Why American automakers make cheap cars


Cars once represented a pillar of the American dream — mobility and independence. But they’ve become something of a luxury product, and customers and auto dealers are growing frustrated.

The average price for a car in the U.S. is nearly $50,000, an increase of close to 30% in the past five years, according to Kelley Blue Book. Monthly payments are also near an all-time high. A record number of owners are underwater — paying more than the vehicle is worth — according to Edmunds.

Despite record profits in 2023, automakers face challenges: the need to invest billions into software and electrification as well as a global landscape where Chinese and other foreign automakers can produce cars much cheaper.

Some Chinese startups that make EVs and plug-in hybrids have a 30% cost advantage over established global automakers, even without government support, according to research firm AlixPartners.

And despite current U.S. tariffs of 100% on Chinese vehicles, and President-elect Donald Trump’s promise of more tariffs to come, AlixPartners managing director Mark Wakefield said automakers can’t rely on protectionism to bring costs down.

“You have to get ready to fight,” Wakefield said, “And if you say, OK, how do I get ready to fight? Well, let’s look at what the guys that are growing faster are doing.”

Watch the video to learn more.



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