Trump’s Small Car Price Proposal Unlikely to Succeed—Here’s Why
President Donald Trump recently proposed a bold initiative to boost the production of small cars in the United States. He suggested that manufacturing mini cars, similar to those prevalent in Asia and Europe, could significantly lower car prices for American consumers. However, industry experts are skeptical about the viability of this plan.
Challenges Facing Trump’s Small Car Price Proposal
During a meeting with auto executives in December, Trump emphasized the need for American factories to start producing these small vehicles. Despite Trump’s assertion that regulatory rollbacks would facilitate their production, experts indicate that various factors contribute to the lack of small car sales in the United States.
Market Preferences and Buying Habits
- Americans favor larger vehicles such as SUVs and trucks.
- Small cars have limited appeal, often viewed as a niche market.
- Demand for compact cars has decreased significantly, with sales dropping 59% over the last decade.
- Subcompact car sales have plummeted by 90% during the same period.
According to Ivan Drury from Edmunds, while consumers may prefer lower prices, their choices reveal a consistent preference for larger models that provide greater profit margins for manufacturers. This trend leaves automakers hesitant to invest in smaller vehicle production, especially given the current average price of a new car in the US, which stands at around $50,000.
Current Availability and Market Response
Only a handful of subcompact models remain available, including the Nissan Versa and the Fiat 500, all of which are produced overseas. In fact, the Versa, the cheapest subcompact, starts at $18,635, and its sales remain considerably lower compared to popular SUVs.
Manufacturers have attempted to cater to demands for smaller vehicles but found limited success. Ford, for instance, announced a new affordable electric vehicle, but it will only be sold in Europe due to low demand in the United States.
Kei Cars: A Look into the Market Niche
Kei cars—small vehicles popular in Japan—are difficult to introduce in the US. They often fail to meet safety regulations and are typically designed for a different market. Specialty importers like Gary Duncan report selling about 20 kei trucks monthly despite restrictions in multiple states. Demand exists primarily among farmers and other niche groups.
As reported by Michael Brooks, executive director of the Center for Automotive Safety, car manufacturers would consider entering this market only if a substantial demand emerges. Currently, kei cars are not built to meet US safety standards, which complicates potential imports.
The Path Forward
For Trump’s proposal to gain traction, both automakers and consumers must express a clear interest in small cars. Without a groundswell of demand, the initiative may face insurmountable challenges. Although the lower price of small cars could address affordability issues, the preferences of American drivers continue to lean toward larger vehicles, complicating the realization of this vision.
