40-MPG Cars Are Better Than Ever; Too Bad They're Not Selling

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2010 Honda Fit Sport

2010 Honda Fit Sport

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Today's small cars are better than they've ever been, even if few of them are among the EPA's all-time gas mileage champs.

And spurred by tighter fuel-economy laws, 40 miles per gallon on the highway is becoming the new target for subcompact and even compact cars.

There's just one little problem: Not only are 40-mpg models not selling particularly well, the whole small-car segment is anemic at best.

As auto sales have started to recover, the fastest growing segment is midsize sport utilities and crossovers. According to sales data from Ward's Auto, small cars have been the only segment to decline in sales even as sales rose overall. (All data cover the 12 months from October 2009 through September 2010.)

2010 Toyota Yaris

2010 Toyota Yaris

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Declines of 25 percent...or more

In fact, sales of the much-praised 2010 Honda Fit fell a remarkable 26.6 percent, with the older 2010 Toyota Yaris declining more than 30 percent. Sales across the Scion brand, which offers only small cars, plummeted 30.7 percent, while Smart was down 63 percent and Suzuki lost essentially half its sales.

The 2011 Ford Fiesta, new this year, "isn't setting the sales world on fire," in the words of Cars.com. The optional trim level that rates the Fiesta at 40 mpg on the highway doesn't seem to have helped much.

Hybrid sales, too, fell 3.8 percent for 2010 model year offerings. The car that accounts for more than half of all hybrids sold here, the 2010 Toyota Prius, was in short supply just 18 months ago but is now easily available on dealer lots.

2011 Chevrolet Cruze Eco

2011 Chevrolet Cruze Eco

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Gas prices, of course

The culprit, of course, is essentially stable U.S. gasoline prices--which remain at levels far lower than those in much of the rest of the world.

It's a truism that new-car buyers generally opt for the largest, best-equipped vehicle they think at the time that they can afford. Not every buyer, but most of them. And that seems to apply equally in Europe and Asia too.

New entries regardless

Several new compact cars are entering the market, or about to. The 2011 Chevrolet Cruze is now in dealerships, the 2011 Hyundai Elantra will arrive shortly, and the eagerly awaited 2012 Ford Focus will land in a matter of months.

2012 Ford Focus ST

2012 Ford Focus ST

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Then there are the plug-in cars, albeit in small volumes: the 2011 Chevrolet Volt and 2011 Nissan Leaf. Despite high purchase prices, they're essentially sold out for the year. Their real test won't come until 2013, when much higher volumes are available and waiting lists will have been sated.

What will it take?

But it may take the next spike in gasoline prices before U.S. car buyers look again at small and subcompact cars.

In the summer of 2008, remember, when gas prices soared to $4 a gallon or more, buying behavior changed so abruptly that for several months, the mix of models sold would have--if continued--met the 2016 fuel economy standards a full seven years earlier.

But then gas prices ebbed, and gradually U.S. buyers returned to larger vehicles. Which poses a question: What would it take to raise sales of subcompact and 40-mpg vehicles?

Leave us your thoughts in the Comments section, below.

[Kicking Tires, Ward's Auto]

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Comments (40)
  1. The "40 mpg hwy" mantra does very little to make me want to plunk down my retirement allotment. When the industry decides to roll out 40mpg hwy AND 40mpg city... a combined 40mpg..that will get my attention. All it would take is a small elec motor (start/stop technology that is inexpensive and already here)to stop gas engines at stops/red lights and in traffic. Also, I have a perfectly good 2004 Honda Civic Hybrid that gets over 40mpg city and hwy and is (knock on wood)in great running shape. Simple, efficient, and paid for.

  2. I recently bought a mid-size sedan. I was looking at smaller vehicles but a few things were stopping me from getting one. 1-Safety. Life is more important than fuel economy. 2-Comfort and features. It is near impossible to find a small vehicle that would have features that I am looking for in a vehicle; automatic climate control, for example. 3-Performance. Most small vehicles are not fun to drive at all. When you have three passengers and you floor the gas pedal to merge into highway traffic, but the vehicle doesn't accelerate you stop caring about fuel economy. 4-Space. You wouldn't want to drive it on a long trip, or and your go grocery shopping for a family of four.
    It may work for a young family on a budget that doesn't have kids, but then priorities change...

  3. Gas tax is what it will take. If that does not happen, then the rise in price due to demand from developing countries like China and India. It's a shame people are so short sighted.

  4. What it apparently takes is someone that can read a chart. Like "Light-Duty Automotive Technology Co2 Emissions, and Fuel Economy Trends: 1975 through 2010." from the EPA, November 2010
    You say that hybrid sales are DOWN. Wrong they are UP, way UP. 2009 hybrid sales were 2.3% in 2010 hybrid sales are 4.3%. Not quite double, but close.
    You say that percent of SUV sales are up, well compared to 2009, OK, they are up a little. But they are well below the percentage of sales show in 2004-2008.
    And you may not drive, but for those of us that do, gasoline is once again above $3/gallon. Perhaps that might be a factor.
    And perhaps it is worth mention in such an article that the CAFE standard will be pushing cars up to 35.5 MPG by 2015 (I believe) and the first step on that part starts next year.

