(WWJ) Economy vehicle buyers want more economy and fewer extras.
That word from a new AutoPacific study, as car companies pump more extras into entry level models, which can really inflate the sticker price.
“A lot these kind of kinda like higher end, upscale features, there’s just not a lot of demand for them amongst these more budget conscious buyers,” says Robby DeGraff, AutoPacific’s manager of product and consumer insights.
AutoPacific surveyed more than 14,000 new vehicle intenders about their interest in more than 160 features and technologies. Those who were looking to spend less than $35,000 on a new vehicle summed up their message in one word: simplicity.
“It’s good for models in that price range to offer some fancier, lower-demand features, but those should be optional and limited to higher trim levels, which can also serve to capture customers of bigger and nicely-equipped models who may be downsizing into more affordable segments as they tighten their belts,” says Ed Kim, AutoPacific’s president and chief analyst.
Extras like leather seats, new technology and exterior styling enhancements may add to the desirability of more expensive vehicles, says the study, but they don’t move the needle much among buyers that are looking to spend less.
“They are looking for things that are simple and they work, and aren’t super miraculous and flashy,” says DeGraff, the study’s author.
This comes at a time when carmakers find it tougher to develop lower cost vehicles and make a profit on them. Many of those vehicles are made in low cost countries like Mexico, and include a lot of imported content. Tariffs will add to the cost, and often carmakers need to find extras that consumers are willing to pay for. That can often be the difference between a vehicle that makes money for a carmaker and one that’s a money losing proposition.
This is why the low end of the car market has been disappearing, and has been moving to the upper twenty to low thirty thousand dollar range.
While this has moved a lot of buyers into the used car market, DeGraff says there are still some who want to buy new, and will take fewer features so they can keep the monthly payment affordable.
“Y’now, OK I’m fine with having cloth seats and manual adjustment, if it saves me a little cash up front,” is the message DeGraff heard from those consumers. “Maybe I don’t need an upgraded Bose stereo and I can just get the standard stereo.”
The buyers being spotlighted are those with a median household income of $50,000, live in the suburbs, have no children in their households, and are either Millennials (31%) or Baby Boomers (29%), many of the latter taking into account their fixed incomes. 57% are women. They drive less than 20 miles per day and intend to use their $25k-$35k vehicle for tasks like commuting, longer road trips, relaxed/pleasure driving, and highway driving.
There are things these customers like, and are willing to pay for, in particular safety.
“Even if you’re buying a vehicle that’s under $35,000, these shoppers have to have things like rear cross traffic assist, rear emergency braking and lane change assist or rain sensing windshield wipers.”
Nobody is talking about going back to the days of vinyl seats, crank windows and vehicles without air conditioning. There are certain things once thought of as extras that are here to stay.
DeGraff says there's another luxury item people want, no matter what their budget may be.
"Y'know regardless of climate or what time of vehicle you are buying, even these lower end budget minded shoppers have to have things like heated and ventilated front seats."