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
“The logic of an electric truck”
It will be logical once the engineering challenges of reducing the weight of the energy storage system have been addressed. Li-Ion is too heavy to store enough energy to make an electric truck practical today. Unless you are going to not tow, or haul any significant weight and just treat it like a normal car.
Wait don’t tell most truck owners.
>>>General Motors was making great strides in offering more-than-decent, affordable little crossovers that people seem to love.<<<< Well; -gm- vehicles are 4th or 5th or worse in most EVERY CATEGORY they compete in. They make garbage. The customers are dim bulbs. They succeed only due to the dealer network and the pig up truck profits. Boom. Mic Drop.
I think the GM engine issues in the Trucks will reduce the profits considerably. But yes, to make the wages the UAW requires, the vehicles have to be absurdly overpriced. the only vehicles that get away with this without building in a depressed southern state with no UAW is to build something people strangely overpay for gladly.
Wasn’t VW’s big cost savings plan to cut Currywuerst from the company cafeterias?
“What’s the best cheap car ever made in the United States?”
Probably the Geo Prism… which was basically a US-built Corolla in Geo drag.
Honourable mention to the original Saturn S-Series sedan, wagon and coupe.
2nd Honorable mention to the Ford Escort of the 1990s.. mainly due to it having a lot of Mazda in it. But that car was built both in the USA and Mexico.
Gen 1 Saturn. FAIL. The Detroit Free Press reviewed the car when it came out and made fun of the engine. They said, ” It shook like a farm tractor engine.”
But, it was reliable for a GM product and Inexpensive. both are criteria for the question.
True. It was not class leading in terms of performance, dynamics, sound or smoothness, but the cars were relatively cheap to buy, cheap to run, durable and decently reliable.
I drove one of them, while not spectacular, I’d take it any day over any GM product with the Iron Duke 4cyl.
Cheap cars and American built cars (well, American designed anyway) are nearly universally crap, why would I want either? Though even the Corolla is crap, it’s just *reliable* crap. I found a 15yo Range Rover sufficiently reliable, so that means very, very little to me.
Why is labor per car $400 more in the US than in Canada? . You would think They should be roughly equal.
A 25% difference is huge.
You might have heard of this thing called “universal health care”. THAT is a massive expensive difference between us and the Canuks.
We still have employer insurance for things like prescriptions, physio, mental health, dental, eyes, etc.
Basically almost anything delivered outside of a hospital will cost. But my insurance costs me $22/pay for my whole family, and covers 90% of my prescription costs.
We also cover prescriptions for anyone under 25 or over 65.
This all varies slightly by Province, but I’m in Ontario, along with over 16mil of Canada’s 41mil total residents. So I use Ontario as the example.
The difference in employer cost is just massive. My 30% share of my employer subsidized insurance is nearly $800/mo. Do the math on what my employer is paying for the other 70%… Though that said, it is exceptional insurance with minimal restrictions and no deductible at all, so very expensive. We do have a cheaper option as well with deductibles and higher copays, but I prefer the no surprises aspect of the best plan (not that there still can’t be surprises, but fewer of them). If I was younger I would get the cheaper plan, and that is how it splits out in the company. And we are stuck in the relatively small group insurance market (another idiotic aspect of the US system) – GM et al would pay FAR less for the same coverage, but it’s still a significant expense. And of course, the legacy automakers are also paying for health insurance and pensions on legions of retired employees still.
On the flip side, I know that I am *significantly* better paid than a Canadian in my same role would be (good friend works in IT for TD Bank so I get the inside scoop there). It largely works out in the wash once you get into professional careers. Other than the whole madness of lose your job and you are screwed for health insurance here.
Yeah, we lag pretty far behind in a lot of industries, pay-wise. However in my field (heavy truck/coach/diesel), pay is pretty consistent around the world. With the US being one of the worst payers.
It is sad how little working with your hands is valued globally – and these days that work ALSO requires lots of brain power in many cases, certainly with anything that drives, floats, or flies. I guarantee you work a hell of a lot harder than I do, but inevitably make a fraction as much.
We’re in the 6-figure range now, but as someone with a background in computer engineering, I don’t doubt you’ve got me probably doubled.
That’s heavy equipment, though. Which is always hourly. The flat rate automotive world I’ve always steered clear from.
