Smart Fortwo and Other Popular Small Cars

It doesn’t take a genius to see the correlation between gas prices and car size. As the former rises, less of the latter becomes more attractive. We saw it in the Seventies and Eighties during the fuel shortages, and with large SUV sales currently tanking, we’re seeing it today.

The small car is having something of a renaissance in the U.S. with a smattering of affordable, efficient models now available from some of the major players. But the biggest news concerns the smallest of them all – the entry of the smart brand in the U.S. market. The tiny two-door smart fortwo model has become increasingly popular in 36 countries around the world since its launch in 1998...just not here.

The smart brand has been a bit of a tease in the U.S., with DaimlerChrysler’s initial plans to bring the brand to this country vaporizing just a few years ago. Just this summer, however, DaimlerChrysler confirmed that the smart fortwo would go on sale here starting in 2008. A strategic change is that the automaker is foregoing its early decision to bring in a new smart SUV called the foremore as a first model, and instead is going with the next generation of the diminutive smart fortwo. It’s a safe bet that rising gas prices played into this decision. A dealer network for the smart car is currently being set up with Roger Penske’s UnitedAuto Group.

Other small cars are at play, with the latest crop represented by the new entry-level Toyota Yaris, Nissan Versa, and Honda Fit. These new models will compete directly with subcompacts from Korean automakers that had been enjoying pretty much a monopoly in the inexpensive subcompact niche. Hyundai’s Accent and Kia’s Rio are two such examples, along with the Chevrolet Aveo built by General Motors’ South Korean subsidiary GM Daewoo. Suzuki’s take on the affordable small car includes its Aerio, while Toyota’s Scion division offers subcompact five-door models in two distinct styles: the jellybean-shaped xA and breadvan-like xB.

None of these cars exist because of today’s high gas prices – automotive development cycles aren’t that responsive – but gas prices do affect buying decisions. If consumers embrace this new flock of small cars, car companies may be emboldened to offer future small cars to American buyers right from the get-go rather than restricting them to foreign markets a la the smart.

And finally, an interesting thought: Small cars lend themselves to experimentation with advanced and efficient powerplants because of their light weight and typically urban-specific use. Such exploration is currently taking place with up to 200 electric examples of the smart fortwo being tested in England. Could it happen here? You bet...it’s only a matter of time.