There is a fundamental truth you have to understand about car companies:They do not exist to make cars. They exist to make money. That distinction, analyst Kevin Tynan tells me, is why they’re not really interested in making affordable electric vehicles.
Perhaps that’s an oversimplification. Tynan is the director of research at an auto-dealer-focused investment bank, the Presidio Group, with decades of experience as an analyst at firms like Bloomberg Intelligence. What he means isn’t that automakers have no interest in affordable products. It’s that their interest begins and ends with winning customers who will eventually buy more expensive, higher-margin products.
One of the auto industry’s dirtiest secrets is that at scale, it doesn’t cost that much more to make a bigger, more expensive than a smaller and cheaper one. But they can charge you a lot more for the former, which makes this a game of profit margins and not just profits. In recent years especially, that’s a big part of why your new car choices have skewed so heavily toward bigger crossovers, SUVs and trucks.
This might be hard to believe but 2005 was nearly 20 years ago…cars have improved in nearly every way possible, then add 20 years of inflation to that and it starts to sound like a good deal…
Using an online inflation calculator shows the 2005 price inflating to 21,400, and the 2015 price inflating to 24,900. It would seem the civic is matching inflation. So, I’m wrong on how inflation has impacted the value of most cars, but that still doesn’t solve the problem that New cars aren’t being released for under $20,000 (stateside) anymore - and subsequently how much debt people have to sink into to buy New. Inflation has run what should just be a basic ass car into $24,000+
But my turnaround question would be does the cost to manufacture this car truly not fall? Is the manufacture cost also meeting inflation the way we found the MSRP has? Has manufacturing one truly remained at 90% MSRP? (A quick Google says profits are usually only 10%). If so, why? I understand facelifts and upgrades over the years but if you’ve been making the same “name” car that shares parts with itself through the years from 2005 till 2025, how are some of those parts not dirt ass cheap - because car brands are intentionally not reusing the parts. A great example is the 2012 and 2014 Chevy Sonic rims are the same. 2013 and 2015 are the same too. Why aren’t they they same across 4 years? Also why is the 2012 one a bolt pattern 5x105 - a size and pattern never used again or previously? Because fuck you, consumer, we needed them to be scarce so the price stays at $300 per rim. (Personal experience I had in 2017). A civic, and any other long life car model could be cheaper, but they’re not because car makers insist on convoluted systems and “innovation for innovation sake” so a new car is always full of new R&D they need to pay for.
Also cars are covered in touchscreens now. Do you know why - touchscreens are just a TV with a digitizer like your phone. And we have been making those for 20 years so they ARE cheap as dirt. Touchscreens are so popular in the face of consumers wanting buttons because they’re so cheap to put in and make a UI for. In fact the UI doesn’t even have to change, it just needs to look new every few years and anyone with some computer knowledge will tell you how far changing a jpg image for a button goes to fooling people you did a lot of work.
So they…don’t like profit? Because that also contradicts OP.
No, they made cars nearly unfixable to most mechanic shops and you, the consumer with computerisation/combining parts (climate controls are built into the radio unit on mustangs) and own the market on tools to fix their brand. Most Dealerships state parts/maintenance make big bucks. If your car is new enough Chevy and Dealerman are making bank by selling you, for example, a radio head unit that specifically fits around that climate control system, for $500 and then $70/hr in labor.
Not just the consumer, they also get to rake shops across the coals because they make parts that need a unique tool to access and then charge the shop $500 for the tool to prevent them getting their value out of its use. No shop will get $500 of use out of a cube tool that resets the brake caliper of a Kia Sedan in 2006, 2007, and 2008. So shops didn’t buy it. Where does that bring you but back to Kia Dealerships. (Or attempting it with needle nose pliers)
that still doesn’t solve the problem that New cars aren’t being released for under $20,000
The number in OP was $25k
Inflation has run what should just be a basic ass car into $24,000+
Yes, inflation is a problem. That’s a different discussion.
Is the manufacture cost also meeting inflation the way we found the MSRP has?
Manufacturing costs go down but also there is an increase in technology, fuel efficiency, and especially safety.
if you’ve been making the same “name” car that shares parts with itself through the years from 2005 till 2025
No one is doing that. Just because it has the same name doesn’t mean it’s even remotely the same car as it was 20 years ago…
Also cars are covered in touchscreens now. Do you know why
Because backup cameras were mandated in 2016.
The number in OP was $25k
For electric cars yes. (As opposed to the civic question). The reason I would posit is a culmination of my points. Companies love to over engineer these systems to justify high R&D to allow prices (and margins) to go up.
Manufacturing costs go down but also there is an increase in technology, fuel efficiency, and especially safety.
Not something you or I could answer, but are these costs truly matching inflation? In this era I am hard pressed to believe profits are still only 10% that is listed online.
No one is doing that. Just because it has the same name doesn’t mean it’s even remotely the same car as it was 20 years ago…
Many parts do the exact same stuff they used to. A radio head unit nowadays is the same head unit 3 and 5 years ago in a new shell. Bluetooth, USB, Apple/Android carplay, am/fm. And now they’re hooked up to the touchscreens. Why change what already works in a new facelift year, except for no reason other than to intentionally prevent parts from becoming commonplace. The rims I mentioned. No one will notice when buying a car if those rims were reused those 4 years.
Because backup cameras were mandated in 2016.
A friend owns a 2019 Ford Fiesta that has a backup camera on the installed screen that’s 5 inches tall to 6 inches wide. It’s incredibly minimalist and I know most people do enjoy an infotainment system now. That doesn’t change my point here that brands embraced putting an iPad in your car, and won’t give you buttons back because the ever increasing size screens are incredibly cheap compared to the radio/climate/headlight buttons you see people bemoaning they want back. It also feeds back to the “you can’t fix it yourself” problem that car brands have manufactured for consumers.
For electric cars yes.
Doesn’t matter. The entire point of the article was that EVs can’t be made inexpensively because there’s not enough profit in inexpensive vehicles. I brought up the vehicles I did because it disproves that theory.
are these costs truly matching inflation?
Probably not. Still nothing to do with EVs.
Many parts do the exact same stuff they used to.
That doesn’t mean they’re the same part.
A radio head unit nowadays is the same head unit 3 and 5 years ago in a new shell
No.