Commercial equipment makes money, and pays accordingly. Compared to your average Corolla owner who needs the Jaws of Life to open their wallet.
The only beneficiary to flat rate is the shop owner. Everybody else gets screwed in the long run. Especially car owners who pay flat rate for the easy stuff but actual time if it goes sideways. And of course, it incentivizes techs to cut corners on warranty work.
Makes sense that equipment that makes money gets lavished with a bit more love, and so do those doing the loving! 🙂 Similarly, in my field working with multi-million dollar IT gear (and priceless data), what I am paid to do it is rounding error compared to the GeekSquad working on $500 laptops all day.
Agreed, on all fronts.
It doesn’t help that heavy equipment techs are getting thin on the ground. I’m getting pinged multiple times a week with job offers.
One was a fly-in/fly-out at $900/day +free accommodations, but as someone with a young kid, I’d hate to miss 2 weeks per month of her life.
Based on our inability to attract mechanics for our municipal fleet, the hourly rate is gonna keep climbing.
Our current turnover rate is about 5:1 for leaving/retiring/dying vs incoming techs. at least 50 of our remaining 148 techs are over the age of 50. we had 205 techs when I started here in 2016.
Every shop in town is hiring. This is going to get worse. I’ve been championing city-backed apprenticeships straight out of high schools for a couple years now. It takes 4 years to develop a licensed tech.
Yeah, part of why I make the relatively big-bucks is that I am willing to travel. Actually, I am willing to travel rather more than I currently do. Sigh.
It’s tough to get people to do dirty jobs in general. Can’t say I blame them though – as I have told my high-school dropout little brother many times – I went to school all those years so I don’t have to sweat my balls off to make a living (not that I don’t get sweaty occasionally when I have to rack and cable a mess of gear). I LIKE working on my own cars, and working on my own house, etc, but there is no way I would want to do that for 40+ hours a week for an entire career. Mad respect for you guys that do it!
High pay is ultimately the way that you get people to do dirty jobs, unless they are the sort of job any warm body can do that literally isn’t qualified to do anything else, and wrenching on anything is NOT one of those jobs.
Must be nice to live in a proper country.
As someone who had 1 cancer and 0 hospital bills to make it 0 cancer, I can confirm it is nice. 11/10 would not-die for free again.
Congrats on not dying! I’m happy to hear you have zero cancer.
I’ll be around to haunt the comment section for many moons to come.
A big part of the problem in the US is that just enough people actually do have good enough employer-provided health insurance for it to not be a big enough political issue. And the powers-that-be are excellent at fear mongering – “DEATH PANELS”. Which is exactly what health insurance companies who can override your doctor for profit are…
As I was reading the article and got to the numbers, my first thought was “bet the US-Canada difference is the cost of employee health care”.
I used to really wonder why US industries didn’t fight tooth and nail for universal healthcare to get it off their plate, then I realized healthcare is a great cudgel to use to be able to essentially hold employees hostage.
You got it!
You know, I was thinking about that so I checked how much my employer pays for my health insurance, it’s about 500 a month for my family (individual coverage would cost them less at ~300) let’s go with the average of single vs family plans 400/mo or $4800/yr
GM has 90,000 US employees (this probably over counts them since some of the US based GM employees work on international projects) and made about 2.8 million US vehicles in 2023. This works out to 31.1 vehicles per employee. 31x$400 gives us $12,444 extra for a US employee per year.
That’s still an $7600 difference even accounting for Healthcare. something is missing. Maybe it’s executive pay? Payroll taxes? SS?
If your employer is only paying $500 for a family plan they are getting a VERY good deal and must be a very large employer. Or your insurance is crap. But certainly there is a HUGE difference between small group and large group rates (why the “group” should be the entire population of a country).
GM is probably paying a LOT less per employee than your company is, but it still adds up to a lot of money per car.
Yea, it’s got a crap deductible $7500 and only 60% premium coverage but amazing prescription coverage max $100 per year. I’ve had better before (through a union) but I’ve had worse (ACA).
I’m going to blame executive pay for American car companies high costs. My company being employee owned doesn’t have that extra costs.
Executive pay is the same in Canada as in the US – they are the SAME executives since there is no such thing as a Canadian automaker.
