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Car Manufacturers Scrapping off Cheap Small Cars, Mat Watson Explains Why

Let’s face it. Your V12 supercar is impractical in the city unless you live in Westminster, London. Small cheap cars are much more practical and affordable in cities. They can maneuver through chaotic traffic and ask very little in return in terms of maintenance. Are small cheap small cars getting scrapped off? Mat Watson of CarWow tells us why.
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According to Watson, when he was a kid, the starting price for a Skoda was $10,000 in today’s money. The starting price for a modern Skoda is currently at $23,200. The price has doubled over the years. Five years ago, one in five cars sold in the U.S was under $20,000. Today, only one in ten is under $20,000.

So, why are cars getting expensive? Well, most car manufactures are axing the cheaper models in their production lines. For instance, Skoda got rid of the more affordable CitiGo, Citroen axed the C1, Peugeot the 108, Ford the Fiesta, and Fiat the Panda or gasoline version of the Fiat 500.

Most manufacturers are replacing their small gasoline cars with electric versions. But there’s a problem, EVs are not cheap due to the tech involved. The profit margin on small affordable automobiles is tiny. To justify building them, manufacturers must sell tons of them.

Watson notes most manufacturers are moving away from cheap cars because they are more interested in selling more profitable SUVs. For instance, Ford sells eight SUVs, seven pickup-trucks, and a bunch of hybrids and electric vehicles. Ford only sells the Ford Mustang with just a regular, internal combustion engine under the hood. And, of course, you can't properly use that on the narrow streets of many European cities. The story also continues in the U.S., where most carmakers ditched their affordable cars. Ford axed the Fiesta, and Chevrolet only sells the Spark as an entry-level vehicle at $13,400 without any taxes. 

A decade ago, seven percent of cars sold were SUVs. Today, half the cars sold are SUVs.

Watson also believes cheap cars are dying off due to carbon emissions, which is quite ironic. You’d think small vehicles produce less carbon dioxide due to weight and small engines. Surprisingly, governments are less strict on targets for manufacturers of heavier cars. Ultimately, this encourages them to build heavier cars due to easier targets.

Eventually, middle-income earners and younger first-time buyers will have to look for affordable cars in the used-car market, pushing the prices in that segment even higher.

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