Only One American Automaker Sells New Cars For Less Than $20k

Feb. 16, 2020 10:15 AM ET by Jay Traugott Pricing / 2 Comments

What happened to affordability?

For over a century, Ford was the go-to automaker for countless Americans seeking an affordable family car. Although Ford is still focused on value, it no longer sells any new model for less than $20,000. The cheapest vehicle it offers right now is the Ford EcoSport, which begins at $19,995 and does not include the $1,095 delivery charge. The now-discontinued Ford Fiesta and Ford Focus used to be the Blue Oval's sub-$20k models. Turns out Ford is not the only American automaker in this situation.

Ever since Fiat Chrysler dropped the Fiat 500 last year and the Dodge Dart before it in 2016, not a single vehicle in its seven-brand US lineup costs less than $20k. Only Chevrolet, GM's value-focused brand, still sells inexpensive cars, the Chevy Spark (MSRP: $14,095) and Chevy Sonic (MSRP: $17,595). The future for both vehicles remains unknown at this time.

The Detroit News has brought this issue to attention because the Detroit Three automakers all have a long history of affordability but this is clearly changing as a majority of American buyers desire and are willing to pay for more expensive crossovers, SUVs, and pickup trucks. But there could be a significant price they could pay in the long-term: losing the entry-level market to Asian automakers, specifically Hyundai and Kia. But here's the thing: both of those South Korean brands offer sub-$20k SUVs as well, specifically the Kia Soul ($17,490) and Hyundai Venue ($17,350). There's also the Nissan Kicks ($18,870) along with several other non-SUV subcompacts, including the Nissan Versa, Hyundai Accent, and Toyota Yaris.

Because Detroit, with the exception of Chevy, no longer competes in this price bracket, there's a good chance the entry-level market it once dominated will shift to those aforementioned competitors. So did Ford opt-out of the entry-level market?

"We made a strategic decision to exit the small-sedan segment," said Mark LeNeve, Ford's U.S. vice president for marketing, sales and service. "We want to be in affordable vehicles. We just won't be in sedans, but in SUVs where we are stronger."

But why can Ford's Asian brand competitors sell less expensive SUVs? Because Hyundai, Kia, and Nissan have a global footprint that includes Japan and South Korea, two countries where small and cheap vehicles remain in high demand. As a result, they have the production volume enabling them to spread costs. "Our global footprint is in America," LeNeve added. Ford saw small sedan sales shrink to only about 4 percent of the marketplace in recent years, hence the decision to re-focus its lineup. The upcoming reborn Ford Bronco and the Rivian-based Lincoln EV SUV are two unique products the Asian automakers have nothing to compete with.

LeNeve, however, admitted this works the other way around as well: "If what the customer wants is a (compact or subcompact) segment car, then we don't have anything for them right now." It's certainly a bit of a gamble move on Ford's part and only time will tell whether or not it'll pay off.