DETROIT – Just a few years ago the subcompact car in America was a tiny, cheap econobox with a noisy engine and no frills that few people wanted to buy.
But as gasoline prices settle in around $3 per gallon, the market for tiny cars is rapidly growing and changing as the cars’ styling, interiors and features continue to improve.
“I don’t think there’s a segment that’s come to life quite so quickly and robustly,” said Jim Sanfilippo, senior industry analyst for Bloomfield Hills-based Automotive Marketing Consultants Inc.
Analysts say eight tiny cars are on the market from seven manufacturers but that number is likely to grow as demand increases.
Sales of the diminutive vehicles, called “B-Cars” in the industry, are up 43 percent in the first seven months of the year compared with the same period last year. So far this year, automakers have sold 151,848 of the cars, and analysts say sales easily will surpass the 175,387 sold in 2005.
The increase has drawn interest from all the auto companies. Executives at Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group hinted last week that they’ve got new subcompacts in the works. Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co. entered the market this year with great success.
Demand for the Honda Fit and Toyota Yaris is so high that dealers sell the cars at or above sticker price before they arrive at the showrooms.
General Motors Corp.’s Chevrolet has been in the market since 2003 with the Aveo, a tiny car built in South Korea by the company’s GM Daewoo affiliate. The Aveo is the largest-selling subcompact in the U.S., and the company is banking on increased sales when it unveils a redesigned four-door version today.
Honda also has been having trouble meeting demand for the four-seat Fit. At Howard Cooper Honda in Ann Arbor, Mich., graduate student Joshua Bornfield, 26, was disappointed to find none of the cars on the lot.
He is looking to buy his first new car, and he says he prefers a subcompact because of price and gas mileage.
“If I were able to afford a more expensive car, I don’t know that I would pick anything bigger at this point,” he said. “I’m looking for fuel economy.”
Gasoline prices indeed are driving the increased interest, but the cars are selling because they’re much better than the old econoboxes, said Dan Gorrell, a partner in Strategic Vision, a San Diego-based market research firm and consultant to automakers.
“The B-cars of today are far better, more functional, more styled than those of the past,” Gorrell said.
A few years ago, the Toyota Echo flopped largely because it looked and felt cheap, Gorrell said. The rounded Yaris is much nicer inside and out, he said.
“The options and equipment rival luxury cars of 10 years ago,” said Jesse Toprak, chief economist for Edmunds.com, an automotive Web site. “They’re not your mother’s subcompact any longer.”
Chevrolet has realized this with its 2007 Aveo, which is made of better materials than its predecessor, said GM spokesman Jim Burke. When the car is unveiled today, it will have options such as remote keyless entry, heated outside mirrors and steering wheel audio controls.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
