The democratisation of advanced safety technology is accelerating the death of sub-$20,000 cars – but buyers of the cars that are left are getting much more ‘car’ for their money.
You’ve almost certainly heard the adage ‘you don’t know what you have until it’s gone’.
In the automotive industry, that’s generally uttered in reference to the death of traditional petrol and diesel cars – at the hand of carmakers, government regulators, and buyers alike – in favour of fully electric cars.
But there’s another category of vehicle we’ll look back on in one or two decades and wish we still had: the sub-$20,000 new car.
Five years ago, buyers with $20,000 in their pockets (excluding on-road costs, for the sake of easy comparison) could choose from 29 different models from 16 different brands.
Within the 29 models was a diverse spread of vehicle types, from micro hatches and entry-level cab-chassis utes, to one city-sized wagon and even a one-size-up small car. Combined, buyers could pick from 136 different model variants (i.e. combinations of trim grade, gearbox and engine).
Fast-forward to today, and just five new models can lay the same claim. All are hatchbacks, none are more than about four metres long, and only two of the 10 model variants can be had with an automatic transmission below $20,000, once on-road government costs are added.
This line of thinking came to me while helping someone I know shop for a brand-new city runabout, priced around $25,000, and intended as a second car alongside something far more practical.
Now, I’m not expecting Mercedes S-Class levels of technology as standard on Australia’s cheapest new cars, nor a whole lot of luxury features. But there is one feature I insisted on ensuring was in every car on the shortlist: autonomous emergency braking.
If you’re not familiar with the system, AEB uses radars and/or cameras to detect if you’re about to crash into a car, motorcycle, pedestrian and/or cyclist (depending on the system) ahead, sound (and flash) a warning in the cabin, and slam on the brakes if you don’t react in time.
It’s not perfect, admittedly, but it’s incredibly useful for the occasional brief lapse of attention in traffic, or glance away from the road. Of all the advanced safety systems available today, it’s one of the most useful – so no wonder it will be mandatory on all new cars in Australia from March 2025.
But the cameras and radar sensors needed to power it add, like any modern safety feature, cost. So it might come as a surprise, then, that only one of the five new models with variants under $20,000 plus on-road costs actually offers the feature (the Kia Picanto).
Two of the remaining four models are nameplates that may be familiar to recent buyers in the ‘light car’ (in other words, circa-four-metre-long city car) class: the MG 3 and Suzuki Baleno.
Over the past 12 to 18 months, these two cars have risen to the top of the light car sales segment, together accounting for close to 60 per cent market share so far this year – up from under 40 per cent by this time last year.
Yet despite vehicles like these being purchased by some of Australia’s most at-risk drivers – teens buying their first car, and older drivers downsizing – the MG 3 and Baleno are the last two light cars not available with any form of advanced safety technology (including AEB) on any variant.
They’re not necessarily superb in a crash, either. Neither car wears an ANCAP safety rating, but both carry three-star ratings from sister safety body Euro NCAP – with the MG’s against far less strict 2014 criteria, when safety tech only accounted for five points compared to 13 today.
The lack of advanced safety technology and older crash structures of these cars are among the reasons why they’re so cheap to buy – which, in turn, is largely why they’re so popular.
You might ask the question, then: do buyers of budget new cars really care about crash safety? The answer to that is… More complex than it seems.
Five years ago, the Suzuki Baleno was still a minnow in the budget-priced light car sales race, and the MG 3 was only a few months into its time on sale – albeit six years after launching in China.
Instead, the segment sales champions were the Hyundai Accent with 22 per cent market share, followed by the Mazda 2 with 15 per cent, Toyota Yaris with 14 per cent, and in a distant fourth, the Honda Jazz on nine per cent.
Only one of those four cars – the Mazda 2 – offered autonomous emergency braking as standard (albeit thanks to an update in 2017), while the Toyota Yaris could be had with it as an option on base variants, or standard on the most expensive grade.
