Honda is getting out of the small car segment ... its not profitable enough for them to make small cars for North America anymore.
You're kidding, right?
Cars are getting larger because of Chinese preference, and because the population is so large, the market potential is much larger. Manufacturers are catering to those preferences on that basis.
However, China's market will collapse, and the automotive sector there has already tumbled. Unfortunately, many of these car designs were prepared years ago when all signs were 'green' for China being a consistently high-selling market.
The fortunate thing for manufacturers is that the Chinese culture exists outside of the country, and sales will continue to be strong with money being flown out of the country to 'safer' grounds.
Small cars will always be immensely profitable - perhaps not so much on a per unit basis, but certainly based on a high volume of sales. That these cars are getting 'larger' is only so as to make way for new models to 'slot in' between. Then, you can have the microcar (low volume, but sets a low starting price), the subcompact (medium volume, average price), and then the 'compact' class, which is now huge by yesteryear's standards, but will command $25,000 average transactions instead of the $19,000 ones that Toyota and Honda have enjoyed for the past 15 years.
It's smart pricing, even if I don't like it (because it means I have to spend more
). Arguably, cars are 'so much more' now in terms of feature content, and inflation should be bringing pricing upwards, but that cannot outpace actual consumer earnings. As it stands, the average family household income in Canada is $68,410. Shave off much of that for taxes, and $25,000 for a car is probably half of that family's income for a year. It's not sustainable to push the average transaction price up dramatically.