Hmm I was assuming that most of the executives for Ford GM and part of Stellantis would be based in the US and thus be added on to the US cost. Now I’m not sure.
When manufacturers compare cost of production in various places, that would be allocated across all of them (usually, though manufacturing accounting is an art, not a science, and there are myriad ways to cook the books to get the desired results). So no, it would not typically be added to just the US cost.
The main difference is going to be direct employee costs, aka salaries, healthcare, pensions, and other benefits. Most of which are going to be higher in the US than in Canada. Healthcare in particular is a HUGE difference, as I noted previously.
The exchange rate alone gets your labour costs down as an American company. That’s probably where most of it lies.
Good to know, thanks.
I contend that GM will have a winner with the EV trucks. Businesses are going to see the dollars and cents advantage of owning an EV sooner rather than later.
I strongly suspect there is more than just a little “let’s not get the UAW get wind that we can make money selling cheap cars with their labor” in this story.
The best cheap U.S. car was the Ford Falcon. Look what they did with it.
Waiting to see what the Supremes (in name only) have to say about tariffs. Additionally, via my own supply of tea leaves, what company would make long range plans based on what the orange buffoon is saying today? This nightmare will be over in less than 3 years and if they all just redo their assembly etc. how would going back to electric tax credits ef that right up? What has been missed in the pearl clutching over his royal king wannabe tariffs is the time it takes for a huge company to pivot. Like trying to make a U-turn in my Lexus 300RX, it is large boat difficult. The car companies need to use the same tactics that T does: stall, stall, then hire lawyers to help stall some more, rinse repeat till 2027 and 1/2
The reality behind labor costs is probably partly why musk has (allowed to) gone off the deep end with the robots. The whole space base now data centers. Who knows. Automation can certainly bring down costs but so many other factors. Though building out a supply chain is hard and very costly. That’s where the Chinese have just about everyone beat now. I hope slate keeps innovating Tesla has been playing around with alot of those idea too it’s just always too far with them.
Model T is definitely up there. The first peoples car, still a lasting impression so many firsts. BYD is the only company I think can bring out something to that price and ability now. Their $6k car is on the horizon. Just like model t was everywhere I wouldn’t be surprised if their little car was too.
Various Toyotas are probably the best American built cars for a while. XV10 Camry is just about unstoppable and were built in Indiana.
If they could do what little assembly there is left on cars with robots already, they would be doing it.
Musk is going all-in on robots because he sees he won’t be able to compete in the auto sphere in 5 years. (He is also never going to compete in the robot sphere, as Tesla is not a market leader).
Everything he does is to leave the planet. But getting people to fund that seems to involve lots of crazy talk for crazy people. But yeah Tesla probably won’t be making cars in the near future and the robots who knows what they will be doing but probably not on the assembly line. But it’s novel idea to get money out of the likes of Cathy wood etc.
Best cheap car made int he US is the Toyota Corolla. Made in Missisippi of all places and still Toyota reliability is a thing.
The Toyota Tacoma and Tundra have entered the chat…
Neither are cheap or cars really though.
They were probably referring to the current reliability issues on them
I’ve said it before and I’ll say it again about VW: In the ’60s people bought Beetles because they were like nothing else on the road. In the ’80s people bought Jettas because they were 85% of a Mercedes for half the price. Now the only reason to buy a Taos is if they put more cash on the hood than you get on a Kia Seltos.
*eagerly awaits*
nobody in the Midwest really bought beetles in the 70’s. they were mostly purchased by the flower power groups if at all and that was an under represented demographic around here it seemed like. Maybe a bit more in the few urban spaces, but the lack of good heaters on the old air cooled things also probably hurt them a bit around here.
the Rabbit, Fox and I imagine Jetta of the 80’s was all about fuel economy. The hot hatch design was stolen by the US manufacturers, but some how the slow but efficient diesel Rabbit became the thing so many around me seemed to want. they got 40Plus MPG, so that might have been partially it.
the 2000’s saw the end of the 5 cylinder Passat, but if you got one before they were gone., or even the TDI, they were pretty long lived and efficient. and a lot of the 90’s plastic stuff that broke was mostly fixed.
the TSi double down is what kills them for me. The perceived reliability issues and probably real in some instances makes the VW anything these days nothing I want to purchase. I did think the Electric van would have been more of a hit, but I think it was a bit to late to the game and the styling was tweaked enough to miss out on the nostalgia sales.
