realistically, if public transportation is so wonderful, why don’t rich people ride the damn bus???

That is not a rhetorical question. Someone needs to give me a valid reason why wealthy people throughout the world always seem to choose transportation by personal vehicle when that option is available and not horribly impractical.

I don’t see why people can’t admit that public transportation is less pleasant than driving your own car. Public transportation and walkability is undoubtedly a good thing for environmental and many other reasons, but it still sucks to have to rely on it.

This is a hill I am willing to die on. Public transportations sucks and people don’t want it. People might want to want it or want other people to use it, but they always seem to choose a car. Why can’t we just admit that public transportation isn’t that desirable in reality??

DadBod
DadBod
14 days ago
Reply to  Stig's Cousin

Well, you’ve made up your mind.
Are you saying society should be engineered around the preferences of rich people? The point of the article is that transit is seen as a public good that helps (gasp!) poor people function.

Last edited 14 days ago by DadBod
Stig's Cousin
Stig's Cousin
14 days ago
Reply to  DadBod

Yes, and it appears the vast majority of people have as well, and they choose cars.

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  DadBod

I am not saying society should be engineered around the preferences of rich people (I don’t know how you possibly read that interpretation into what I wrote). I am simply saying that wealthy people throughout the world appear to prefer cars to public transportation. Do you have any evidence to the contrary?

I’m not sure why it is so controversial to acknowledge reality. Public transportation is unquestionably a good thing, but people still don’t choose it when private vehicles are a reasonably practical alternative.

Last edited 14 days ago by Stig's Cousin
Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

That REALLY depends on the transit in question. At least in my use case.

When I discovered an express bus line that went almost door to do it was a game changer for my former commute. Instead of fighting traffic I could sit on the bus and watch TV on my phone. The bus was quicker despite the stops and I even got a bit of exercise walking to the stops. As far as commuting goes I’m sold on public transit in the form of express lines over driving.

For shopping its a bit more complex. Its hard to get much more than a couple of grocery bags home on the bus or rail. Not dealing with parking is a plus but overall I find my bicycle is more useful for typical 1-2 bag shopping than public transit. For bigger hauls and inclement weather I drive but I combine trips cars much as possible to minimize those expeditions. I don’t care to use ride share or taxis for *reasons*.

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Cheap Bastard

“When I discovered an express bus line that went almost door to do it was a game changer for my former commute. “

I might choose that option if it were available. I am not against public transportation, although I prefer a longer commute in a private vehicle over a shorter commute via public transportation (I don’t think that is an uncommon view). There is a point where public transportation becomes cheap and convenient enough for me to choose it over a car, though.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

In my case a bus ticket was a bit less than gas so it worked out for me.

I prefer a longer commute in a private vehicle over a shorter commute via public transportation (I don’t think that is an uncommon view)

Unless that longer commute is spent cruising through gorgeous traffic free countryside I’d rather take the bus.

Aaron
Aaron
14 days ago
Reply to  Stig's Cousin

I suspect if Europe developed today, their infrastructure would be similar to ours and larger vehicles would be more popular among the masses.

If you look at photos of European cities after the post-war reconstruction, they didn’t look too dissimilar from American cities of the same era. They had very car-centric development with tons of parking lots and urban freeways. However, in more recent years, they pushed back. Amsterdam, most notably, started ripping up urban freeways and replacing them with boulevards as early as the 1970s. Other major cities like London and Paris implemented all sorts of policies to discourage the use of large and inefficient private vehicles (or private vehicles in general) starting in the 1980s and 1990s.

Especially in the United States, the idea that people vote with their wallets or that the public policies enacted are a fair representation of public sentiment is flawed. There’s a lot of electoral reasons (not really relevant on a car website) behind the reasons European politics more fairly represent the populace than American politics. But a substantial amount of transportation policy and infrastructure in the United States is determined by un-elected officials or outsourced to non-governmental entities. It’s true that people will tend to gravitate towards the places and things that best suit their needs and wants – at least as much as their budgets can support – but it’s also worth noting that the kind of development best suited to transit-friendly and walkable/bikable communities is literally illegal in most American cities. Parking minimums, zoning that allows only single family housing, minimum setbacks and lot sizes, and tons of other nerdy zoning regulations ubiquitous around the country make it virtually impossible to have anything other than suburban sprawl (even withing cities) in post-war development. And, if you have to drive long distances and a long time for virtually everything you do, it makes larger (and typically less efficient) vehicles the desirable choice whenever it is affordable to do so.

