Are Small Cars Too Expensive?

by Benjamin Jones on September 30, 2008

Currently in the US market there are a few types of people looking for small, fuel efficient cars. Traditionally, those people have been the types to wait in long lines for Smart ForTwo tests drives and Prius ownership: the treehuggers (of which I am a part, so I say it with love). With gas prices skyrocketing and the threat of global recession looming on everyone’s mind a new buyer has sprung up: the frugal new car buyer.

As gas gets more and more expensive, fuel efficiency will become more important to the cost of total ownership. These days, it’s not hard to make the case for buying a Civic Hybrid in terms of payback and fuel costs, especially with gas prices expected to rise in the next few years. However, not everyone wants a Prius, needs a Prius, or can afford the upfront cost expecting to be paid back in several years.

This leaves a large segment of people who wish to save money on both gas and the initial cost of the vehicle. Traditionally, these people have bought things like the Civic and Corolla, but with those cars getting bigger and more expensive over the years, people have been looking for other options. Currently, there aren’t many besides the Honda Fit and Toyota Yaris. They’re definitely both good cars, but consumers are still want for more variety and selection.

That’s why I was so surprised when I read this today:

“The Mazda2 is a very good product, and we’ve received very strong requests from dealers. But it is still under study,” said Mazda president Hisakazu Imaki in a report about the possibility of the small car’s North American debut.

“One of the biggest factors (for why) the decision hasn’t been made is that the Mazda3 is still enjoying strong sales,” Imaki said.

This is the story we hear from automakers time and time again. They’re selling cheaper, more fuel efficient cars in other markets, but because of the lower profit margins aren’t selling them in the US. Especially since that would take some of that frugal, efficiency-minded market away from the small cars currently for sale.

But what’s the solution? Well, like other countries have done, we could institute tougher fuel economy regulations. The automakers sure whined about the new CAFE regulations the last time around, but if they’re not in a rush to bring more fuel efficient cars to market in the US, the regulations obviously aren’t that strict. While more regulation might seem onerous, I posit that the burden will be primarily in marketing existing vehicles in North America, and not in a complete technical revolution of any sort.

If you liked this post, sign up for out RSS Feed for automatic updates.

Popularity: 4% [?]


1 Unforgiven October 1, 2008 at 6:27 pm

Yes, small cars are too expensive. Many foreign cars are too expensive as well. Resale value for many small foreign cars is ridiculous in my opinion. Then again, when our American built vehicles cannot stay running as long, or look as good 5 years down the road… well, guess we do pay for what we buy.

2 Alex October 5, 2008 at 12:35 pm

Smart ForTwo requires super unleaded. WTF

Comments on this entry are closed.