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When the world fell in love with SUVs, we also did automakers a favor. See, larger vehicles actually bring higher profit margins while smaller cars usually have razor-thin profit margins, if they even profit at all. Even with such a small profit margin, compact cars are somewhat of a necessity as they provide an entry point to a brand’s lineup and quite often lead to consumers purchasing larger cars with a higher profit margin in the future. This shift to stricter emissions regulations and electrification, however, is making it harder to justify having subcompact models, because they are becoming more expensive to produce yet must maintain their attractive entry-level price point. BMW is the latest automaker to recognize this and is currently weighing its options and reconsidering the future of its front-drive compact vehicles.
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