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Aaron

You make a valid point that city policies may not be reflective of what the population wants. However, the US is far from the only car-dependent country in the world. If you look at other newer, wealthy countries (Australia, Canada, New Zealand, the UAE, etc.), most appear to be as car dependent as the US. I don’t see evidence to support the idea that people prefer walkable cities to car-dependent cities. If walkability was universally desirable, I question why wealthy areas that have the ability to choose between car dependency and walkability/public transportation always seem to choose car dependency. It appears that, in a way, car dependency is a luxury.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

“If you look at other newer, wealthy countries (Australia, Canada, New Zealand, the UAE, etc.), most appear to be as car dependent as the US.”

Meanwhile, in Saudi Arabia a place neither short on gas, spending cash OR room to sprawl:

https://www.npr.org/2022/07/26/1113670047/saudi-arabia-new-city-the-mirror-line-desert

Stig's Cousin
Stig's Cousin
14 days ago
Reply to  Cheap Bastard

Yikes. That is certainly an interesting concept. I doubt it will ever be built, but I would be very interested to see if people actually like living in something like this. From the reactions I read, it seems like this is viewed more as a dystopian hellscape than something appealing.

Cheap Bastard
Cheap Bastard
14 days ago
Reply to  Stig's Cousin

As per the story, written in 2022:

“Construction has already begun”

The proper questions I think are whether it will go much further and if it does whether it will be any less of a dystopia for the non mega wealthy than the rest of that part of the world.

My guess is no.

Aaron
Aaron
14 days ago
Reply to  Stig's Cousin

This isn’t an issue unique to the US. I’m just framing it in American terms because most of the folks on this site (including myself) are American.

I question why wealthy areas that have the ability to choose between car dependency and walkability/public transportation always seem to choose car dependency.

The point is that choice is often not viable, no matter how much resource you have. Zoning regulations (parking minimums, lot size minimums, setback minimums, etc.), infrastructure design, and transit policy create an environment where driving is your only reasonable option for getting around. It doesn’t matter if walk-ability or transit is desirable if it’s not possible due to the legal and infrastructure landscape of an area. But when you see the skyrocketing real estate costs in dense urban centers all over the country, that’s a good indication this mode of transportation and living is plenty desirable when it’s made possible.

Bill D
Bill D
15 days ago

Just about a year ago I bought a VW Tiguan. I would much rather have bought a Golf Alltrack (lifted wagon with 4Motion) but they don’t sell those new in the US any more.

Joe Ligo
Joe Ligo
15 days ago
Reply to  Bill D

Ahh yes, the VW “AMC Eagle” wagon. hahaha. Those were cool!

Long_Time_Reader_First_Time_Poster
Long_Time_Reader_First_Time_Poster
14 days ago
Reply to  Bill D

I have a 19 Alltrack 6MT. Tan interior. It’s good! The suspension is tuned to have that feeling of understeer which is a minor negative but I suppose I could change the sways if I wanted to try to move it more neutral. Good economy, decent shifting action – though getting into reverse when its cold is a bit of a pain. I was spoiled by Miatas so YMMV!

Ranwhenparked
Ranwhenparked
15 days ago

One of the major problems automakers have always faced is that smaller cars really don’t cost all that much less to manufacture than big cars, they’re a little cheaper to build, but not proportional to how much cheaper customers expect them to sell for, so they’re always going to carry thinner profit margins. When low interest rates and extended financing periods mean a more profitable bigger car is only going to cost a modest amount more per month, automakers have every reason to steer customers that way and to actively kill interest in their own remaining smaller models that are still in showrooms by pulling back marketing support.

