Drivers Try Downsizing
A new wave of small-car models could soften the sting of $3-a-gallon gas
Right now, automakers sell about 200,000 small cars in the United States, barely 1 percent of the roughly 17 million new cars purchased each year. But expensive gas, changing tastes, and trendy new offerings like the Yaris and Versa will probably drive that up. "There's definitely some growth ahead for this segment," says Jeff Schuster of J.D. Power & Associates. "Younger buyers want affordable vehicles that aren't completely gutted and have some style and uniqueness."
If the automakers seem prescient--bringing compelling, economical cars to market just as gas prices are starting to make drivers squirm--well, they're not quite that good. The domestic automakers still have their big money riding on a new stable of SUVs, like the Chevy Tahoe, the Explorer, and the Jeep Grand Cherokee. And the Japanese are beneficiaries of lucky timing as well as good planning. Toyota's Yaris has been slated to replace the underwhelming Echo since gas prices were half what they are now and SUVs were still king of the road. Most of the other small cars have long been in the pipeline, too.
What's new, however, is a more seamless globalization of the auto industry, which makes it easier for manufacturers to quickly adapt vehicles from one market to another. The Yaris, Fit, and Versa are virtually identical to models sold in Europe and Asia. Retrofitting those cars to meet U.S. safety and environmental standards requires relatively few modifications. In the past, efforts to build such "world cars" have stumbled for various reasons. For one thing, Americans have long shunned the itty-bitty vehicles that have been popular in Europe, Asia, and Latin America, where gas is far more expensive and streets narrower. But that is clearly beginning to change. Even though the Yaris has a meager 106-horsepower engine--puny by U.S. standards--Toyota has sold nearly 8,000 since it went on sale in mid-March.
Automakers have also gotten better at using their far-flung resources to figure out commonalities in global tastes and identify what types of cars are likely to sell in multiple markets. The new Chevy Aveo coming out this summer was designed in Detroit and at GM's Daewoo subsidiary in South Korea. It will be built in Korea and exported to America, as well as to Europe, a curious counterpoint to Chevy's all-American image. "This will be happening more," says Brent Dewar, head of sales, service, and parts for GM's North American operations. As long as the cars are cool and the gas gauge falls gently, consumers probably won't complain.
More on cars is parked at www.usnews.com/autos
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