Small cars are hot again — because they're cheap
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2024 Chevrolet Trax sales are up 230% in the first half of the year. Photo: Courtesy of GM
Americans are snapping up small cars again, not because they want to, but because it's what they can afford.
Why it matters: Higher sticker prices, plus lofty borrowing rates, are making it harder for people to buy the new car of their dreams, so they often have to settle for a smaller vehicle or look for a bargain on a used car.
Driving the news: 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%.
- Compact cars and SUVs also increased 18% and 12% respectively, per Cox.
- Full-size pickup truck sales, meanwhile, were down 4% for the first half.
Yes, but: 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," she tells Axios.
- "If you have not gone car-shopping in five years, your sticker shock will be real."
Zoom in: 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-30 (starting at $24,995) 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%).
- U.S. automakers pretty much gave up on small sedans in recent years, although the popularity of small SUVs like the Trax is keeping them in the entry-level game.
Between the lines: 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."
What to watch: Ford and Tesla both plan to introduce small, entry-level EVs priced under $30,000.
The bottom line: Affordability is a real issue that pushes people away from the cars they really want to the ones they can afford.
Note: Cox Automotive's parent company, Cox Enterprises, also owns Axios.
Editor's note: The chart has been corrected to reflect that the 2019 data is annual (not year to date). This story has also been updated to correctly identify the model name and starting price of Mazda's subcompact SUV.
