Trump says small cars can bring down big prices. Here’s why that’s unlikely
By Chris Isidore, CNN
(CNN) — President Donald Trump has a tiny solution to a big problem: have US factories manufacture very small cars, like the ones found in Asia and Europe, to drive down giant price tags.
“Manufacturers have long wanted to do this, just like they are so successfully built in other countries,” Trump said in a Truth Social post after meeting with auto executives in early December. “START BUILDING THEM NOW!”
But even the mini cars’ mini price tags aren’t likely to solve pricing issues, experts say. While Trump claims to have rolled back regulations that he blames for keeping small cars off US roads, the truth is there is no minimum-size rule for vehicles sold in America as long as they meet safety standards.
What stops automakers, both foreign and domestic, from building such cars here, or even importing them, is much simpler: Americans have shown, repeatedly, they just don’t want those cars.
The “kei” cars, popular in many parts of Asia, can cost as little as $8,000 or $10,000. In contrast, the average price of a new car in the United States is currently around $50,000.
Having new cars that cheap would be an answer to affordability issues for many car buyers — and a major political headache for Trump. The problem is, there just isn’t enough demand to sell those cars in America, let alone building them at US factories instead of importing them from countries where they are popular.
That’s because American car buyers have long demonstrated that they prefer SUVs and trucks. It’s also great for automakers, because those larger models carry bigger profit margins.
Americans like bigger cars and often don’t feel comfortable driving smaller vehicles alongside larger counterparts on streets and highways, said Ivan Drury, director of insights at car-buying site Edmunds.
The small vehicles are “a niche of a niche of a niche of the car buying market,” Drury said. “If you ask (Americans) if you’d rather spend $50,000 or $10,000, they’d choose $10,000 every day, but it’s what you get for that price that makes it non-viable.”
The vanishing subcompact
Most automakers did sell compact and subcompact cars in the US — until demand withered. US compact car sales have plunged 59% over the last 10 years, according to Cox Automotive, while subcompact cars sales have plummeted 90%. Only four subcompact models remain for US buyers and they are all built overseas: the Nissan Versa, the Mitsubishi Mirage, the Fiat 500 and the Mini Cooper. Many tiny car models, like the two-seater Smart car, are no longer available in the United States.
The cheapest subcompact, the Versa, starts at $18,635 with an automatic transmission. But Nissan only sold 41,000 in the first nine months of this year, or about one quarter of the sales of its Rogue SUV, its best-selling model.
At the December meeting, Trump also announced a rollback in fuel economy rules. Ford CEO Jim Farley said that day the change would allow Ford “to invest in affordable vehicles made in the US, which we will take the lead on.”
Ford last week announced a new smaller, cheaper electric vehicle. But the EV, made in partnership with European automaker Renault, will be exclusively sold in Europe due to limited US demand.
Stellantis, the parent company of Jeep, Ram and Dodge, is planning to sell a new tiny electric Fiat in the United States. But it will be imported from Morocco, since that’s closer to foreign markets with greater demand.
And it barely qualifies as a car — it’s considered a “quadricycle,” or a cycle with four wheels.
Kei cars not OK for US roads
Kei cars don’t currently meet safety standards for US roads. That means those cars would take extra work to be made or imported here. But car makers would make the necessary changes to comply with those rules if there was enough demand.
Nissan and Toyota told CNN its lineups are based on customer demand.
Nissan said it “will consider additional vehicle types if a strong opportunity exists.” Honda declined to comment on its plans.
That has left the handful of buyers interested in kei cars looking to specialty importers.
Gary Duncan, owner of Duncan Imports and Classic Cars in Christiansburg, Virginia, said he sells about 20 kei trucks a month despite many states, including Virginia, not allowing them on the roads.
“They’re a whole lot safer than motorcycles on the road, so I don’t know why,” he said. “People like the size, the gas mileage, the utility. We sell a lot to farmers, to wineries, to cemeteries, to colleges,” he said.
Most of the kei cars Duncan sells are at least 25 years old, so safety regulations don’t apply to them. (New models can be sold for off-road use.)
Automakers would need to see more demand to justify either importing the cars or investing to reengineer the cars to pass US crash standards, said Michael Brooks, executive director of the Center for Automotive Safety.
“The kei cars are not built for the US market, so none of the vehicles are going to immediately be able to meet US standards,” Brooks said. “But that doesn’t mean there is some kind of mandate or block against those vehicles operating in the United States. Nothing could be further from the truth.”
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