My number one requirement is that any car that I buy is mine. No subscriptions. No calling back to the mothership. No spying on my activities or driving skills. I'd like to be able to repair it too, or at least be able to take it to the mechanic of my choice. This is a somewhat different desire than simply K.I.S.S.--and wasn't addressed in the article--though I wouldn't mind that either.
BTW, if you want to get a hint at what shenanigans are going on with "your" vehicle, read the privacy policy. That they even have one is itself a sign of the times.
Simple cars don't make money... well, all of the available money.
The complex ones do.
You can get John Q. Public to buy a basic, efficient, safe compact car with cloth seats... or you can use that same production line to build a full-sized truck with tons of non-essential electronics that costs three times as much, which then requires the buyer to take out a loan from your financial arm for 84 months.
Which one returns more value to the shareholders?
EDIT: "non-essential electronics" should be seen as huge displays and the like, not things like emissions controls or safety equipment.
Do they not want those conveniences? Or are they tempering their expectations based on their budget and perceived cost?
If, let's say, a typical $30k car means a large EV SUV with all the luxury gadgets and conveniences, plus fridge, massage chair, full camping setup, etc. Would 30k car buyers not expect those things?
For an article about keeping cars simple they don't mention some really big things.
They present it as a choice between manual or electric seats, manual or electric buttons, etc., which are indeed valid items of discussion ..
But what about other expensive, complicated, things I want a choice to get rid of, major things I don't want to pay for, like .. auto stop-start, or the ability for the car to slam on the brakes by itself, or the ability for the car to decide to steer itself if it thinks I've strayed from the middle of the lane. Heck, I don't want a rear camera or blind spot monitoring, I'll check my blind spots myself. They're even working on mandating some sort of monitoring in the next few years to "detect" whether you might be drunk.
What are the costs of all those sorts of things? All the sensors? All the computers? All the design/coding? The costs for maintaining all of it? The cost of the extra complexity? No mention of any of that?
(Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
A big part of this is economies of scale, the reason your cheap compact gets a digital guage cluster is that the cluster has already been engineered and tested and it's just cheaper to slap that in there instead of re-engineering.
But while it makes it cheaper for the manufacturer and ultimately cheaper for the buyer on the lot, it makes for much more expensive repairs. I'm looking at you Ford with your $1200 taillights.
The complete abandonment of budget models in the US is completely foreseeable from market dynamics and how the industry is structured.
1. Economies of scale are the only way to build a budget car.
2. The incremental costs of adding features are nearly zero. The vast majority of price comes from the basic costs of building a legal vehicle.
3. Buyers generally won't reject a car for having features they don't care about, but they'll frequently reject a car for lacking a feature they deem important.
4. Buyers have different preferences.
In order to sell at a low price, automakers have to sell as many as possible to hit massive economies of scale. In order to sell that many, they need to please a huge number of buyers, which means they add a whole bunch of cheap features to satisfy as many buyers as they can without cannibalizing their higher-tier offerings.
The other side of this is the price point that western OEMs can actually hit with economies of scale has climbed significantly in recently decades, in part due to inflation / wage pressures, but mainly due to massive institutional inefficiencies. Mary Barra's compensation alone adds several dollars to the price of each GM vehicle. Legally mandated dealer margins and fees add tens of percent to the price that consumers pay. The inefficiencies of spreading production for tax purposes across state and international borders adds more cost. So on and so forth, and the market feedback mechanisms to correct these issues are intentionally hampered by policy decisions to favor the current status quo.
Change in the market needs support at the regulatory level.
If you care are about cost, you buy a used car -- not a basic model.
If you buy a new car, you're already paying a premium. If you're willing to pay a premium, you were probably not looking for a basic model in the first place.
It has been my experience that people who talk about cars are lying to themselves.
They say they want one thing, but buy another.
They claim they want a manual transmission and then buy a RAV4.
They claim they want a sports sedan and then buy a RAV4.
They claim they want a station wagon and then buy a RAV4.
They claim they want a base, cheap, simple, vehicle and then they drop $55k on a fully-equipped RAV4 Hybrid.
Be weird. It's ok. Do the dumb thing and follow your desire.
And you can hedge your bets. I bought, used, a manual transmission convertible sports car, a sports sedan (red, even!), and capacious station wagon for all of my Home Depot needs all for less than the price of RAV4 Hybrid and between the three I always have at least one functional vehicle!
I think there is definitely some self delusion happening on the customer side, but automakers absolutely shape your purchasing choices away from what might be your ideal vehicle to things that are good enough vehicles for more people.
