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You forget that the companies making those cheap cars are often the same companies of the fancier cars. Thinking Hyundai and their Genesis line.
Hyundai will never make a Sonata look like a fancy super car because then they won’t have any reason for someone to want to pay more for the fancier models that their Genesis line has for 3x the cost.
The people buying the fancier cars want something exotic that no one else is driving on the roads. They will willingly pay the premium for that luxury to not look like the rest of the cars on the road. Many also don’t care what’s under the hood, i.e. doesn’t matter if a cheaper Chevy can beat their Maserati, they’re buying the car for the exotic looks.
And then you also have some people who don’t want something flashy even if it is cheap. When I lived in a not so great area, I specifically did not want anything that drew attention to me. For example, I didn’t even want to wear knock offs of high end clothing like a knock off of Gucci clothing because it makes people think I have money and am a target for being robbed. So yes, I want the generic 4 door sedan the broke college kids are driving. Maybe the local thief won’t be so likely to smash my windows or try to carjack me.