Kia might be more reliable. And if it isn’t, you have a warranty for quite a bit longer.
Besides the GTI, which has minimal competition these days, I’m not sure why anyone goes into a VW dealership. I’m shopping for a large SUV these days and the Atlas appears to do nothing better than the competition and it isn’t any cheaper.
I used to fancy the idea of a Golf R, but at $55k, I’m probably going elsewhere these days.
Best cheap car built in America?
Model T.
It was the first cheap car. Heck it was THE cheap car for something like 50 years. Even today, it’s a cheap way to get into really old antique cars.
The Model T filled America’s appetite for cheap as possible transportation for more than a century. DURING the Great Depression, Ford was selling nicer cars with twice the cylinders. They knew that nobody would want as basic a car as the Model T in the US ever again.
The Model T shows how to make a cheap car in America. A special state of the art factory was made to make the Model T. They turned on the factory in 1908. Changes were very few and basically only made to make the car easier to build. The result is that a 1917 and a 1927 Model T look like they could have been built the same year to someone that hasn’t studied them intently.
By keeping the design static, Ford was able to cut prices as the price of the development and setting up of the factory were paid for. This allowed Ford to sell 2 million a year of these cars way after they were hopelessly out of date and still turn a profit.
Imagine if Slate does come online in 2027, they sell trucks for $30k. Then imagine that Slate is still building trucks in 2060. These trucks are so identical to the 2027 ones that you can switch parts between them without any problems. Now, because the factory and design and tooling is all paid for, Slate is selling the trucks for $6k. That’s what Ford did with the Model T. It’s no wonder that they sold nearly 2 million of them in 1926 (last full year of production).
Model T remained the premier cheap car for a couple decades after production stopped. You could buy one for $10-25. Because Ford used high quality materials and super simple designs, they were tough and repairable.
T’s were poverty transportation. They were first cars bought with paper route money. They were the foundation of the nascent hot rod industry. It was really, really hard to sell a cheap car for 20 years when there were 20 million durable Model T’s and A’s on the used car market. (Just ask American Austin, Bantam, and Crosley.)
Only after WW2 saw many of these old horses worn out or scrapped did an entry level market begin to open up again. Even then, it was a hard go when most Americans could step up to a much nicer Ford, Chevy or Plymouth for a few hundred bucks.
As Hoser68 points out, Model Ts are still the budget option for classic cars. You can get a driver for under $5k, and $10k will get you one that looks decent.
Model T – THE cheap American car for 100+ years.
Based on some past experience in these things, I’m pretty sure they could have put a few points worth of that 20% in the piggy bank if they skipped the retreat and just used a conference room.
I’ve wondered for a while whether the current administration’s disdain for unions and normal working people will actually result in lowering wages across the US. A bit tin-foil-cap-ish, but if you start with removing any of the people in the country that are willing to work at Mexico’s wages, you have good ‘ole ‘Muricans left to build the vehicles, and those automakers simply aren’t going to accept selling less, so they’ll have to appeal to lower income earners eventually…. like the post says, you can’t have “US Made” and “cheap” without something in the equation changing.
I’m pretty sure the intended goal is to drive down wages.
Seems like having 120 executives may be part of the problem..
Given the number of brands in VW’s house, that 120 number isn’t unreasonable.
And not only the number of brands, but the number of markets, which often have very, if not completely different lineups.
I’d bet those were just the 120 that made the list. I’d be shocked if they don’t have many, MANY more.
Yup, you have hit the question. Lots of unemployed people out there, do they really crave a non-union manufacturing job? The guy in charge seems to think so, while he says wages will go up. Math is hard. He is looking to be a union buster which jives with his NY real estate background. In my field, everything is union in nyc
I’ve always understood the majority of the cost delta between Canadian autoworkers and American autoworks is the burden of healthcare costs being borne by the company, in the case of the USA, vs the public healthcare system for Canadians.
Correct and depending on the region, lower and more predictable (greener) electricity rates.
For the sake of courtesy, I won’t even flag the differences the (not great, but better funded) public education system delivers in terms of worker quality.
