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3:45 pm
Tue October 15, 2013

The 'econobox' is dead. Long live the nice small car.

In recent years, U.S. automakers have introduced a slew of appealing new compact, sub-compact and mini cars.  The trend threatens to make the "econobox" an endangered species.

Econobox is the disparaging term used by many auto analysts and reviewers, including Michelle Krebs of Edmunds.com, to describe a cheaply made, no-frills small car.

Krebs says U.S. domestic car companies were caught flat-footed, with no small cars to offer during the oil crisis of the 1970s.  That left them unable to compete with Toyota and Honda's fuel-efficient and reliable small cars.

"When they (American companies) did start making them, they weren't very good,' says Krebs.  "They had crank windows, they didn't have amenities.  It was as if they said, "okay, we gotta make one, here it is."

But there's been a sea change in the world of the small car, driven by several factors.  The rising price of gasoline is one of the biggest.  Many people now have fuel-efficiency at the top of their "must have" list.

In addition, strict new U.S. fuel economy standards loom for 2017-2025.   Globally, governments are tightening their emissions regulations.

"So they have to build small cars," says Krebs. "Well, why not build great small cars?"

Hyundai's Elantra was among the first to prove that a small car could be stylish, as well as fuel efficient.  Ford's new Focus compact and Fiesta sub-compact also emphasize style as a reason to buy.

Krebs says car companies have to make small cars more appealing to the next generation.  Young people often prefer small cars because they're ideal for life in the city.  But, "they don't want to give up amenities," says Krebs, "especially infotainment systems."

A sophisticated infotainment system is the price of entry now for the small car. 

Some companies are going even further.  Ford has a Titanium version of the Fiesta that offers heated seats, a rear-view camera, and leather upholstery.  Those are features more commonly found on pricier, larger vehicles, or luxury cars.

Another reason smaller cars are nicer is they're cheaper to make now, thanks to global platforms.

"If you look at Ford," says Krebs, "It used to be the Focus you bought in Europe - which was a fabulous car - was not the Focus you got in the United States.  Now, global architectures are bringing costs down, so it's the same car around the globe.  They can afford to put more stuff on them."

Car companies also need to make the options available for small cars as irresistable as possible to protect their profitability.  Since small cars are usually less profitable than larger vehicles, convincing the consumer to buy that higher trim level means a juicier sales price.