Peter Lyon
July 31, 2024
Small cars are the flavor of the month. And the very affordable Chevy Trax has come out on top of the pile. Americans are opting for small cars again, not because they want to, but because they can afford them.
More expensive prices, plus steep borrowing rates are making it tougher for people to purchase the new car of their dreams, so they are often forced to settle for a smaller car or look for a bargain on a used one.
Small car sales are outpacing the rest of the market this year, according to Cox Automotive data. While overall vehicle sales were up about 2% nationwide in the first half of 2024, subcompact crossover utilities grew more than 20%, while compact cars and SUVs also rose 18% and 12% respectively, according to Cox. Full-size pickup truck sales, conversely, fell 4% for the first half of the year.
Trading down isn’t the sacrifice it used to be — today’s small cars are roomier than ever, and often come with standard technology and safety features that satisfy budget shoppers’ premium tastes.
“You don’t really have these stripped-down vehicles anymore,” says Rebecca Lindland, senior director of industry data and insights at Cars.com.
“But that’s also part of the affordability challenge. Consumers on average are paying $11,000 more for a new car than they were five years ago,” says Lindland.
“If you have not gone car-shopping in five years, your sticker shock will be real.”
The Trax’s entry-level price of $21,495 is hard to ignore
The Chevrolet Trax, with a starting price of $21,495, is perhaps the best example of the trend. General Motors redesigned the small SUV for the 2024 model year, making it larger and less expensive but with more technology than the previous version. Even the base model comes with standard safety features like automatic emergency braking and lane-keeping assist, while higher-trim versions include Apple CarPlay, a Wi-Fi hotspot and adaptive cruise control — all for well below $30,000. Consumers love the Trax, with sales up 230% compared to the first six months of 2023.
Other subcompact SUVs, like Mazda’s CX-50 (starting at $30,300) and Honda’s HRV (starting at $25,100), are also selling fast. Compact cars are also booming, led by strong sales of the Nissan Sentra (+55%), Honda Civic (+38%) and Toyota Corolla (+26%).
The threat from China is electric
The threat of inexpensive electric cars from China will also drive automakers to shift to smaller, more affordable vehicles. That’s the best way for automakers to compete with cheap Chinese EVs, Ford CEO Jim Farley said recently.
“We have to start to get back in love with smaller vehicles. It’s super important for our society and for EV adoption,” Farley told The Guardian. “We are just in love with these monster vehicles, and I love them, too, but it’s a major issue with weight.”
“These huge, enormous EVs are never going to make money: The battery is $50,000, even with low-nickel, LFP chemistry. They will never be affordable. “Ford and Tesla both plan to introduce small, entry-level EVs priced under $30,000.
CARLIST THOUGHTS
Affordability is a real issue that pushes people away from the cars they really want to those they can afford. And they can afford the compact type like the Trax, CX-50, HR-V and Corolla. With Tesla and Ford planning to introduce sub-$30,ooo EVs, then we can expect a big surge in small car sales over the next few years.
