Quote:
Originally Posted by Isaac Zachary
I knew it was coming. So there will be no more sub $20,000 new cars after 2025.
It's sad to see the sedan die out. From an aerodynamic stand point, sedans and station wagons make more sense than crossovers and SUV's. It looks like there's a push for "coupé" SUV's for that very reason. |
It isn't surprising. The sedan's death is a combination of fashion as redpoint said, demographics - the country is aging and most old people don't want to stoop down into low vehicles, and regulations - new side impact tests have a higher barrier that hits cars along to bottom of the greenhouse.
The death of cheap vehicles is a sign of the times as well. The auto industry is going through the biggest change since the 70's with the current shift to electric vehicles. In the US alone companies have committed to a bit over $100 billion in capital spending for new battery and EV assembly plants. Unprofitable and low profit cars and trims are on the chopping block because of opportunity cost. Automakers must maximum profit from every assembly line to pay for the billions they have to spend to completely redesign and retool their business.
It isn't just the bottom end that is dying. Mercedes recently announced they are killing off most of their coupes and convertibles. They are dropping from 33 models to 14.
And when I say automakers need to maximize profit it is important to know that making cars is a very capital intensive business with low profit margins. The UAW likes to talk about huge profits but the profits aren't huge. GM made $9 billion last year - true. Sounds huge until you realize that is only a 6% net profit margin and guaranteed savings bonds paid more last year.
GM stock owners
LOST 42% on their investment last year which erased the 41% they made in 2021. The business of business is making money - it is that simple. Automakers used to pay out dividends to make up for the flat stock price but those are mostly gone.