Every administration wants highly profitable companies, a balanced budget, cheap cars, and more domestic automobile production. It’s probably possible to do all of the above simultaneously, but it’s not really feasible to do all of the above instantly. This is the central challenge of the current administration, and it’s making it awfully hard on car companies and consumers.
The Morning Dump, as ever, is about affordability and the efforts to ensure that happens. Up until recently, General Motors was making great strides in offering more-than-decent, affordable little crossovers that people seem to love. The challenge, though, is that those cars are made in South Korea and will be for the foreseeable future. GM is, instead, producing expensive electric trucks here, and it probably can’t stop anytime soon.
One way to get cheaper cars in the United States, of course, is to build Chinese cars, which is something that Ford legitimately has talked about trying to do. The administration, though, seems against doing this.
Can Volkswagen save us? No. Volkswagen may not even be able to save itself.
GM’s Korea Problem/Opportunity
There’s a stat that I keep coming back to, and it’s the key to the whole affordability problem. This comes via a Cars.com report from last year:
Inventory of new vehicles priced under $30,000 — the most tariff-sensitive segment — averaged 13.6% share in the first half of 2025. This is down significantly from 2019, when entry-level vehicles made up 38% of the market and reflects the third consecutive month of declines. With 92% of these vehicles built outside of the U.S., tariffs are disproportionately affecting this entry-level tier, which relies almost entirely on foreign-built vehicles. Only two models in this segment are built in the U.S. – the Honda Civic and Toyota Corolla – while some are also produced in Japan. While overall new car units grew 5.6% year over year in the first half of 2025, the entry-level segment lagged behind at just 3.9% growth in the same time period.
Did you see that? A total of 92% of under-$30k cars are built somewhere else. And for good reason. Building cars in the United States isn’t as cheap as building cars elsewhere. Estimates vary, but a recent one from analyst Oliver Wyman shows that per-vehicle labor costs go something like this:
- Mexican-built: $305
- Canadian-built: $968
- American-built: $1,341
When it comes to a $50k vehicle, that $1,000 price difference is fairly easy to hide. For a sub-$30k cost, it’s a big deal. Another component is, of course, the metal (steel and aluminum) used to build a car. Those materials are necessary to make almost any vehicle you’re going to be able to afford, and, currently, those are being heavily tariffed in the United States. This is to say nothing of the cost of imported parts already made of those materials.
There are Toyota Corollas and Honda Civics being built here, but even those share production with Japan. So far as I can tell, the only purely American-built car under $30,000 is going to be the Chevy Bolt, although let me know if I missed one.
GM is worth talking about here because GM makes a lot of pretty good cars that cost under $30,000 in the form of the Chevy Trax/Buick Envista and Chevy Trailblazer/Encore GX twins. I just had a Trax, and I need to review it (I’m behind on reviews), but the bottom line is that it is a great choice in this segment.
All those cars are also built in Korea, and, for GM, that’s going to continue, according to Automotive News:
GM wants output to reach 500,000 at the plants this year, Korean media reported in early February. The ramp-up would dispel intermittent concerns about GM scaling back operations in the Asian outpost, especially after the U.S. raised tariffs to 15 percent, from nothing, last year.
The capacity push tests GM’s commitment to its Korean operations, and reaching full output would validate the strategy of using South Korea as a low-cost export base to North America.
This is GM utilizing its old Daewoo facilities. Currently, the not-quite-finalized trade deal with South Korea sets tariffs at 15%. That’s not cheap, but GM thinks it’ll be able to eat it. The President, though, has been toying with the idea of raising that number to 25% if South Korea, in his mind, drags its feet on American investment.
I do think that, long term, enough manufacturing could shift to the United States in order to keep prices down and, maybe, automakers could find the sweet spot. The trade-offs are numerous, though. The goal of having some cars built in Canada, Mexico, Japan, South Korea, or wherever is being able to have lower-margin, affordable cars for some Americans, and more profitable, higher-margin cars for car companies (and built in the United States).
Rebuilding the way we assemble and price cars, though, cannot be instantaneous, and it can’t be done magically without some sort of cost to automakers or consumers. This is where the President’s dream of Kei cars comes in, which is mostly a fantasy at this point.
