The Auto Industry Isn’t Facing a Demand Problem, It’s Facing a Value Problem

We built vehicles consumers can’t afford –> and then wondered why demand shifted.

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Some of the biggest drivers of vehicle price inflation aren’t Powertrains or Materials…
they’re Technologies consumers never asked for. Oversized screens. Subscription-ready software. Layered driver assist packages. FEATURE CREEP in every trim.

All of it adds cost. Little of it improves affordability.

Meanwhile, the Tech consumers DO care about: Comfort, Reliability, Operating Cost, & in the EV world: Range and Charging Consistency… is still uneven in a market already reacting to affordability pressure.

Recent ICE (Internal Combustion Engine) Side Facts That Prove the Point:

Average ICE transaction prices continue rising even as incentives increase… meaning MSRP inflation is becoming structural, not purely demand-driven.
Toyota, Honda, & Ford all cited higher production costs tied partly to electronics, sensors, & infotainment systems now standard on lower trims.
JD Power reported rising consumer frustration tied to touchscreen-only controls replacing physical buttons.
Multiple OEMs have reduced or eliminated lower-cost trims, forcing buyers into tech-heavy mid & upper packages.
Used vehicle demand for 5–10yr old ICE models has surged, specifically because they offer simpler tech, lower repair costs, & more predictable ownership.
Insurance premiums have climbed for vehicles w/ advanced driver assist systems because repairs are more expensive.

This is the opposite of the old ICE playbook, where OEMs built trims around Comfort, Reliability & Affordability. Think of the old Ford Texas/Oklahoma packages… value-oriented trims built off basic truck configurations. Buyers could get towing capability, durability, practical upgrades, & comfort w/out being pushed into luxury packages or unnecessary tech.

They sold because they aligned with market priorities.

Recent OEM Financial Signals (EV + ICE)

Ford’s Model e division posted multi-billion-dollar losses, prompting slower EV investment.
GM delayed several EV launches & scaled back production citing cost pressure & slower adoption.
Stellantis reported margin pressure on both ICE and EV models tied to rising tech & compliance costs.
Tesla cut prices multiple times, compressing margins & signaling affordability strain even in the EV-first segment.
Multiple OEMs reported higher-than-expected Warranty & Repair costs tied to electronics & sensor-based systems.

These aren’t isolated events… they’re symptoms of the same structural issue:
Feature-driven cost inflation is outpacing consumer value.

When product mixes become too expensive, volume softens, incentives rise, & residual risk increases. That pressure eventually hits credit performance & portfolios.

We built vehicles consumers can’t afford –> and then wondered why demand shifted.

Consumers responded rationally: shifting demand into Used inventory.

When New car pricing is driven more by features than fundamentals, affordability breaks… and the cycle bends.

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