President Donald Trump has a tiny resolution to a big drawback: have US factories manufacture very small cars, like those present in Asia and Europe, to drive down large value tags.
“Manufacturers have long wanted to do this, just like they are so successfully built in other countries,” Trump mentioned in a Truth Social post after assembly with auto executives in early December. “START BUILDING THEM NOW!”
But even the mini cars’ mini value tags aren’t more likely to resolve pricing points, consultants say. While Trump claims to have rolled again rules that he blames for conserving small cars off US roads, the reality is there isn’t a minimum-size rule for automobiles bought in America so long as they meet security requirements.
What stops automakers, each international and home, from constructing such cars right here, and even importing them, is way easier: Americans have proven, repeatedly, they only don’t need these cars.
The “kei” cars, fashionable in lots of elements of Asia, can price as little as $8,000 or $10,000. In distinction, the common value of a brand new automotive within the United States is at the moment round $50,000.
Having new cars that low-cost could be a solution to affordability points for a lot of automotive consumers — and a serious political headache for Trump. The drawback is, there simply isn’t sufficient demand to promote these cars in America, not to mention constructing them at US factories as an alternative of importing them from nations the place they’re fashionable.
That’s as a result of American automotive consumers have lengthy demonstrated that they choose SUVs and vans. It’s additionally nice for automakers, as a result of these bigger fashions carry greater revenue margins.
Americans like greater cars and sometimes don’t really feel comfy driving smaller automobiles alongside bigger counterparts on streets and highways, mentioned Ivan Drury, director of insights at car-buying web site Edmunds.
The small automobiles are “a niche of a niche of a niche of the car buying market,” Drury mentioned. “If you ask (Americans) if you’d rather spend $50,000 or $10,000, they’d choose $10,000 every day, but it’s what you get for that price that makes it non-viable.”
Most automakers did promote compact and subcompact cars within the US — till demand withered. US compact automotive gross sales have plunged 59% during the last 10 years, in response to Cox Automotive, whereas subcompact cars gross sales have plummeted 90%. Only 4 subcompact fashions stay for US consumers and they’re all constructed abroad: the Nissan Versa, the Mitsubishi Mirage, the Fiat 500 and the Mini Cooper. Many tiny automotive fashions, just like the two-seater Smart automotive, are now not obtainable within the United States.
The least expensive subcompact, the Versa, begins at $18,635 with an automated transmission. But Nissan solely bought 41,000 within the first 9 months of this yr, or about one quarter of the gross sales of its Rogue SUV, its best-selling mannequin.
At the December assembly, Trump additionally introduced a rollback in gas financial system guidelines. Ford CEO Jim Farley mentioned that day the change would enable Ford “to invest in affordable vehicles made in the US, which we will take the lead on.”
Ford final week introduced a brand new smaller, cheaper electrical automobile. But the EV, made in partnership with European automaker Renault, will probably be exclusively sold in Europe on account of restricted US demand.
Stellantis, the dad or mum firm of Jeep, Ram and Dodge, is planning to promote a brand new tiny electrical Fiat within the United States. But it is going to be imported from Morocco, since that’s nearer to international markets with higher demand.
And it barely qualifies as a automotive — it’s thought-about a “quadricycle,” or a cycle with 4 wheels.
Kei cars don’t at the moment meet security requirements for US roads. That means these cars would take additional work to be made or imported right here. But automotive makers would make the mandatory adjustments to adjust to these guidelines if there was sufficient demand.
Nissan and Toyota instructed NCS its lineups are based mostly on buyer demand.
Nissan mentioned it “will consider additional vehicle types if a strong opportunity exists.” Honda declined to touch upon its plans.
That has left the handful of consumers occupied with kei cars trying to specialty importers.
Gary Duncan, proprietor of Duncan Imports and Classic Cars in Christiansburg, Virginia, mentioned he sells about 20 kei vans a month regardless of many states, together with Virginia, not permitting them on the roads.
“They’re a whole lot safer than motorcycles on the road, so I don’t know why,” he mentioned. “People like the size, the gas mileage, the utility. We sell a lot to farmers, to wineries, to cemeteries, to colleges,” he mentioned.
Most of the kei cars Duncan sells are not less than 25 years outdated, so security rules don’t apply to them. (New fashions can be bought for off-road use.)
Automakers would want to see extra demand to justify both importing the cars or investing to reengineer the cars to go US crash requirements, mentioned Michael Brooks, govt director of the Center for Automotive Safety.
“The kei cars are not built for the US market, so none of the vehicles are going to immediately be able to meet US standards,” Brooks mentioned. “But that doesn’t mean there is some kind of mandate or block against those vehicles operating in the United States. Nothing could be further from the truth.”