GM is betting that its South Korean operations will avoid another tariff hit and that it’ll allow it to serve the lower end of the market while it focuses on trucks.
GM Probably Can’t Stop Building Electric Trucks
You can understand the logic of electric trucks, right? Americans love pickup trucks. While compact crossovers are the most popular vehicles, pickup trucks are highly profitable, and buyers are highly loyal. It turns out, though, that the fundamental challenges of making an efficient electric truck that can do truck things like tow (even if that’s not something people really do all that often) are mostly insurmountable at a reasonable price.
The Cybertruck is a flop, the Rivian R1T is an awesome toy for a very specific buyer, and both Ford and Ram walked away from pure-EV trucks. GM’s solution to the EV truck problem is just to slap in the biggest battery you can imagine and charge a high price.
Could GM follow its crosstown rivals and cut EV truck production? Ehhh, it’s tough, as the Detroit Free Press points out:
S&P Global Mobility principal analyst Stephanie Brinley noted that the shared architecture for GM’s large electric vehicle lineup makes it difficult to achieve significant cost savings by cutting production of just one vehicle. Sales of vehicles with the same powertrain as the electric Silverado, like the GMC Hummer EV pickups and SUVs and the Escalade IQ SUV, remain stable, selling a combined 43,174 vehicles in 2025.
Maintaining a full suite of vehicles with the same powertrain helps keep costs down, according to Sam Abuelsamid, vice president at Telemetry.
“They get some scale for a lot of components. If they start dropping models, the cost for those that remain go up,” Abuelsamid told the Free Press.
Ford had one EV truck, and RAM didn’t even build its truck, so that’s why both automakers could change course. GM has a whole product ecosystem.
Ford Reportedly Talked About Building Some Chinese Cars Over Here
I’ve already talked about Ford’s various efforts to make a deal with Chinese automakers beyond the deals it already has in place, but it sounds like Ford went a step further in trying to gauge whether or not the White House would be open to, say, allowing a Chinese automaker to build cars over here. It kind of solves some of the problems above, even if it opens up a Pandora’s Box of other issues.
This, via Automotive News, is interesting:
Farley discussed the matter with U.S. Trade Representative Jamieson Greer, Transportation Secretary Sean Duffy and EPA Administrator Lee Zeldin when they visited the Detroit Auto Show last month, the people said. The discussion took place days after President Donald Trump indicated that he’d be open to allowing Chinese automakers into the U.S. if they built plants and hired Americans, saying “let China come in” during a Jan. 13 speech at the Detroit Economic Club.
Ford said Farley gave the cabinet secretaries a tour of the Ford stand at the auto show and that they “discussed a variety of industry topics,” but declined to reveal specifics.
Ford’s talks generally about China with the Trump administration have consistently emphasized “the need to protect our home market from a flood of subsidized vehicles built in China,” Mark Truby, Ford’s chief communications officer, said in a statement.
Deeper in the article, there are a few more details, and it sounds like what Farley was talking about was a way to get ahead of the likely inevitable inroad Chinese automakers are going to make into the United States. Farley reportedly got a “cold reception” that centered around what everyone else in Washington was going to say about such a deal.
I still think the Trump administration could definitely cut a deal with Beijing to open up the United States in order to get proposed investment dollars.
Volkswagen Is Cooked
I’ve written at length about how bad of shape Volkswagen is in, and it sounds like the company has a plan. A terrible plan, but a plan. And that plan is to cut, cut, cut. Why? Volkswagen has borrowed a ton of money lately, some of which was used to finance an EV development plan that mostly hasn’t panned out. If the company runs too short on cash, it gets downgraded, and if it gets downgraded, it has to pay more for borrowed money, tuis impacting cash flows.
That’s not good, so the company is going to have to find 20% of savings, somewhere. Anywhere. Manager Magazin has the details, and the details are not great:
Volkswagen’s 120 top executives reportedly returned somewhat bewildered from a retreat in Berlin in mid-January. The board members of the various brands had expected CEO Oliver Blume (57) and CFO Arno Antlitz (55) to urge them to be frugal and adhere to cost discipline. However, the massive cost-cutting plan that the two then presented was of a completely new and unprecedented scale.