More people naturally want a RAV4 than a manual station wagon, but the automakers would prefer that even the folks leaning towards the manual station wagon leave the dealership with a RAV4 so they can just make the RAV4. So manufacturers offer nicer features it would make sense to offer in any vehicle exclusively in models they want to steer customers towards, like nicer seats, better sound systems, advanced safety features, etc. Subaru sells both the Impreza hatchback and the Crosstrek, which is literally just a lifted Impreza. But if you want non-cloth seats, roof rails, or even a spare tire, your only option is the Crosstrek. The conclusion that everyone wants crossovers is driven in no small part by the fact that buying a crossover is often the only way to get features customers want that should be, but are not, model agnostic.
Can't recommend enough this approach of multiple older cars. Between the extremely high cost and steep depreciation new cars make no sense unless you're so rich money is not a consideration.
I have multiple sports cars (all over 30 years old), a truck for towing and utility (over 20 years old), a minivan for kid and family duty (~15 years old). All that together is cheaper than a single new car. And having bought them depreciated, the value barely goes down. In fact a couple of the sports cars are appreciating now, worth more than my cost.
I've thought for a long time that offering only electric vehicles with 200+ mile range as the base availability is overkill. I drive a short commute to work and then maybe 2mi to the grocery store and I have no other needs. Otherwise I take plane/train.
The common arguments I hear are
1. What if I need to take a roadtrip?
2. What if I don't have accessibility to a charger at home or work and need longer range to account for that.
Only (2) seems reasonable to me, but many do have access where they live. Seeing as the huge expense of EVs is batteries, I'd love the option of something with a much, much reduced battery (and the additional reduced feature sets the article mentions).
Budget car buyers likely don’t make a good customer base. People who want their new car to be mostly like their old car probably will just drive the their old car until it breaks down then get a used car.
When I was looking for a car I was looking for 3 things:
1. Low gas mileage
2. Cheap/Reliable
3. Not run by Elon Musk
So I got a used Corolla Hybrid and plan on driving that for at least 5-10 years. But I understand that I’m not a profitable customers to most car companies.
This is exactly why I got a Model Y AWD with all the default options.
It basically has everything you need, and is Long-Range, too, without having to decide whether or not you want a mutually-exclusive "technology package" or "XXX package".
Without having to decide a whole bunch of other things, too, which, if you don't get, won't give you the advertised features seen in commercials, and if you do, won't keep the advertised price of the car.
I'm actually a huge fan of the extreme level of simplification that electric cars have to offer. They literally eliminate the need for thousands of high maintenance moving parts, and replace them with motors that can run hundreds of thousands of miles without service. Regenerative braking reduces brake wear and maintenance dramatically. 4 motor setups eliminate complex differentials and give you extremely high quality awd, traction control, and stability control, without any increase in mechanical complexity. You get better low-end torque output and smoother power curves. The only mechanical features that really remain the same are bearings and suspension components. Complexity still exists, it just has been offloaded to electronic complexity which has become orders of magnitude more reliable and capable in the last 4 decades.
So please, could we just have that? Just because it's easy for you to add internet connectivity doesn't mean I want it. I don't want my car to rat me out to megalomaniac dictators because my car company's psychotic CEO wants a sweetheart trade deal. I don't want my car to create data trails that will allow advertisers to see places that I frequently visit, regardless if that place is an oncologist or my friendly neighborhood dominatrix. I don't want my car to know my retinal data or fingerprints, to be controllable via my phone, or to tell me that my resting heart rate is. Just give me a car, and let me do the rest on my own.
Imagine manufacturing like a long vine - any disturbance along the vine can cause the fruit to wither.
The overall company can run low on capital or the share price may drop too far and induce leadership changes.
The product has to reach capacity targets to pay for overheads and fixed costs.
A competitor can drop their prices.
A supplier can go out of business or have their own production issues - fires and floods happen ever year.
Many governments have ramping targets for safety and efficiency.
Any particular government can increase taxes or tariffs, causing an unplanned uprooting of production from one assembly plant to another, costing at least millions of dollars; also unknown costs due to uncertainty.
Consumers preferences change over time.
---
With all of that, the fruit that withers first is the smallest - the cheapest or leanest.
There are many, many K.I.S.S. cars out there. They are used, old, cheap and can still run great. Personally, I really do not want to have a car with any kind of computerization (other than a basic ECU) and more complexity and weight than it absolutely needs to have. Fortunately, I'll be fine - I doubt the supply of old cars runs out before I shuffle off this mortal coil.
