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Where have all the cheap cars gone? With MG3 pricing jumping by more than $5000 the Kia Picanto and Suzuki Ignis are now Australia's cheapest new cars | Analysis

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2024 MG3 Excite (Image: John Law)
2024 MG3 Excite (Image: John Law)

A short 15 years ago, the Hyundai Getz was available for as little as $12,990 drive-away, but the cheap end of the new-car market has nearly evaporated today. 

Two of Australia’s most affordable vehicles, the MG3 and Kia Picanto, have been updated in recent months pushing prices north of $20,000 drive-away, leaving not a single new car under $20,000 after on-road costs.

You don't even have to go very far back to see much lower prices – in 2020 the Kia Picanto listed at $14,390 before on-road costs.

Inflation is partly to blame but not wholly – the Getz’s ‘drive-away, no more to pay’ price would equate to $18,700 in today’s money according to the RBA.

There are also safety requirements and expectation of better cars from punters.

Justifying the MG3's increased price, Akshat Ahuja, Senior Product & Strategy Manager, told CarsGuide: “If you compare the outgoing entry MG3 Core with the new MG3 Excite, there is about $7000 worth of equipment added in the car.

2020 MG3 Excite (Image: Matt Campbell)
2020 MG3 Excite (Image: Matt Campbell)

"Yes, the price naturally would go up, but if we look at the value that has been added it is definitely more than the price,” he said.

MG also has previous-gen MG3s in stock to satiate low-end demand for the 13-year-old city hatch until December; these are being sold from $18,990 drive-away. 

After that, it will be the fresh MG3 with optional $4000 hybrid that starts at $23,990 before on-road costs, or about $25,500 on the road. 

2020 MG3 Excite (Image: Matt Campbell)
2020 MG3 Excite (Image: Matt Campbell)

The Kia Picanto will then become Australia’s most affordable new car from as little as $20,690 drive-away for the Sport manual, and $1000 more for the four-speed automatic.

Kia’s little city car features key safety technology including autonomous emergency braking (AEB) as well, making it a more attractive option than the ageing MG3.

Then it’s Suzuki which, despite axing the Baleno and increasing Swift prices, still offers the cute little Ignis GL light SUV from $22,490 drive-away with a CVT. Unfortunately, the Ignis does not feature AEB on any trim. 

2022 MG ZS (Image: Matt Campbell)
2022 MG ZS (Image: Matt Campbell)

Suzuki Australia axed the Baleno hatch locally with no replacement on the way. 

After those two, MG offers arguably the value king of the cheap new cars with the ZS small SUV from $22,990 drive-away. It gets remarkable luxuries such as a six-speaker Yamaha sound system and leather-appointed steering wheel.

The ZS is also significantly larger than other vehicles in this price bracket, measuring 4314mm long and boasting a generous 359L boot

2024 Kia Picanto GT-Line (Image: Tom White)
2024 Kia Picanto GT-Line (Image: Tom White)

It has technically been superseded by the newer ZST, but MG has maintained the regular ZS as a price leader and it shows in the way it drives with its small naturally aspirated 1.5-litre four-cylinder developing just 84kW and 150Nm.

The new Suzuki Swift – which is really a very deep facelift – now starts at $24,490 drive-away for an efficient mild-hybrid version. Contributor Byron’s review promises the iconic nameplate remains a peachy car to drive with willing engine and impressive economy. 

Rather hurting its value proposition is the CVT adding $2500 to the price – in our book that’s enough of an incentive to go and learn to drive a manual if you like the rest of the Swift package. 

2022 Suzuki Ignis GLX 4wd (Image: Justin Hilliard)
2022 Suzuki Ignis GLX 4wd (Image: Justin Hilliard)

The rest of the regular players such as the Mazda 2, Volkswagen Polo and Toyota Yaris are all dearer than the above without a truly affordable entry point. 

For a similar price to an entry-level Mazda 2 you’ll get a Mitsubishi ASX  – now $26,240 DA – with a 2.0-litre engine and much more interior space. 

Hyundai no longer sells an i20 or Accent, Kia has discontinued the Rio, the Holden Barina has long-since met its demise – as have the Mitsubishi Mirage and Nissan Micra – while Honda has ended Jazz sales in Australia.

2024 Suzuki Swift
2024 Suzuki Swift

Sales numbers for Light and Micro passenger cars have fallen off significantly over the last decade. In 2013 Australians bought 130,757 of the typically most affordable Light market segment led by the Mazda 2 followed by the Toyota Yaris and Hyundai i20.

Last year, the Micro and Light segments combined accounted for 47,100 sales with only the MG3 hitting the 15K/year figure enjoyed by the class best a decade before – Yaris sales were down to less than half and Mazda sold a third as many 2s.

Offsetting this decline has been the growth in the more expensive Light and Small SUV segments from a miserly 74,809 units in 2013 to 227,172 last year. 

Manufacturers generally cite the loss of this end of the market due to low demand. In the case of Volkswagen and Toyota, certified pre-owned vehicles have supposedly taken the place of sub-$20K brand new vehicles.

2024 Suzuki Swift
2024 Suzuki Swift

The margins made on affordable city cars are typically very thin and, with stricter requirements now than ever before to obtain five-star ANCAP safety ratings, a lot of brands have pulled out of these segments.

Even new(ish) Chinese brands like MG, GWM Haval and Chery are punching up with semi-luxury intention in their vehicles, trading on value over ultimate low prices. 

Cheaper, more flexible and readily available finance options have undoubtedly a played a part in pushing market prices up, too.

Regardless if you see this as a carrot or stick-motivated phenomenon, it’s clear that the entry level of the market is drying up with fewer carmakers looking to do business at the entry point.

John Law
Deputy News Editor
Born in Sydney’s Inner West, John wasn’t treated to the usual suite of Aussie-built family cars growing up, with his parents choosing quirky (often chevroned) French motors that shaped his love of cars. The call of motoring journalism was too strong to deny and in 2019 John kickstarted his career at Chasing Cars. A move to WhichCar and Wheels magazine exposed him to a different side of the industry and the glossy pages of physical magazines. John is back on the digital side of things at CarsGuide, where he’s taken up a role as Deputy News Editor spinning yarns about the latest happenings in the automotive industry. When he isn’t working, John can be found tooling around in either his 2002 Renault Clio Sport 172 or 1983 Alfasud Gold Cloverleaf.  
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