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Small Cars Making a Big Splash in North America

Small Cars Making a Big Splash in North America

It’s been a while since the sub-compact car market has garnered such attention in
North America. Our friends in Europe have always known the virtues of small cars.
But here in North America, SUV’s have dominated parking lots at the local Pier 1 for
more than a decade. However as current gas prices inch forward and with future
prices looking uncertain (and by uncertain I mean they’re certainly going to be
higher than today) more people are buying small, fuel-efficient cars. We’ve seen a
lot of activity in the segment recently. Toyota has introduced the Yaris, Hyundai has
significantly revised the Accent, Kia has updated the Rio, Honda has just introduced
the Fit, and Nissan will introduce the Versa in May of this year. And let’s not forget
Scion with the xA and xB.

Having a car in the sub-compact market makes sense for a variety of reasons. First,
it introduces new, young buyers to the brand. If their experience is good they’ll stick
with the brand as they grow up and move to a larger vehicle. Toyota, Honda,
Hyundai, Kia, Nissan, Volkswagen, Mazda and others all got their start in the sub-
compact car market. Secondly, it provides a safety net during economic downturns.
If gas prices rise unexpectedly, the knee-jerk reaction is to get a small, more fuel-
efficient vehicle. And these cars are fuel-efficient. The new Honda Fit for example,
gets an estimated 33 miles per gallon in the city, 38 mpg on the highway.

But these are no one-show ponies. Beyond fuel efficiency they offer respectable
performance. The Toyota Yaris has 106 horsepower which may not sound like
much, but tipping the scales at only 2315 lbs, it has a power-to-weight ratio close
to that of the 220 horsepower Hummer H3. And these cars can carry just about
anything. With the rear seats up, the Honda Fit can swallow 21.3 cubic feet of gear.
A Ford Crown Victoria by comparison can hold 20.6 cubic feet worth of cargo in the

The domestics haven’t invested much in this class recently, if ever. The Chevrolet
Aveo is essentially a re-badged Daewoo and doesn’t offer the level of refinement as
the others. The Ford Focus is larger and more expensive, as is the new for ’06
Dodge Caliber. But with the uncertainty of gas prices and growing competition in
the segment, GM, Ford, and DaimlerChrysler would be wise to offer competitive
offering in this segment and introduce first time buyers to their respective brands.
For most manufacturers, having competitive sub-compact cars has grown the
business and created brand loyalty, something the folks in Detroit have been trying
to do for a while now.