Over the past five years, however, a lot has changed. Five of the 15 budget light cars on sale in 2017 have been axed – including the Hyundai Accent and Honda Jazz – while the Ford Fiesta, previously available in a number of sub-$20,000 budget variants, is now offered as a $35,000-plus drive-away hot hatch only.
What about the Mazda 2 and Toyota Yaris? The Mazda was hit with a $5400 increase to its base price as part of a facelift in 2020, in order to offset a host of newly standard advanced safety technologies including lane-keep assist and blind-spot monitoring.
As for the Toyota Yaris… Its base price rose by up to $9000 drive-away with the arrival of an all-new model in 2020 (the first in a decade), due to a new platform, larger and stronger body, new engine and interior, front-centre airbags and, crucially, the fitment of AEB, lane-keep assist, rear cross-traffic alert and adaptive cruise control on all models.
Executives from both brands argued at the time that the city car market “understands” that “technology and price go together”, and that more technology and safety is in line with customer preferences.
But sales figures tell a different story. Toyota Yaris sales are down 67 per cent over the first five months of 2022 compared to the same period in 2019, while Mazda 2 sales are down 52 per cent.
Admittedly, the entire light car ‘under $25,000’ segment is down 30 per cent over the same period – and for the extra money they’re spending, buyers are getting a significantly higher level of safety and comfort technology, which may in fact save their life in a crash.
The market is also currently suffering from well-publicised supply issues, which have made the process of sourcing parts for, building, and shipping a car more expensive.
But over the same period (2022 vs 2019), MG 3 sales are up 627 per cent (albeit aided by strong supply), and the Suzuki Baleno is up 695 per cent. As one challenger departs, another enters.
I should clarify: even if it means higher prices, I’m in favour of packing safety technology (and a body that’s safe in a crash) into cheap cars. Automatic climate control and leather seats look better in a showroom, sure, but it’s AEB, blind-spot monitoring and centre airbags that will keep you and your car on the road.
It’s also worth noting safety isn’t the only factor pushing up city car prices, as manufacturers across all segments are bundling more features as standard: more speakers, better headlights, larger screens, wireless connectivity, and more.
But whether you see it for better or worse – significant safety improvements, at a higher price – advanced safety technology is playing a role in the death of the cheap city car as we know it.
The MG 3 and Suzuki Baleno might be carrying the city-car team for now, but not for long.
AEB will become mandatory for all new cars from March 2025, by which point these cars will be 14 and nine years old respectively – likely too late in their life cycles to have the tech retrofitted. Whether next-gen models will follow is no certainty, let alone at similar price points.
It’s not just safety – and a push by manufacturers to bundle in more technology across all models – spelling the end of affordable, $20,000 new cars.
COVID-induced price rises are playing their own role. See the cheapest Kia Rio automatic, which has risen $3000 drive-away in 18 months with no additional features – while base Suzuki Swift pricing is up $5500 in a similar time, albeit with more kit as standard, but still no AEB on the base model.
The Volkswagen Polo now costs close to $30,000 drive-away for the cheapest manual model, up about $6000 – though in its defence, VW Australia says most buyers never bought the base model anyway.
Fortunately, buyers of one-size-up ‘small cars’ seem to be happy with paying a bit extra for more active safety technology.
The Kia Cerato is one of the final small cars to offer key safety technology as an optional extra, in a $1500 Safety Pack – but thankfully, 75 per cent of private buyers of the base S model (the volume seller in the range) ticked that box, or 66 per cent of business and fleet customers.
However, it is worth noting you could’ve had a new automatic Cerato S hatch for $21,490 drive-away three-and-a-half years ago – much more affordable than the $27,490 base price today (albeit, again, with more standard features).
In the end, no matter how you look at it, the era of the $20,000 new car is nearly over. Whether it’s killed by safety technology, COVID-19, rising inflation, electrification or any other factor… Enjoy your Kia Picantos and MG 3s while they last.
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