Automotive

$20,000 Market Opportunity for Auto Manufacturers

• Feb. 1, 2022, 1:04 p.m. Updated: Feb. 16, 2022, 9:38 p.m.
$20,000 Market Opportunity for Auto Manufacturers
Ford Maverick - Ford Media Center
Summary

There is a prime market opportunity for a manufacturer to bring to market a vehicle in the $20,000 range.


Market Opportunity

The current auto market has left car buyers purchasing high-priced used automobiles. Used automobile prices are so high, it seems reasonable to buy a new vehicle, instead. At the time of writing, the average used car price is ~$28,000. Manufacturers have a prime opportunity to tap into an unfilled market. Ford's new Maverick success, closing orders until summer, shows the market wants a $20,000 multi-purpose vehicle. The Ranger and F-150 are well above $30,000 and will not satisfy the market's needs for a while. Manufacturers have an opportunity to bring a vehicle in the $20,000 range to market and actually flourish. A manufacturer could gain a large market share by rapidly releasing a vehicle to satisfy utility wants and needs. A simplified vehicle with fewer microchips may be doable in the microchip shortage.

Some manufacturers could take an older generation platform from the 2010s, retrofit a current-generation fuel-efficient drivetrain, add a rugged updated exterior, and slap a 5-foot bed on it. The cost could be cheaper, due to the cost of development, as the model has already been through its financial lifecycle.


Some Examples:

  1. Honda HR-V 1.5T or 2.0T Truck or Rugged Styling
  2. Toyota RAV-4 2.5L Truck
  3. Subaru BRAT reboot
  4. Land Rover collab with Toyota
  5. Suzuki Jimny in North America

 

These could take the streets by storm and add more market share to brands with smaller sales. The market is lacking in options for lower-priced units because manufacturers are preferring to make fewer high-margin vehicles. This is not sustainable, because vehicle prices will reach unattainable highs, and lower-income people could turn to other modes of transport. Vehicles are retired from the roadway and require replacing. Also, interest rates will eventually climb, making the high-priced models even less affordable.

 

Final Thoughts

It may be feasible to sell a small simple-utility vehicle with a large volume to replenish the market that lost production to the pandemic. The lack of rental cars being sold will leave a void where newer low-mileage vehicles are usually filled. Ford probably doesn't want too many Rangers and Mavericks cutting into F-150 sales. Honda is making a van with a bed, so they probably aren't up to it. I would like to see Land Rover collab with Toyota. Seeing how Toyota often teams up with other manufacturers, they could make Land Rover's first modern reliable vehicle. There is a large market opportunity, and many units could lead to big profits in parts sales, down the road.