Japanese automakers were at an advantage because of the generally smaller size of vehicles there, their compacts were built to be middle class family cars with the necessary levels of refinement, not as tinny economy cars built to a hard price

Made Nash-Kelvinator’s Rambler innovation all the more brilliant for the era it was conceived in, the first Ramblera were more expensive than an entry level full sized Nash Statesman, and came available only as a swanky laundaulet convertible. The premium compact idea worked amazingly well in the 1950s, but has seen only lukewarm attempts since then. MINI initially played in that space, but they’ve been going the same SUV direction as everyone else and seem to be losing interest in their own cars

Joe Ligo
Joe Ligo
15 days ago
Reply to  Ranwhenparked

Yes, very good point! It seems when the economy is bad, the preferred way to make money is by selling volume. But when times are good, some automakers are happy to abandon thin-margin, high-volume sales for juicier parts of the market.

AceRimmer
AceRimmer
15 days ago

Fuck CAFE!

William Domer
William Domer
15 days ago
Reply to  AceRimmer

But where will I get my double espresso then?

Austin Vail
Austin Vail
15 days ago
Reply to  William Domer

Well, you can get a Cappuccino from Japan…

Cheap Bastard
Cheap Bastard
15 days ago
Reply to  AceRimmer

OK Stinky.

Freelivin1327
Freelivin1327
15 days ago
Reply to  AceRimmer

“I can have as many CAFE Latte’s as I want! It says right here!” -Kramer

Gary Lynch
Gary Lynch
15 days ago

very well written article. Looking forward to more.

A question is begged: what is more important in the government’s eyes: the American consumer, or automobile manufacturers? The tariffs, lack of subsidies available to foreign manufacturers, hurt the consumer. Take them off, get to a free market (as much as possible) and let the EV situation sort itself out. Large manufacturers have been putting their eggs / money into increasingly more expensive vehicles, as outlined. With the low end market wide open, don’t penalize consumers for the big manufacturers placing their emphasis on max profit per car.

The Dude
The Dude
15 days ago
Reply to  Gary Lynch

Usually it’s going to be the auto companies. During the great recession the government was tripping over themselves to bail out banks and auto companies while completely ignoring the average American.

Joe Ligo
Joe Ligo
15 days ago
Reply to  Gary Lynch

I have a hunch that automakers would suddenly become VERY interested in making affordable new small cars if tariff-free Chinese cars started showing up in America! But that doesn’t seem likely in this political climate.

Logan King
Logan King
15 days ago

“CTRL-F ‘Footprint rule’ 0/0”

That’s your reason. The Big 3 benefited so laughably much from CAFE being restructured to basically specifically reward them and punish manufacturers that didn’t compete directly in their space that I wouldn’t be surprised if their lawyers wrote it. It’s absurd it was ever paraded about as a win for fuel economy standards for the Obama administration when even at the time people were noting why GM and Ford were so strongly in favor of the changes.

Last edited 15 days ago by Logan King
Joe Ligo
Joe Ligo
15 days ago
Reply to  Logan King

Ahhh, yes, I should have included that. That was certainly a BIG motivator for the Big 3 to abandon small cars and keep making vehicles bigger and bigger. But it doesn’t explain the full story of why consumers started buying fewer small cars, even from the Japanese brands.

But yes, that would have been a helpful part to include. Thanks for pointing it out!

Bob Boxbody
Bob Boxbody
15 days ago

I’ve always driven compact sedans (and hatchbacks). Kia Spectra, Kia Forte, Honda Civic, etc. But I’ve noticed that just like my phones, every car is a little bigger than the one before. And just like my phones, I’d really like to stop that trend.

William Domer
William Domer
15 days ago
Reply to  Bob Boxbody

Oh so true. As a strange Autopian that has cars from the last century, when I see a Civic that is way bigger than the original Accord I sort of chuckle about the size thing in America. (1986 VW Cabriolet that gets 35mpg on the highway, 1994 Honda Del Sol that gets +40 mpg no matter where, and the 99 Lexus RX300 Campmobile that struggles to get 17 mpg with expensive premium. LOL my wife’s Hyundai Ionic has a miles reminder on the dashboard. Last time it was filled up with about 12 gallons of petrol it read 621 miles till the next fill up so greater than 50mpg.). Turns out over COVID and till now our electric pedal assist bicycles have more miles than all the old toys: 4,500 since Feb 2020, and they get +40 miles per charge. I’m wild guessing that a charge costs about $0.78. PS the size of new phones is ridiculous, given that pocket sizes are not correspondingly growing.

