Micro Machines – Tiny Cars in the US?

In 2001, the Mini Cooper really brought the small car to America.  BMW, the current owner of the Mini brand, showed that Americans were willing to pay for a premium small car.  The Mini gets good gas mileage, has “go kart” handling, plenty of creature comforts, and sells for thousands more than its same-size siblings.

Since then, every competitor to the Mini has failed.  While sales might be good for a particular car, they just can’t seem to outsell the Mini. Since 2006, Nissan has been selling the Versa and Toyota has the Yaris.  The difference is, the basic Versa and Yaris are both available for around $10,000, well under what the Mini is going for.  Not too surprisingly, they’re also missing a lot of the creature comforts of more expensive cars.

A car that falls in between the Yaris/Versa and Mini is the Smart ForTwo, a car that is shorter in length than both the Versa and Yaris and yet sells for more money.  Sold by parent company Mercedes-Benz since 2007, the Smart ForTwo has two seats, but is available in a few trim models, including a convertible for under $18,000.  It’s biggest claim to fame is its length, which allows it to park in a parallel parking spot perpendicular to the road, and not stick out much.

Enter the gas price crisis of 2008, when gas hit $4.00 per gallon in a lot of places in the United States.  Buyers flocked to smaller cars, and the subcompact car was once again live and well in America.  All of a sudden, cars which nobody would’ve payed attention to in 2007 were hot sellers!  Anything that got 30+ MPG was in short supply.  eBay was full of auctions for used hybrids, Geo Metros, and the like.

Since the Mini’s success began, different manufacturers have been trying to one-up the Mini, offering their funkiest designs in cars such as the Scion xB, Scion xD and Nissan Cube.  While they seem to sell at a decent pace, they aren’t taking the market by storm as their price and advertising should suggest.  While the intended demographic is the young 20-something who wants a lot for his or her money, automakers are finding that more and more empty-nesters are buying up the cars.

If a more mature generation likes the smaller cars, and the data shows that they have a higher median income than the intended demographic, how well should premium small cars sell in America?  Also, why are the buyers with more money not spending it on the Mini?  The easier question to answer is the latter, and the simple answer is that the Mini has a stiff ride coupled with great handling.  While this works for many people, the buyers of the Nissan Cube aren’t looking to take their car to a race track.  That could explain why sales of the Mini Clubman, an extended-wheelbase version of the Mini Cooper, doesn’t sell as well as hoped.  For example, the Mini has a comparable amount of storage space to the Nissan Cube, so the big difference is the ride.

All of the manufacturers who sell cars in the United States have been pouring over the sales data for the last several years, trying to figure out what will sell here, especially with the current economic recession.  Most of those same manufacturers are readying cars to come to our shores in the next 12-18 months, and I’d like to give you a breakdown of what I see coming our way.

Chrysler is now under the control of Fiat, who is known for building small cars.  Current plans call for the Alfa Romeo MiTo to come to our country first, but I predict that the Fiat 500 should hit our shores before June, 2011, if not far sooner.  Fiat is reportedly fast-tracking their small cars for North America, to be incorporated into Chrysler dealerships.  Click here to read more about Chrysler/Fiat.

Ford has already unleashed a few of its Fiesta cars on US streets.  It’s had a marketing campaign going for almost a year now called “Fiesta Movement”, and is expected to bring the Fiesta to our shores in the Spring of 2010 as a 2011 model.  This new Fiesta isn’t the same one sold in Ford dealerships across the US from the 1980’s into the 1990’s.  It’s a much improved, much better car, sporting a wide range of available options, engines and styles.  Expect to see sedan and hatchback models, possibly with an optional EcoBoost engine, which couples high technology with smaller engine sizes to give drivers plenty of performance without paying a penalty at the pump.  Click the link to see our report on the 2011 Fiesta.

GM is rumored to be developing an American version of its Brazilian hatchback to battle Ford’s Fiesta in 2010.  Not a whole lot is known, but expect it to carry GM’s current styling cues, and closely resemble the Fiesta in size and overall shape.  Reports have also shown that GM will keep the Chevrolet Aveo in the states, so most of their strategy hasn’t been revealed yet.

Lexus has a concept car they are showing off, called the LF-Ch.  It’s a small car, but not quite as compact as the Fiesta or Mazda2.  It’s size is closer to the Audi A3 and BMW 1-series.

Lincoln revealed its version of the compact car this year at the Frankfurt auto show, the C Concept.  A small car by any measure, it’s impossibly tiny for a Lincoln, but still sports Lincoln-esque dimensions.  Specifically, it’s wider than most compact cars, giving the illusion of a bigger car.  Based on the Ford Focus, the C Concept isn’t as small as the Yaris, Versa or Fiesta, but would definitely provide Ford with a compact luxury platform, if it gets built.

Mazda shares a lot with Ford, including the platform that the Ford Fiesta and Mazda Mazda2 are built upon.  By changing out some of the suspension and engine parts, as well as completely different interiors and exteriors, the Mazda2 should provide more “zoom-zoom” that Mazda is famous for.  The Mazda2 should offer comparable features and options to the Fiesta, but in a more enthusiast-friendly package.

Conclusions:

Given all of the above information, what do I think is going to happen?  I think that 2010 is going to be a very exciting year for buyers of small cars.  The decent selection is going to explode, offering more luxury-oriented cars.  The Lexus will be a bellweather for the “compact luxury” segment, while the Ford should take the top sales spot, especially given Ford’s recent win with the Fusion as Motor Trend‘s Car of the Year for 2010.  Enthusiasts looking for a small car will flock to the Mazda2 or a Fiesta RS, if it’s brought over from Europe.  If Lincoln builds it, the C Concept would probably end up a bit player in this arena, but would be popular with city-dwellers who want something to soak up the potholes and still fit into tight parking situations.  The Fiat/Chrysler/Alfa MiTo is a wildcard; it could end up a big seller in Chrysler dealerships, or it could end up not selling at all.

by John Suit

Photo Sources: AutoBlog, Automobile Magazine, Inside Line, Jalopnik, Left Lane News, The Truth About Cars (TTAC)