Do they though? I’ll give you the first and the last, but evidence suggests that the two in the middle are very much not a priority. I know President PP went on a rant about kei cars recently, but I’m convinced he conflated kei cars (a thing he neither knows nor cares about) with a K-shaped economy (a thing he very much does want) and thus you get an incoherent rant about kei cars.
And a balanced budget? ROTFLMAO. Tax cuts for the rich and increased deficit spending on things no one wants like ICE concentration camps do not scream “I care about a balanced budget” to me.
Exactly. I don’t think this admin cares about anything other than allowing rich people and corporations to make and keep as much money as possible, while lining their own pockets. All the talk about manufacturing and jobs is just red meat for their base.
When thinking about automakers on the Strugglebus (VW, Stellantis, Nissan) I can’t help but imagine that VW is, surprisingly, in the worst shape. Or at least from this American’s perspective, based on our own market, which seems pretty important.
Stellantis might be running out of customers, but they at least have a few knuckleheads to sell cars to, and plenty of American truck buyers to lure. They sell BOF trucks, minivans at a time where the segment is experiencing a light resurgence, etc. Nissan has affordable options in most of the hot segments, has a new Xterra on the way, and fresh designs in the affordable compact sedan, subcompact crossover, and afforable EV space. It could be worse.
VW has… wow yikes. Basically no product? Long in the tooth Jettas? Soon to be ancient Atlas? A new Tiguan that’s probably too expensive to be taken seriously? The totally and utterly forgotten Taos? None of my local dealers have a GTI in stock which is… concerning. I think the other two manufacturers have at least an understanding of who their customers are and why they might consider their product. Who the fuck are supposed to be VW customers? People who find Toyotas to be too reliable? Back when VW was bringing a unique sense of design and quality (if only skin deep) to their products I at least understood what they were trying to do. But they’ve abandoned that entirely to bring us designs that don’t seem to resonate with practically anyone. Audi has roughly the same problem.
Once upon a time VWs were an inexpensive way to get German engineering and some level of quality. Even the less-spirited models were fun, and the company marketed them that way.
I blame Piech for the fall of VW. The engineering got complicated for no good reason (W8 engines wtf?!), and the company pushed upmarket. When even a simple oil change becomes an ordeal, and all those complicated systems lead to failures and quality lapses, and the cars are no longer cheap…
Dieselgate didn’t help.
I mean, VW reliability in the 00s was pretty abhorrent, but I guess at least they were nice cars while they lasted. VWs push for premium meant at least they had the “for a little more coin, a much nicer car” thing going for them. The brand at least had a thing going.
Ever since it’s been a race back down to the bottom to compete with mainstream brands where the mainstream brands are arguably nicer and definitely more reliable. It’s a bummer because a competent version of VW is something I want around, but VW itself can’t seem to figure out what it means to be anymore.
The way I see it, Piech “made hay while the sun shined”. While they had some bumps in the road, the ’90s & ’00s were pretty good for VW, so why not burn some of that cash on some crazy projects that might lay groundwork for future engineering solutions, or at least make some great PR? Sure, some things didn’t really work out in the long run, but as long as they learned something, then that’s worth something.
Also, the American perspective of foreign car companies tends to be skewed, as those companies only give us what they think we’d like. VW never stopped selling cheap cars, they just stopped selling them in certain markets (like the US) in order to move upmarket, where they can make more money per car. There’s any number of other trims & models that they could bring here to try to find more sales, but federalization and tariffs will cut down what may already be slim profit margins, and that’s assuming that we’ll actually buy the things. There are dozens of us who’d sign for a new Polo in the US. Dozens!
Piech and then Dieselgate damaged the company’s foundations, but they were far from fatal blows. However, betting big on electric, just to have it blow up in their faces, while their combustion models stagnate, combined with uber aggressive competition from Chinese brands in most markets, and tariffs in the US market, absolutely is fatal.
