Why I think little compacts went away and SUV's came to dominate

[Indenturedebtor]

Aside from any analysis of the American psyche, or deals/stock with oil/gas companies, there are a couple of glaringly obvious reason why a car company doesn't actually want to sell you a 7,000 dollar car.

Profit margins are probably around 1/3 as much for a tiny car as for a monstrosity. But tiny cars tend to be paid off so you don't trade in as much. You also don't need as many parts to fix them (as they tend to be simpler in design). Perhaps most importantly you don't need to finance as much money.

GMAC is GM's only profitable division right now. GMAC finances everything from homes to cars and credit cards. So if you buy a 25,000 dollar midsize car and you finance longer to make the payments and pay that interest on a larger loan the profits baloon. Even better if you cash out some home equity to pay for part of the loan. You'll be paying interest on that at a lower rate but for much much longer. If you end up with enormous house and car payments you are more likely to pay bills and whatnot on your credit card. And don't forget that if you finance a car for 7 years to make the payments manageable you're going to have to roll over some considerable negative equity if you trade in. So maybe next time I can get you for a 65,000 dollar loan after you put 15,000 down out of your home equity account.

Consider also that if I offer you a 7,000 dollar car and a 55,000 dollar car you are MUCH less likely to buy the 55,000 dollar car than if I offer you the choice between a 25,000 dollar car and a 55,000 dollar car. Why do we want to make a 7,000 dollar car again? Because we care about the environment and the little guy? Jones... are you stupid?

[KT2000]

1. What happened to station wagons?

I had and 88 Nissan Stanza that was a station wagon - it meets car standards not truck standards. It was great - lots of room and excellent gas mileage. When I needed a new car I looked for station wagons but very few make them anymore. Suburu was about it. Just the huge SUVs.
They got to meet lower standards and charge more for SUVs. Add on the financing and it's a win-win.

[NNN0LHI]

3. The were replaced by mini-vans which themselves were eventually replaced by SUVs

There was no demand for them.

Don

[flvegan]

4. Nothing. They're called hatchbacks now.

Love my Mazda, 2nd hatch in a row from them. I run an animal rescue, and I get all the space I would from a midsize SUV like an XTerra.

[Indenturedebtor]

6. Yeah Mazda was making one a few years back as well but they stopped

Now they're putting out these "cross overs" which are essentially station wagons with SUV bodies heh. Don't tell the consumer that though.

[ColbertWatcher]

2. Beautifully put. k+r n/t

[Edweird]

5. I think it's just because people like SUV's and trucks.

Otherwise the oil crisis in the 70's would have been the end of them.

















Edited for clarity.

[Indenturedebtor]

7. If the SUV's and trucks weren't so heavily advertised

I don't think they would be so desired. They ride like shit, suck a ton of fuel, cost a fortune to fix, are prone to flipping over, handle like shit, are slow as shit, oh and cost a fortune to maintain even when they're not broken. Oh and they break more often on average. SUVs are shit.