Paul A. Eisenstein: Will New Small Cars, Like Fiesta and Mazda2, Find a Market?

Paul A. Eisenstein

This month’s Los Angeles Motor Show brought the launch of an assortment of small cars, including Ford’s new Fiesta and Mazda’s subcompact Mazda2. Even more downsized offerings will make their debut in January at Detroit’s North American International Auto Show.

Borrowing a maxim from the film “Field of Dreams,” manufacturers are betting that if they build ’em, customers will come, especially in an era of costly fuel and new government mileage standards.

But not everyone agrees.

“People want technology to solve the problem of fuel economy,” cautions Stephanie Brinley, an automotive analyst with AutoPacific Inc. “Americans just aren’t in love with small cars. They’re seen as econoboxes and not as safe as larger vehicles.”

How to reverse that mindset? Certainly, higher fuel prices would work. In early 2008, minicars and subcompacts made up just 10 percent of the American new car market, according to industry data. By July, when fuel prices peaked at $4 a gallon, that share soared to 17 percent. Since then, however, as fuel prices have slipped back to current levels, the smallest products available in the United States aren’t commanding much more volume than they did two years ago.

That doesn’t mean Americans aren’t downsizing. Many buyers are trading in full-sized, truck-based SUVs for compact, car-based crossovers. And on the passenger car side of the ledger, Ford President Mark Fields notes that when you factor in compact models, as well as smaller vehicles, sales have jumped from 14 percent of the market to 22 percent in just a couple of years.

The Detroit maker is optimistic that even subcompacts and smaller models will catch on. But they won’t be the stripped-down econoboxes of decades past. Take the new Ford Fiesta, the American version of what has become the top-selling nameplate in Europe.

Decades ago, Ford designed one car for Europe and another for the United States -- possibly even a third for other world markets. That not only drove up product development costs but the price of buying parts for different models. With Fiesta, the U.S. version shares 60 percent of the parts of the European model, and that means massive savings that the automaker claims it is passing to consumers in the form of better content, improved performance, a classier design and a more comfortable ride.

There are signs that suggest Americans will buy the right small car, even if it means paying more than in the past. The British-made Mini has been one of the big hits of recent years, despite its premium price tag.

Most experts anticipate fuel prices will go up in the coming years, and that should have more buyers looking to downsize. If the industry can also deliver more appealing products in the compact and subcompact segment, small cars could become a big part of the market.

Paul A. Eisenstein is an award-winning journalist who has spent more than 30 years covering the global auto industry. His work appears in a wide range of publications worldwide, and he is a frequent broadcast commentator on subjects automotive.