If you want simple get a motorcycle. Most do not even have a radio.
I got an almost new BMW 310GS for $5k. Even at that price it has antilock brakes, slipper clutch, throttle-by-wire. Any idiot could ride this bike, and it gets 60-70MPG.
Now I ride it every chance I get and keep the miles off my $40k pickup truck.
Budget car buyers aren't driving the market - especially not the market for new cars. In the US income inequality has gotten to the point where most new cars are bought by upper income customers. And they want fancy SUVs. Budget car buyers purchase their cars in the used market. For them it would in fact make sense to purchase less expensive more efficient vehicles. But they don't get a vote (in theory a lower depreciation for such vehicles should flow up, but I don't think that signal really gets anywhere now.)
Most people with a < $30,000 budget buy a used vehicle. They get a lot more car for the same amount of money. So the market for a cheap new car is pretty small.
Which screws up the market for those who have a $10,000 budget for a car. Most of them would likely prefer a 5 year old $20,000 car than a 15 year old $50,000 car, but the market has very few of the former.
> people interested in buying cars under $35,000 would rather have the option for more basic vehicles in order to keep costs down and repairs simple.
See the problem? It's right there in the quote.
Car manufacturers are in the business of making money, not cars. People that want to keep costs down are not the kind of customers they can make money from.
In fact, they would be happy if no other manufacturer would have them as customers, because that would mean those people will succeed in spending less, grow accustomed to the ideea of not having to spend a lot on a car, and possibly hijack some other customers that would have bought an expensive car.
23 comments
[ 248 ms ] story [ 944 ms ] threadThe complex ones do.
You can get John Q. Public to buy a basic, efficient, safe compact car with cloth seats... or you can use that same production line to build a full-sized truck with tons of non-essential electronics that costs three times as much, which then requires the buyer to take out a loan from your financial arm for 84 months.
Which one returns more value to the shareholders?
EDIT: "non-essential electronics" should be seen as huge displays and the like, not things like emissions controls or safety equipment.
If, let's say, a typical $30k car means a large EV SUV with all the luxury gadgets and conveniences, plus fridge, massage chair, full camping setup, etc. Would 30k car buyers not expect those things?
They present it as a choice between manual or electric seats, manual or electric buttons, etc., which are indeed valid items of discussion ..
But what about other expensive, complicated, things I want a choice to get rid of, major things I don't want to pay for, like .. auto stop-start, or the ability for the car to slam on the brakes by itself, or the ability for the car to decide to steer itself if it thinks I've strayed from the middle of the lane. Heck, I don't want a rear camera or blind spot monitoring, I'll check my blind spots myself. They're even working on mandating some sort of monitoring in the next few years to "detect" whether you might be drunk.
What are the costs of all those sorts of things? All the sensors? All the computers? All the design/coding? The costs for maintaining all of it? The cost of the extra complexity? No mention of any of that?
(Also don't get me started on the extra cost and complexity and loss of maintainability that emissions regulations have added to cars. They used to be dead simple and maintainable.)
But while it makes it cheaper for the manufacturer and ultimately cheaper for the buyer on the lot, it makes for much more expensive repairs. I'm looking at you Ford with your $1200 taillights.
1. Economies of scale are the only way to build a budget car.
2. The incremental costs of adding features are nearly zero. The vast majority of price comes from the basic costs of building a legal vehicle.
3. Buyers generally won't reject a car for having features they don't care about, but they'll frequently reject a car for lacking a feature they deem important.
4. Buyers have different preferences.
In order to sell at a low price, automakers have to sell as many as possible to hit massive economies of scale. In order to sell that many, they need to please a huge number of buyers, which means they add a whole bunch of cheap features to satisfy as many buyers as they can without cannibalizing their higher-tier offerings.
The other side of this is the price point that western OEMs can actually hit with economies of scale has climbed significantly in recently decades, in part due to inflation / wage pressures, but mainly due to massive institutional inefficiencies. Mary Barra's compensation alone adds several dollars to the price of each GM vehicle. Legally mandated dealer margins and fees add tens of percent to the price that consumers pay. The inefficiencies of spreading production for tax purposes across state and international borders adds more cost. So on and so forth, and the market feedback mechanisms to correct these issues are intentionally hampered by policy decisions to favor the current status quo.
Change in the market needs support at the regulatory level.
If you buy a new car, you're already paying a premium. If you're willing to pay a premium, you were probably not looking for a basic model in the first place.
They say they want one thing, but buy another.
