I’m thinking a lot about vehicle affordability lately and when, if ever, cars will become affordable again. The numbers are improving, but for various reasons it’s becoming harder and harder to get a good new car at a reasonable price. A few years ago there were numerous cars you could buy under $20,000. Today, there’s only one.
While we’re at it, we’ll take a look at EV demand and why it’s so much more geographic. Plus, we’ll talk about how Lotus is doing way better and Lyft is doing, well, not way better.
God Bless The Mitsubishi Mirage
The little Mitsubishi Mirage is not the nicest new car on the market. It may, in fact, be the least nice. But it is reliable, reasonably efficient, and reasonably safe, with more than two doors and a five-year bumper-to-bumper warranty. Are there better used cars for the same $16,245 starting price? Absolutely. Do some people desire the lack-of-worry that comes with a new car? Yes. [Ed Note: And there can be financing-related reasons to also go new vs used. -DT]. If you’re one of those people and you have less than $20,000 to spend on a car, well, check out the Mitsubishi Mirage.
The massive marketplace site Kelly Blue Book has its monthly market insights report out and there’s a little good news there, with the average transaction price (ATP) down about 0.7% month-over-month to $48,334 and only up 0.4% year-over-year. For reference, the ATP is the price someone actually pays for a vehicle, not what it’s listed for. These numbers are not that surprising given that inventories are rising and we’re into the summer selling months. Here’s the paragraph that knocked me on my seat-warmer this morning, with all the bold my doing:
“[U]nlike five years ago, only one model transacted below $20,000 in July. The Mitsubishi Mirage’s average transaction price in July is reported as $19,205. In July 2018, there were a dozen vehicles with ATPs below the $20,000 barrier. In comparison, many of today’s smallest vehicles, including the Hyundai Venue, Kia Rio, Nissan Versa and Toyota Corolla, are all transacting well over $20,000. Notably, and in stark contrast to the under $20,000 category, there were 32 vehicles in the Kelley Blue Book database transacting on average over $100,000 in July, which excludes super exotics from Ferrari, Lamborghini, Rolls-Royce and the like. In comparison, five years ago in the summer of 2018, there were only 12 vehicles in the over $100,000 category.“
Yikes. Like I said in yesterday’s trimflation article, production has quite clearly shifted towards the higher margin end of the market and this will continue to have impacts on what shows up on dealership lots (and what stays there). My sense is that there’s an opportunity for vehicles like the new Trax and Maverick to continue to pick up market share.
There’s a small indication of this trend in more of the data:
The high-end luxury car segment had the highest incentives in July 2023 at 9.6% of ATP, followed by luxury cars at 8.4%, hybrid vehicles at 7.7%, entry-level luxury cars at 6.9% and electric vehicles at 6.7%. Full-size luxury SUVs, high-performance cars and sports cars had some of the lowest incentives in July.
Unsurprisingly, over the last year Tesla has seen the biggest drop in ATP (-19.9%) and Mercedes had the biggest increase (18.8%).
Is EV Demand Really Softening?
Here’s a fun headline from Automotive News this morning: “EV stockpile is evidence of growing pain, not demand dip, experts say”
We talk and think a lot about where electric car demand really is, but the market is super young and most of the players getting into it who are not Tesla are essentially EV newbs. Perhaps, rather than kvetching about increased inventory, we just accept it as part of the transition and not sweat the inventory?
That seems to be the point of the article and it’s an interesting counterpoint to the prevailing concern that we’ve tapped out demand for EVs or, at least, for $60k EV crossovers. Here’s Tyson Jominy from J.D. Power in that AN article:
EVs are an expanding slice of the overall market but until recently were hindered by short supply. Now, the EV sales share is outpacing the inventory share, said Tyson Jominy, vice president of data and analytics at J.D. Power.
“The story that demand for EVs is slowing is patently false,” Jominy said.
Helped by robust sales related to changing federal zero-emission vehicle sale incentives this year, EVs made up 8.6 percent of retail sales and 6.7 percent of available inventory in June, according to J.D. Power.
The article goes on to talk to dealers in Texas who, yeah, are not finding as many buyers for electric vehicles as dealers in California. This makes sense to me and I do think we probably overestimate the impact of a couple of months of inventory and, in fact, won’t have a real sense of what the market is until we can view it in hindsight.
Happy Days For Lotus
There is no objectivity, there’s only disclosure. Full disclosure: I like Lotus. I like the cars. I like the history. I played a lot of the “Lotus Turbo Challenge 2” game for Sega Genesis (see above) and fell in love with the taillights of the Elan.
The history of Lotus is, eh, complicated. It’s always been a questionable business, even as they’ve made sublime cars. It’s why I’m going to revel in a little bit of good news from Lotus from the first half of 2023:
- Order book grew to approximately 17,000 vehicles worldwide for the Eletre, Lotus’ first electric lifestyle hyper-SUV, and Emira, a mid-engine sports car.
- Produced over 2,200 Emiras in its UK sportscar manufacturing facility, which is a 381 percent increase from FY22. The order book for Emira is full for the next two years.
- Production of Lotus’ lifestyle hyper-SUV, Eletre, ramped up this year in its first all-electric vehicle factory. Customer deliveries began in China at the end of March, and Lotus expects to deliver to UK and European customers later this summer.
I don’t want to damn Lotus with faint praise. Getting people to want your cars and then, you know, building them is sort of the essence of being a car company and yet Lotus has not has not been able to pull that off with any regularity. The fact that the company is producing Emiras is a great sign and I’m anxious to see if it can do the same with the Evija.
As a reminder, Lotus is now owned by Chinese carmaker Geely.
Less-Happy Days For Lyft
Uber has continued to dominate the rideshare space, expanding into other forms of delivery (in London there were even Uber boats). Lyft is definitively the numero dos and, while it’s profitable, investors are worried that the company is overly focused on getting market share from Uber and not making profits.
“The major concern we hear from investors is if Lyft is able to achieve significant economic returns as the number 2 player in the U.S. mobility marketplace, and we think the guidance will only intensify those concerns,” Needham analyst Bernie McTernan said.
Where does this end? Analysts that Reuters spoke to seem to think that Lyft might get acquired by someone along the way. I could see that. Perhaps Geely should acquire Lyft and then we can all get picked up from the airport in Eletres.
The Big Question
What is the most you have ever spent on a new car? What is the most you’d spend right now and what would you buy with that money?
- Jason Torchinsky Thanks You All From The Bottom Of His Recently Patched-Up Heart, Has Thoughts On His Walker’s Amber Reflectors
- I Developed A Suspension For A Peruvian Race Team, Then They Invited Me To Help Them Race At The Country’s Only Track
- Honesty, Journalism And The Perils Of Access: A Defense Of Jason Cammisa’s Cybertruck ‘Review’
- Everyone Loves A Good Classic American Pickup Truck: COTD