My $0.02 on VW…My first nearly new car was a 2000 New Jetta TDI. At the time (2002), it was miles better than anything coming out of USDM. The car felt solid, was engaging to drive (manual trans). The interior was fantastic for the time with soft touch materials, comfortable seats, and a good sound system. Everything was simple, intuitive, and manual (including crank windows). Even the engine was simple with a mechanical injection pump. From a design standpoint, it was mature and professional without being flashy. It was a grown-up car, that made me feel like an adult making responsible choices, while still having everything I wanted. To me that was VW’s pinnacle. From there in my opinion it’s been a long, slowly accelerating decline as they chased imaginary trends, fat profit margins, and visions of grandeur. They started building their own coffin once everything became a comparison to Tesla…I think this is not unique to VW, but an overall infection of silicon valley hype into the automotive industry. A sickness that substitutes fancy gimmicks for genuine value. A mindset that treats a car like an iphone designed to distract, engage your attention, collect your data, and sell you apps. Instead of focusing on quality and value, they made numerous decisions that did not benefit the customer. Everyone did, but VW is a canary in this coalmine. Outside of tech-bro culture and those emulating it…no one wants any of this. Maybe I’m just old…
Agreed. And I’m 37 in an engineering field? I feel like I’m exactly the sort of person VW used to target, and I really couldn’t be less excited about what they offer.
Frankly, I’m surprised that the labor costs make up such a small amount of a vehicle cost, and I feel like a lot of people would pay $1000 more for a US built vehicle, but I live in Michigan, so that’s really driven into me. I didn’t even own anything that wasn’t “big 3” until the last 5 years, and most were US built. Now I have a BMW 3-series and a couple Miatae hanging out with the Bolt, STS, and RAM. But those last 3 were all US built (actually all Michigan built).
There’s so many automotive jobs in my area that I really do try to support the local industry when I can. In the case of my couple outliers, it’s because the US doesn’t make something like it. The BMW is a PHEV, which replaced my Volt because GM didn’t have anything like the Volt anymore, I’d honestly say the Volt was the better car in most ways, but they don’t make them anymore and the newest ones are 7 years old at this point. The Miatae are just superior to anything else in the segment. A Sky or Solstice might have been OK, but it’s not the same.
Same, I thought it would be more on the order of $10K. But I suppose you have a whole bunch of people of different pay grades touching the car for 30 seconds at time, so it’s amortized out in a way.
Not like my current line of work where the project bears 100% of my engineer’s rate for weeks on end. That’s when it almost doesnt matter what the BOM and M&S cost are because I am the expensive snap ring in the equation.
The manufacturer also expects to make margin on the labor costs, so there’s an additional delta: either a small margin, which is nothing in Mexico but still substantial in the US, or a big margin in Mexico that they can’t possibly match in the US.
I think almost every car is suffering from amortized costs: it costs a billion to develop a new model, and hundreds of millions in tooling, and very few models sell in really big numbers anymore. Spreading out all that $$$ over 600k cars vs 300k cars is just a massive jump.
I’ve been saying for a good while now, that if BYD can make in-roads into the USA, they could be category killers in multiple segments. Given the Trump Tariffs currently in effect, it does make sense for BYD to explore partnering with a domestic manufacturer to be able to get their vehicles on American roads.
There’s still going to be a markup on them should sales commence stateside, but they will definitely put many other makes on their backfoot to defend against a number of high-quality affordable EV’s.
i think that’s exactly why they’ll be held out of the market. They’d eat a sizable chunk of the USDM makers’ lunch.
I wonder if they’d be that much cheaper at all. Being built in the US, I’d think the Chinese government subsidies to the manufacturer wouldn’t happen, so that, increased labor costs, and (I imagine) a less efficient supply chain should all conspire to bump the prices up. Still cheaper, probably, but enough to grab a lot of market share?
The problem is that building cars in the US (or other local market) doesn’t really help BYD and its peers. The Chinese brands are built to export from China, and they have too much capacity in China and need to sell more cars from those factories to survive. Building plants or creating partnerships with domestic manufacturers to build their cars locally doesn’t solve that problem for them.
It’s probable various Chinese companies will pick up pieces of various failed US operations and use their plants. BYD I’m not sure, they already have experience in the US labor market and seem to be avoiding it. If nafta is back Mexico is certainly back on the table for them. But once their factory city is online even with a 300% tariff they will still be competitive in the US market. Maybe still makes sense for them to move forward in Mexico but globally businesses are unsure of just about everything everywhere so safe bets will be the norm for the foreseeable future.
