The ratio of sprung to unsprung weight determines the amount of spring rate and stiffness of the shock absorbers that are necessary to arrest the inertia of the components of the wheels and suspension that are "fired" at the vehicle by bumps and potholes. If you reduce the mass of the unsprung weight by 50 % then it takes a lot less spring force and shock dampening to stop that mass from bottoming out the suspensions travel. Drive a pickup with a solid rear axle down a washboard road, the do the same in a Mercedes to understand the difference.
In the example of the Prius getting better mileage with the proper low rolling resistance tires, most of the difference was the tires as well as the rim width and agressive tire design. My brothers Prius increased it average MPG by close to 5 by going from cheap 15inch tires to Ecopia 422s with no change in rims.
regards
Mech
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