Summer is here and the automotive industry continues to be caught in the middle of chaos, fending off rare-earth minerals shortages for parts, ever-changing tariff guidance on imported vehicles and parts that necessitate relocating production locations, general inflation, and punishingly high interest rates. It’s not the easiest time to be a consumer shopping for a new vehicle. To combat these threats, automakers may need to get creative by streamlining their current offerings and do whatever it takes to keep affordability in check.
Whether it be trading automatic climate control for manual operation or leather-wrapped steering wheel for a polyurethane material, we’ve seen examples of de-contenting and packaging shuffling before. Tesla recently moved forward on previously announced plans to offer a base Cybertruck that eliminated almost $10,000 worth of standard equipment, swapping AWD for a RWD footprint and leather for cloth seats, removing a rear touchscreen, and downsizing from 20-inch to 18-inch wheels, amongst other adjustments. Both Mazda and Hyundai have added or reintroduced new entry-level trims, while MINI on the other hand occasionally offers a limited-release, value-focused Oxford Edition for its Cooper family, bundling together desirable features and unique styling elements at an MSRP oftentimes thousands of dollars less than the nameplate’s existing base trim.
Basic, Less-Extravagant Features are “In”
As average new vehicle transaction prices climb closer to that $50,000 ceiling, automakers need to ensure there’s product available for consumers who want to stay out of the used market yet spend as little as possible in the new one. Data from AutoPacific’s syndicated Future Attribute Demand Study (FADS) which surveyed over 14,000 new vehicle intenders about their interest in more than 160 features and technologies, gives us a clear idea of what matters to those shoppers who plan to spend less than $35,000 on their next new vehicle: simplicity. Upgrades like nicer, plusher seat upholstery choices, flashy exterior styling enhancements, and more immersive cabin technology just aren’t as desirable amongst these shoppers who would rather keep their monthly payments low and their vehicles sensibly equipped.
At the same time, even though many of these listed features lack strong demand, they’re commonly found on popular vehicles that carry MSRPs within that coveted $25k-$35k price bracket.
“Front wheel drive, base stereos, cloth seats with various manual adjustment, and analog gauges are “in,” for these more frugal shoppers,” says Robby DeGraff, AutoPacific’s manager of product and consumer insights, “so the array of standard equipment found on entry- and mid-level trims of today’s popular vehicles within the $25,000 to $35,000 price range may need to be reexamined as consumers tighten their belts in the face of economic uncertainty.”
Several must-have features could likely be removed to lower a vehicle’s total cost and consequently better match the more limited budgets and needs of those active in this particular price bracket.
It’s no surprise that most of top ten most-wanted features amongst vehicle shoppers planning to spend between $25k-$35k are nearly identical to those of shoppers planning to spend north of $35k, however, there are clear differences in prioritization and demand for some. For example, 34% of $25k-$35k vehicle shoppers want a sunroof/moonroof (ranking it their 6th most-wanted item), whereas $35k+ vehicle shoppers have a greater interest in things like driver profile settings, a household 110v outlet, and even sunshades for rear passengers.
While there’s a starker difference in demand for numerous comfort and convenience features between these two price brackets, data show that demand for common safety features, both passive (like parking sensors front and rear at 29% vs 32%, respectively) and active (rear cross traffic alert with automatic emergency braking at 30% vs 32%, respectively), is relatively similar. However, when it comes to driver assist features that allow the vehicle to take on more driving tasks, those $25k-$35k buyers are definitely not as interested in these costlier, more advanced technologies as those planning to spend more than $35k. For example, $25k-$35k vehicle shoppers are 6%-7% pts less interested in adaptive cruise control with active lane centering, regardless of if it has stop-and-go functionality.
What is the Ideal $25k-$35k Vehicle and Who Would Buy it?
With unique needs, wants, and priorities, just who might be the typical $25k-$35k vehicle buyer and what might that $25k-$35k vehicle look like?
Per AutoPacific data, many shoppers in the $25k-$35k price bracket are more open to sedans compared to shoppers looking to spend over $35k due to their greater affordability, and they’re more likely to want a tried-and-true gasoline engine. Note that while 88% of these new vehicle intenders currently own an internal combustion engine vehicle, 20% want their new $25k-$35k vehicle to be hybridized, and only about 5% want it to be fully electric. For more than a third of these buyers (35%), this will be the first time they have ever purchased or leased a new vehicle, upgrading from their current vehicle that’s, on average, more than 11 years old.
On the outside, their ideal $25k-$35k vehicle doesn’t have flashy exterior enhancements like LED welcome lighting, illuminated brand logos, or an expansive glass roof. On the inside, the cabin is likely upholstered in cloth, with manual adjustment for the seats, a cabin layout that prioritizes practicality over design with more buttons and rotary dial controls, and an analog gauge cluster next to a modestly-sized center touchscreen that doesn’t have embedded factory navigation. Despite a more restricted budget, buyers of this $25k-$35k vehicle still want several of the popular features and technology found on higher-priced vehicles including wireless charging pads for smartphones, heated and ventilated front seats, a common 110v outlet, driver profile settings, and active safety features like rear cross-traffic alert with automatic emergency braking, rearward automatic emergency braking, lane change assist, and rain-sensing windshield wipers. Features like a head-up display or upgraded branded stereos (Bose, Harman Kardon, etc.) aren’t necessary, nor are immersive connected services that require an additional paid data plan to use.
These buyers have 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. A third lug around their pet(s) and an adult front-seat passenger, but don’t plan on using their backseat as frequently. Generally, these buyers are a bit more conservative and humble. While more than 60% do want their $25k-$35k vehicle to come equipped with technology to help prevent careless driving mistakes, there’s less interest in various ADAS systems compare to those planning to spend more than $35k.
While automakers can — and should — continue to offer upgraded and aspirational features, amenities, materials, and technology even on more budget-focused products, it’s important to ensure the availability of sensible, modestly equipped versions of these vehicles during these times. Maintaining a persistent focus on delivering value to entry-level shoppers is paramount, especially if an automaker wants to create, build, and retain a relationship when that entry-level buyer in time decides to jump up to the next price bracket when shopping.
“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.