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  • Detroit says small cars are the future

    Nov 19
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    The business case against small cars is strong. Simplified, it goes like this: Americans don't want them, won't pay the dramatically higher prices required for them to be profitable — and don't need them because gas still is cheap.And, all else equal, the laws of physics still mean small cars are less safe than big cars in crashes.

    None of that matters for carmakers now, though. Federal rules say that the industry's products must average 35.5 miles per gallon in 2016, and proposed regs could boost that to 62 mpg by 2025. That all but mandates shrinking cars.

    Thus, the small-car parade begins. A get-small theme was widely evident this week at the North American International Auto Show here, at the Los Angeles auto show last November and in the array of trim-size newbies arriving in America's dealer showrooms. Automakers are sinking billions of dollars into cranking up small-car production and can only hope that buyers will come.

    Not everyone thinks they will.

    "I'm a little concerned that nobody's talking about the consumer, what the buyer wants," says Rebecca Lindland, ranking industry expert at IHS Global Automotive, a consultant. She says her research tells her: "We like our big cars, and we are going to keep buying them as long as gas is relatively cheap. ...We're not going to look like Europe anytime soon."

    Even small-car specialist Fiat Auto doesn't have high expectations for the U.S. as a small-car market.

    "I don't see a big market (in small cars). I see a market. There is a big difference," says Sergio Marchionne, CEO of Fiat Auto and Chrysler Group. "We never set out to conquer the U.S. market with A and B cars."

    Those are the industry designations for the two vehicle categories smaller than the common compacts such as Honda Civic and Ford Focus, which are so-called C-segment cars. Mainstream U.S. family sedans typically are C or even larger D-segment cars, such as the Ford Taurus.

    Marchionne's comments are startling, coming from the chief of the Italian automaker given control by the U.S. government of then-broke Chrysler in 2009 in return for bringing it small-car expertise. Conventional wisdom said at the time that one of Chrysler's biggest troubles was a lack of small cars.

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