They claim they want a manual transmission and then buy a RAV4.
They claim they want a sports sedan and then buy a RAV4.
They claim they want a station wagon and then buy a RAV4.
They claim they want a base, cheap, simple, vehicle and then they drop $55k on a fully-equipped RAV4 Hybrid.
Be weird. It's ok. Do the dumb thing and follow your desire.
And you can hedge your bets. I bought, used, a manual transmission convertible sports car, a sports sedan (red, even!), and capacious station wagon for all of my Home Depot needs all for less than the price of RAV4 Hybrid and between the three I always have at least one functional vehicle!
More people naturally want a RAV4 than a manual station wagon, but the automakers would prefer that even the folks leaning towards the manual station wagon leave the dealership with a RAV4 so they can just make the RAV4. So manufacturers offer nicer features it would make sense to offer in any vehicle exclusively in models they want to steer customers towards, like nicer seats, better sound systems, advanced safety features, etc. Subaru sells both the Impreza hatchback and the Crosstrek, which is literally just a lifted Impreza. But if you want non-cloth seats, roof rails, or even a spare tire, your only option is the Crosstrek. The conclusion that everyone wants crossovers is driven in no small part by the fact that buying a crossover is often the only way to get features customers want that should be, but are not, model agnostic.
Can't recommend enough this approach of multiple older cars. Between the extremely high cost and steep depreciation new cars make no sense unless you're so rich money is not a consideration.
I have multiple sports cars (all over 30 years old), a truck for towing and utility (over 20 years old), a minivan for kid and family duty (~15 years old). All that together is cheaper than a single new car. And having bought them depreciated, the value barely goes down. In fact a couple of the sports cars are appreciating now, worth more than my cost.
The common arguments I hear are 1. What if I need to take a roadtrip? 2. What if I don't have accessibility to a charger at home or work and need longer range to account for that.
Only (2) seems reasonable to me, but many do have access where they live. Seeing as the huge expense of EVs is batteries, I'd love the option of something with a much, much reduced battery (and the additional reduced feature sets the article mentions).
When I was looking for a car I was looking for 3 things: 1. Low gas mileage 2. Cheap/Reliable 3. Not run by Elon Musk
So I got a used Corolla Hybrid and plan on driving that for at least 5-10 years. But I understand that I’m not a profitable customers to most car companies.
It basically has everything you need, and is Long-Range, too, without having to decide whether or not you want a mutually-exclusive "technology package" or "XXX package".
Without having to decide a whole bunch of other things, too, which, if you don't get, won't give you the advertised features seen in commercials, and if you do, won't keep the advertised price of the car.
So please, could we just have that? Just because it's easy for you to add internet connectivity doesn't mean I want it. I don't want my car to rat me out to megalomaniac dictators because my car company's psychotic CEO wants a sweetheart trade deal. I don't want my car to create data trails that will allow advertisers to see places that I frequently visit, regardless if that place is an oncologist or my friendly neighborhood dominatrix. I don't want my car to know my retinal data or fingerprints, to be controllable via my phone, or to tell me that my resting heart rate is. Just give me a car, and let me do the rest on my own.
The overall company can run low on capital or the share price may drop too far and induce leadership changes.
The product has to reach capacity targets to pay for overheads and fixed costs.
A competitor can drop their prices.
A supplier can go out of business or have their own production issues - fires and floods happen ever year.
Many governments have ramping targets for safety and efficiency.
Any particular government can increase taxes or tariffs, causing an unplanned uprooting of production from one assembly plant to another, costing at least millions of dollars; also unknown costs due to uncertainty.
Consumers preferences change over time.
---
With all of that, the fruit that withers first is the smallest - the cheapest or leanest.
I'm sorry if this is upsetting.
I got an almost new BMW 310GS for $5k. Even at that price it has antilock brakes, slipper clutch, throttle-by-wire. Any idiot could ride this bike, and it gets 60-70MPG.
Now I ride it every chance I get and keep the miles off my $40k pickup truck.
Which screws up the market for those who have a $10,000 budget for a car. Most of them would likely prefer a 5 year old $20,000 car than a 15 year old $50,000 car, but the market has very few of the former.
See the problem? It's right there in the quote.
Car manufacturers are in the business of making money, not cars. People that want to keep costs down are not the kind of customers they can make money from.
In fact, they would be happy if no other manufacturer would have them as customers, because that would mean those people will succeed in spending less, grow accustomed to the ideea of not having to spend a lot on a car, and possibly hijack some other customers that would have bought an expensive car.