Automakers have all but abandoned the budget market (opens in new tab)

There seems to be a growing trend for companies to favor rich buyers. When companies start losing customers they raise prices instead of reacting to the market and lowering prices (it's almost like they think they have a monopoly or something). There are way more new products that only the rich could afford ($150,000 camper vans) than there ever used to be. The EV makers have totally ignored the under $20,000 market. This seems doomed, the eventual result will be no sales since the market will saturate quickly due to few buyers while the economy (which is 70% just people buying things) will collapse because no one can afford anything any more and the companies will no longer be able to make their numbers no matter how high they raise prices.

I wonder if this is actually bad.

There's an argument I see in favor of building luxury condos and apartments. If they're built, the richest people will vacate their current residences to live there. The next richest people vacate their current residences to move into the now empty residences of the richest people. The third richest group also upgrades to the now empty apartments of the second richest, and so on. At the end of the line, we see that everybody has upgraded, and I don't think this upgrade guarantees people pay more, at least in theory (supply increased while demand remained constant, after all).

Could this happen with cars? Seems like we're moving into a world where instead of the options being nice-new and shitty-new, the options are nice-new and nice-old. Maybe that's not so bad.

(As an aside, their analysis seems pretty flawed by not adjusting for inflation.)

Either electric bikes will pick up the slack or some manufactures will offer sizable rebates. Either way, there will be new options coming online for less than $20k at some point. It's probably residual effects from the supply issues of the pandemic.

If car makers have limited chips etc, they'll probably only use them in their high end cars.

Non-issue for me. I buy only used Corollas, Civics, Accords, and Camrys.

They last forever. My last car was a Corolla and lasted me 17 years. I bought it for $4500, it comes out to about $20 per month when amortized. Never had a problem with it - no major repairs. It also looked very stylish and great during that time.

I just purchased a used Civic about 5 years ago for $5,500 and I expect it to last another 15 years.

Not a great article as it ignores the ~40% inflation of the last few years. Counting sales numbers would be a better metric.

I have seen budget/economy cars being discontinued in the US, such as the Honda Fit. But it has a lot to do with emission rules pushing folks to buy larger truck platforms. That still needs to be fixed I think.

First published https://www.marketwatch.com/story/are-we-witnessing-the-demi...