Long_Time_Reader_First_Time_Poster
Long_Time_Reader_First_Time_Poster
14 days ago
Reply to  William Domer

“…given that pocket sizes are not correspondingly growing.” JNCO was about a decade and a half early I see.

Joe Ligo
Joe Ligo
15 days ago
Reply to  Bob Boxbody

Yes indeed! We need a Samsung Jitterbug equivalent for cars! Hahaha.

Outofstep
Outofstep
14 days ago
Reply to  Bob Boxbody

For real. My 2019 Elantra (somehow considered compact) is almost as big as my 1994 Camry (midsize) was. The Elantra is slightly wider and taller and 6 inches shorter.

I will say that I’m surprised that a 2024 Camry isn’t much bigger than a 1994 Camry was. At least according to google. I thought it would have been much larger.

1994 Camry dimensions: 188-189″ L x 70″ W x 55-56″ H

2024 Camry dimensions: 192-193″ L x 72″ W x 56-57″ H

MikeInTheWoods
MikeInTheWoods
15 days ago

As a kid in the late 70’s and 80’s, I now understand why my parents held onto the Plymouth Volare and Horizon. Makes sense to me now. It also explains why they were so mad at the Chrysler K car that kept breaking in 1983. This also explains why my Dad was so excited by Buick’s 0.9% financing offer in 1986. He sprung for the Century T-Type instead of the regular Century. That car was quick compared to the neighbors cars. I learned to drive in that car and learned a lot about what NOT to do with vehicle handling. Thanks for the great read and some memories too.

Joe Ligo
Joe Ligo
15 days ago
Reply to  MikeInTheWoods

Ha, that’s awesome that your dad had a T-Type! Thanks for reading!

Drive By Commenter
Drive By Commenter
15 days ago

When the Detroit 2.5 actually bothered to try making decent compact cars, they sold! Cruzes and Focuses were everywhere in the early 2010’s. The 2012 Cruze was far nicer than a 2012 Civic. The Focus wasn’t too far behind. Sadly Ford decided to slap the PowerShift dry clutch DCT into the Focus and GM cheaped out on the initial spec for dexos1 and a too long change interval to the detriment of many a Cruze turbo. The chickens came home to roost in 2016 or so when both cars had a poor reputation for reliability. And let’s not bother talking about the Dodge Lawn Dart that was both too late and a steaming pile to boot. Then Chevy delayed the launch of a new Cruze. When it came out it looked like a derivative Civic instead of the other way around.

Meanwhile in CUV-land the Escape had a real transmission. The Trax benefited from GM’s early 1.4T learning. The Equinox also got better. And at Chrysler, the merger with Fiat meant that Jeep got better CUV’s.

Long story short, Detroit tried when the government made them. When the pressure was off they slid back into their truck-loving ways.

Joe Ligo
Joe Ligo
15 days ago

I know! Ford and GM have made multiple good small cars over the years. It’s just a shame they always kill them off. More choices are always a good thing for buyers!

Cameron Palm
Cameron Palm
15 days ago

Other items to consider: car seats have gotten bigger and set fixtures for families in cars. Severely limiting car flexibility in seating. Average height has increased about 2” from the 50’s. BMI, much more than that. Average vehicle speeds have increased as well, and thus sound and comfort inside low cost cabins is much more noticeable.

TDI in PNW
TDI in PNW
15 days ago

I just got into my smallest daily in about 15 years. It’s fun to toss around and can theoretically get good mileage if I lighten my foot. …and, it’s not, yet another, SUV or truck (also around here, not yet another Outback).

Sedans and coupes have always been my preferred style. Most of the latest ones look really good too.

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