According to information from manager magazin, the company plans to reduce its budgeted costs by a massive 20 percent by the end of 2028. Otherwise, given the economic slowdown in China , American tariff policies, and the challenging competitive environment, it would be impossible to achieve a sustainable return on investment. Furthermore, one of those present commented that spending on software and the dual development of combustion engines and electric drives would remain high.
I don’t understand how this is going to work, which means I’m qualified to be a Volkswagen exec. This is a truly lost company right now.
What I’m Listening To While Writing TMD
Peaches come from a can, they were put there by a man, and then put into a song called “Peaches” by the Presidents of the United States of America.
The Big Question
What’s the best cheap car ever made in the United States?
Top graphic images: GM; DepositPhotos.com
Politicians are doing everything they can to waste manufacturers money, and confuse the general public.
And by “eat it”, they really mean subsidizing it by raising prices on more expensive or higher volume cars. Or raising prices on parts sales or through fees/rate increases within GM Financial. If you really think they’re going to intentionally give up overall profits, you’re sorely mistaken. One way or another, they are going to pass on those costs.
TBQ: It’s sort of cheating but I would probably answer with a product coming out of the NUMMI plant (joint venture between GM and Toyota). Assuming you’re sticking with a domestic nameplate the Geo Prizm or Pontiac Vibe would both be excellent choices.
The Chrysler K Car. Truly US made and US designed, seating 6 in a compact car is wonderful, not to mention the introduction of the minivan and revitalizing the nearly dead convertible car market at the time.
There’s something deeply poetic that the only two domestically produced cheap cars both wear foreign badges.
“What’s the best cheap car ever made in the United States?”
Gen7 Honda Accord with the K24A3. Built in Marysville Ohio by American robots and workers. It cost me $20k 20 years ago off the lot which should still count as “cheap” and since then has needed little more than basic maintenance.
(Of course the only other cheap domestic I have experience with were early 1970s Pintos….)
I’m going with a World War Two jeep.
We can have both, if people weren’t so insistent on having 4 wheels
I’ll go with Chrysler’s Omni/Horizon family of cars from the 80s as the best small, US-built cars ever.
“Volkswagen’s 120 top executives reportedly returned somewhat bewildered from a retreat in Berlin in mid-January. The board members of the various brands had expected CEO Oliver Blume (57) and CFO Arno Antlitz (55) to urge them to be frugal and adhere to cost discipline.”
Why would you expect that? Was your retreat slightly less than lavish? Was the sparkling water imported from Finland rather than Italy? Did the masseuses have eastern European accents? Were the gold crusted steaks 22k instead of 24k? The cocaine only 99.9% pure?
They were just pissed because their Spitcoin is tanking.
“What’s the best cheap car ever made in the United States?”
1964 Plymouth Valiant, 170 cubic inch Slant Six, three-on-the-tree. Simple, relatively heavy gauge steel for a small unibody vehicle, good fuel economy, and an engine that will run forever.
So far as I can tell, the only purely American-built car under $30,000 is going to be the Chevy Bolt, although let me know if I missed one.
GM doing GM things, decided to cancel future model years for the Chevy Bolt. And I dont know how american this car can be if only 17% of the parts come from US soil.
My best built in America car was a Westmorland Golf GTI,
Counterpoint to headline: You can have both. You simply have to buy two cars.
Maybe VW could cut costs by using teleconferencing rather than having 120 executives travel to Berlin (transportation, lodging, meals).
“transportation, lodging, meals,…”
..,hookers, blow,…
Chevrolet built (assembled from Korean parts?) the Sonic in the US. So less than 10 years ago it was possible to build a profitable cheap car in the US.
But I think the automobile industry is within spitting distance of the TV set industry. Outside a few niche products made in Japan, 99% of the world’s television sets are made in China, because it’s the only viable way to sell them cheap. Cars aren’t far behind.
FWIW a majority of the Civics and Corollas made in Japan are not in that Sub $30k price range. They’re both solidly in the just under $50k price (GR Corolla and Civic Type R)
Best “Cheap Car” currently built is a base Camry. 50+ mpg and not an atrocious place to spend time. All of the ones for the US are built in Kentucky.
Best cheap US built car: I mean it just has to be the Model T.
Best cheap car ever made in the US? Absolutely up there, if not the best is the first gen Matrix/Vibe at the NUMMI plant. Extremely practical, dead reliable, and had both a sporty version in the XRS/GT and the more rugged option of AWD.
