Expensive Small Cars
“Cheap small cars.” When was the last time you ever heard someone say “nice small cars” or “expensive small cars?” Everyone dreams by dreaming big, but nobody ever figures out how to dream big on the small scale. That’s unfortunate because you can make a lot of money on the small scale. Gordon Ramsay gets this when it comes to food:
A great chef in a fine dining restaurant can take something ordinary and turn it into something extraordinary, and charge an extraordinary price as well.
-Gordon Ramsay
The New York Times recently ran an article about buyers switching to small cars because of high gasoline prices, causing even more pain for GM, Ford, and Chrysler. All of them made their money on big SUVs in the 90s, and each of these manufacturers fell into the same trap: small cars must be cheap cars, and people with money want to spend it on expensive cars which must be large cars.
Where was their imagination? Why can’t small command a price premium? Toyota dreamed small and made the Prius - a small car that you can equip with some seriously nice stuff. Today, they make a lot of money on that model. Elsewhere, BMW is bringing their compact 1 Series to the United States while Audi has already been selling the A3 here for a few years. The small Mazda 3 series is very nice, and Subaru just redesigned the Impreza which comes in a price range from $17,000 all the way to $38,795!
You can make money on small, and something does not have to be big to command a high price. The American auto companies never saw that, and so they made cheap small cars. The rest of the world saw that nice things can come in small packages, and so they made expensive small cars. Guess who’s winning now?