TBQ: The Dodge Neon built in Belvidere, IL, first car I ever bought new and got it for less than $9k back in 1996, 5 speed with no tach, no AC, no radio, manual windows and locks, fisher price interior, rubbermaid bumpers, 14″ wheels with hubcaps, but it was a hoot to drive.
I’m wondering if those labor numbers are for building Ram trucks or Teslas. There has to be a range in the US, Tesla without UAW, gigacasting and robots, vs the legacy auto maker UAW factory that has 3 shifts of hundreds of workers. It’ll be interesting to see if Ford can pull off their $30k EV truck, guess we’ll find out more tomorrow.
you just answered your own question… there is no different labor rates based on the MSRP of the vehicle. It costs the same to build a $100,000 as it does a $30,000 car…
Yeah, this is why few want to sell cheap cars anymore—the floor on production cost is high, requiring larger sales volumes than many models can attain.
In the same manufacturer’s production lines I understand that, but I’m wondering if like a Toyota line that doesn’t have UAW and maybe better processes isn’t at the $1000 vs a Dodge RAM line that has UAW and has workers screwing in every bolt by hand is over the $1000.
The level of automation is a bigger factor in labor costs between vehicles than vehicle size. I’m out of the industry now, and it had started to change, but low labor rate plants spent less on automation, meaning that $1000 difference doesn’t even capture the savings from not buying automation.
I had a 1993 Saturn SW2 wagon that I liked a lot. I thought the whole Saturn enterprise had a lot going for it. The plastic door panels were a great idea
Yeah, I still miss my ’93 SL2.
“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.”
Looking forward to your review. Hopefully you got to drive more of a basic model than when it came out and everybody was reviewing the Activ, 2RS and LT models.
TBQ: I don’t know, but it wasn’t the Geo Metro.
It also wasn’t the GM J-body
I would say it might have been the Ford Escort back int he 1980s and 1990s. Which is saying a lot about how well the US makes small cars.
It absolutely wasn’t the Metro, which was made in Canada.
I didn’t know that. I figured it was made in Japan, what with it being a Suzuki under the badge. The more you know.
Frankly it has been this way longer than I’ve been alive. The best cheap cars and the cheapest cheap cars have been made overseas.
Which makes a lot of sense tbh. In good times people (in the US at least) “buy” (make payments on) a lot of inefficient extravagant automobiles, then when gas is super expensive they regret that decision, and demand for cheap cars goes up. In other nations cheap cars are the majority of cars, so they optimize for making cheap cars, that along with cheap labor keeps the car prices low, however a new problem arises which is how do they increase production capacity to meet the demand for cheap cars.
Frankly we need standardized safety and emissions standards for all developed nations to actually make this work. Noone wants to invest the time and money into making properly cheap cars in the US or at minimum getting them up to US Safety and Emissions specs, and by the time they would get it done the unusual bout of economic hardship that created the demand for cheap cars will be much less if not entirely gone.
The issue with this however is that US automakers will be forced into a market that is almost exclusively US Market only automobiles because they cannot compete with foreign automakers unless they open factories in foreign countries and pay near or slightly above foreign labor rates.
Hi Murica! Happy All The Other Presidents’ Day! You’d better celebrate before it gets renamed.
Unrelated, this article ran here in Family Day Land this morning. It’s about a subject often discussed and agreed upon with Autopian fans. I thought I’d share.
https://www.cbc.ca/radio/thecurrent/night-driving-discomfort-bright-led-headlights-9.7089101
The federal holiday is actually “George Washington’s Birthday”. Hopefully it remains that way. Though Washington had his flaws too.
Now I fear I’m going to get trolled for forgetting to say Merry Christmas. /s
Not by me 🙂
When I was in elementary school, we still got both Washington’s and Lincoln’s birthdays off as holidays for a few years. Felt cheated when that changed.
I grew up (and live) near Louisville and when I was in elementary school, they started giving us off the day before the Kentucky Derby, the Oaks race day. Too many teachers were requesting off to go to the track/have parties, and too many substitute teachers were unavailable for the same reasons.
Oooooh that article is like someone reading my own thoughts back to me. Searing white lights have turned the pleasure of a night drive into an exhausting experience. Also, Daniel Stern is the mack daddy of automotive lighting and I love finally seeing a picture of the guy.