Agreed. Bought mine (XRS) almost 24 years ago. Still have it. Drove it to Bakersfield and back this past weekend. 240K miles and not reaching 300K (when the odometer stops) anytime soon (WFH).
Mine was made in Canada, though. Best feature are the daytime running lights (required in Canada), which automatically turn all the way on when the car thinks it’s dark enough to do so. At first, I had a lot of cars flashing me that my lights were on. “Stop driving so safely!!” Apparently this was a new thing in 2002 in SoCal. No accidents yet, though.
TBQ: completely biased, but the NUMMI Corollas/Novas/Prizms/Matrixes/Voltzes/Vibes. Mainly because I loved my ’88 Nova. But think about it: it’s a Toyota Corolla. Sold through Chevrolet and Toyota dealers. Made in California. Which is part of the United States. That’s hard to argue with.
Have had 2 NUMMI cars in the fleet. Solid vehicles.
Really could end up being possible to draw a straight line from dieselgate to Volkswagens bankruptcy.
I think that’s the easiest narrative to make, but I’m not sure that fully captures just how many bad decisions were mad in the decade after. Sure you had Electrify America mandated by the courts, costing billions in cash to VW, on top of penalties, but at the same time, the product portfolio has been absolutely horrific in the US. The Atlas and Tiguan have had long delays in updates, the Golf has been left to die, the Taos is an absolute afterthought in a red hot segment, hybrids do not exist outside of Porsches, Audis have become mediocre tech-laden piano black seas of blandness, and their EV offerings have been abysmally uncompetitive and uncompelling.
There was absolutely a path to redemption in the US and abroad if VW had reinvested correctly into their key products, but instead they chose to cheapen their models while innovating less and less in the segments that sell. What did VW right in the late 90’s through the mid teens was Piech’s vision of making the cheapest line (VW) be based on the more expensive platforms, correctly creating a model lineup of cars that punched far above their price tags and competition.
Sure a Mk6 or Mk7 Golf may be pricier than a Corolla or Civic, but it had refinement and dynamics not seen south of a luxury badge. When he retired, VW and it’s board and pulled a Stellantis and decided to chase some trends, gut every single model for cost which made desirability and differentiation in the market plummet. Instead of a unique niche, every lineup in VW and Audi simply became a less compelling alternative in each segment.
True, definitely a lot of moving pieces that caused VW to be where they are now. I look at it as they more than anyone else have sunk a lot of money into electrification while also getting poor results. The electrification efforts at least were kicked off with all the polish and enthusiasm of someone being Cort ordered to do something and they choose to build on that going forward while diverting resources from their ICE product development. If they had executed better, Electrify America could’ve been a solid alternative to the Supercharger network and ID.3/4/5/X could’ve been competitors to the Model 3 or Model Y but they just were not very compelling.
Exactly, it has just been a ton of half-assing everything they do. Another example I hadn’t initially thought of is their CARiAD disaster. That mess alone accrued somewhere around $7 Billion in losses over just a few years, and they eventually wrote off their entire $16 Billion investment just to then throw a few billion to Rivian for their software suite. VW is a great example of legacy thinking and rigid corporate structures failing to adapt quickly enough. Unfortunately said corporate structure clearly has yet to learn that lesson, and will continue to ruin the company.
Somebody reads the Number Ones!
I really don’t understand the issue.
Korea pays the tariffs, so no hit to my wallet. And it’s been almost a year, so surely GM has a handful of plants tooled up to build those cars stateside by now anyway.
As soon as my tariff and DOGE checks get here I’m gonna go get an emissions-system free diesel and live the American dream.
Notsureifserious.gif.
Pretty sure not serious gif.
/s FTFY
Coal-powered cars coming in 2027.
“What’s the best cheap car ever made in the United States?”
1960 Ford Falcon.
Not only was it a better car than the rival Corvair, and not as challenging to look upon as the Valiant, but it came in several bodystyles and was the basis of a whole slew of cars for the next 20 years:
Mercury Comet (first two and fifth gens)
Ford Ranchero
Ford Frontenac (Canada)
Ford Mustang (Four generations)
Mercury Cougar (Three generations)
Ford Maverick
Ford Granada
Mercury Monarch
Lincoln Versailles