Popularity of subcompacts is on the rise


Published: Saturday, January 6, 2007 at 6:01 a.m.
Last Modified: Saturday, January 6, 2007 at 12:00 a.m.

DETROIT — Tiny and affordable, subcompact vehicles have come a long way from their "econobox" past.

The small, entry-level vehicles used to offer few frills and raised concerns over safety. But a combination of factors — elevated gas prices, a focus on slick designs and technology marketed to young drivers — have helped give the "B-cars" more visibility in the crowded auto marketplace.

Japanese automakers brought three new models to showrooms last year, the Toyota Yaris, Honda Fit and Nissan Versa, driving interest in the segment. The newcomers joined the Chevrolet Aveo, which General Motors Corp. builds through its relationship with South Korea-based Daewoo, Kia Motors America's Spectra and Rio models and the Hyundai Accent.

Car enthusiasts are not expected to see any major splashes in the segment at this month's North American International Auto Show, which begins media previews on Sunday. Two niche small vehicles will be shown — BMW AG will raise the curtain on the new 2007 Mini Cooper while DaimlerChrysler AG is showing its two-seater Smart fortwo, which is expected to appeal to congestion-pressed city drivers.

But the segment is expected to grow. Sales of seven vehicles in the category were up nearly 50 percent in 2006, to more than 290,000 units, according to figures released by Autodata Inc. It represents only a small slice of the U.S. car market, but analysts said the new models and $3 a gallon gas prices last summer created some buzz.

"There was so much activity in those segments in the last few years — almost everything is new," said Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company.

Subcompacts have made strides in recent years, following a less-than-stellar launch of the Toyota Echo a few years ago. The new models range in price from about $10,000 to $16,000 and come with designs that make the vehicle feel roomier and have safety improvements.

The vehicles typically present safety challenges when struck by larger vehicles. But many of the new subcompacts offer standard side air bags and several have received solid ratings in crash tests by the government and the insurance industry.

"What's fascinating is that while the vehicles are smaller, they're so much better, so much safer," said Jim Sanfilippo, a senior industry analyst for the Bloomfield Hills, Mich.-based Automotive Marketing Consultants Inc.

What they lack in size, the vehicles overcome in technology, perks craved by young drivers. Several provide jacks for iPods and other MP3 players and powerful stereo systems. The Versa, for example, offers the Bluetooth hands-free phone system while the Aveo has options such as heated outside mirrors and controls for the stereo system on the wheel.

The strong showing could lead to increased subcompact production. Honda Motor Co. sold about 28,000 versions of the Fit amid high demand. Honda has not released any production volumes for 2007 but spokesman Chris Martin noted the company generally starts conservatively with any new product.

"It's proven itself in this market — it's been received very well," Martin said.

Other automakers have expressed interest.

DaimlerChrysler AG's Chrysler Group recently agreed in principle with China-based Chery Automobile Co. to build a subcompact vehicle some time after 2007. Chrysler Chief Executive Tom LaSorda told reporters last week that it would help them act quickly to bring a new product to vehicle showrooms.

At last year's Geneva Auto Show, the automaker displayed the Dodge Hornet concept, a stylish B-car designed to attract young buyers. Chrysler has not announced any production plans.

Ford Motor Co. has shown interest in developing a B-car for North America while Mazda Motor Corp. offers a Mazda2 subcompact in Europe — called the Demio in Japan — leading some analysts to predict that the automaker will soon offer one in the U.S.

A Mazda spokeswoman said the company was studying a subcompact version but had no plans to introduce one in North America.

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