  5. A flexible federal gas tax, so that when gas prices spike the feds can lower the tax to keep prices "reasonable". If all funds from this tax are only allowed to be spent redeeming Tbills/bonds, it could work. I would also recommend a rider to this motion, that any politician proposing these funds get redirected, must be castrated. Sounds fair.

  6. The cars that get 40 mpg do only that: get 40 mpg. They can't haul around people, much less be comfortable on long trips that need to occur to GET the 40 mpg highway. Nor can they achieve 40 mpg unless you are alone and accelerating at a rate which hasn't been seen since the Model T.

  7. To all of you that talk about taxing gas, are you serious? If you don't want that money send it my way, don't send it to the people who regulate how many MPG's your car must. Every time you fill up simply take how much you spend, multiply it by, say .15, and then simply send that money to my PayPal account. That way you feel like you are saving the world and I can buy the Corvette I want.

  8. Hartman,the alternative is CAFE, which has never worked because the car companies buy off congress and the president. Instead of all these ridiculous rules, make gas expensive and the product mix changes instantly. We saw it worked as soon as gas reached $4/gallon. No more BS about mileage targets down the road that everyone knows will be "deferred" because of some lame reason or another. I'm all for reducing dependence on foreign oil. You, not so much. The real problem is that taxpayers don't trust politicians enough with any additional gas tax money.

  9. OK. so a gasoline tax is the best answer, however, the evidence suggests that the old 1975 CAFE law did work. Cars do now reach 27.5 MPG. I guess the one failing is that trucks do not and people shifted to trucks.

  10. If our lawmakers in DC were ever able to grow a pair, they'd put a gas tax in place and use the money to pay down our huge deficit. It's not ideal. Taxes are ugly. But people in this country have to learn if we're going to fight 2 WARS simultaneously then there has to be shared sacrifice. Our grandparents knew this when WWII was going on. How come we don't seem to have this shared sense of sacrifice and responsibility?

  11. A increase in the gasoline tax would make the most sense. It would have to be substantial, 50 cents to $1.00 to get everyone's attention, phased in over several years so people can prepare for it. Offset the increase with a reduction in the regressive payroll tax.

  12. I had a 1989 Plymouth Colt (which was just a rebadged Mitsubishi Mirage) and I loved it. I got 43 mpg on the Interstate and in the high 30s in the city (I think the EPA rating was 37 highway and in the low 30s city). With a tiny turning radius and responsive steering, it was fun to drive. How disappointing that twenty-one years later, the automakers have made fairly little progress on improving the mpg of small, 4-cylinger ICEs.

  13. I had a 1989 Plymouth Colt (which was just a rebadged Mitsubishi Mirage) and I loved it. I got 43 mpg on the Interstate and in the high 30s in the city (I think the EPA rating was 37 highway and in the low 30s city). With a tiny turning radius and responsive steering, it was fun to drive. How disappointing that twenty-one years later, the automakers have made fairly little progress on improving the mpg of small, 4-cylinger ICEs.

  14. @Larry, please learn the difference between a 1980s econobox with no ABS, no air bags, no power windows/locks, no stability control, etc. and modern cars. Not only would the modified EPA testing cycle bring your mileage down considerably, the extra weight created by improved safety systems would bring it down much further. It's actually an accomplishment to get similar mileage now with the extra weight and more realistic EPA cycle.
    @John B, I agree with many of your points but sales info from Wards supports the data here and not what you've shown. Wards shows hybrid sales at 270,171 for Oct. 2009-Sep. 10 versus 279,285 for the previous period in 2008-09. I hope I'm wrong here but where do you see they are "UP, way UP?"
    Compacts and subcompacts were never designed for everyone but at least the newer ones are well done. It'll never be my primary car but love my wife's Mini Cooper & it's been great.

  15. The undisputed truth is that people tend to act egoistically - for the moment - not making a choice for the long run. It's sad but true that this is one of the reasons the US economy is again headed to another crisis.

  16. Diesel cars seem to have left out. Again.The mpg is there. The fuel and engines are cleaner than Gasoline. They are comfortable and haul stuff. Due the math: even at higher fuel prices, they are they are cheaper to run than their similarly comfortable gasoline counterparts. My 2009 Jetta averaged in the mid-40's, city/highway. The 2010's do the same.

  17. Enjoyed your piece on breaking down the reasons some excellent fuel efficient vehicles aren't selling.
    I'd like to share a blog that provides ways to improve efficiency should you vehicle not meet the 40MPG criteria.

  18. @Craig H. Interesting how your 2009 Jetta averages 30-40% higher than official mileage numbers reflect. The TDI Jetta averages 30 in the city and 41 highway so you'll excuse my scepticism. I've lived much of my life outside the U.S. and love diesels like you clearly do, but I certainly don't get the same results when I "due the math." The diesel carries a $3-4k premium, or more than most people will ever save in a few years driving, sound like a hybrid here? Yes, mileage is better, of course, but prices are also higher and it takes more petroleum to make diesel than regular gasoline. Comparing the diesel Jetta to the gas version, at 15k miles, usage is only 122 fewer gallons per year. At even $4 a gallon, that's less than $500 savings per year. That also doesn't include higher diesel fuel costs now or use a current number closer to $3/gallon. At a $3-5k premium for diesels, you're talking 6-15 years to recoup one's costs. No, diesels aren't cheaper here yet, unfortunately. Love the torque and mileage but they're not cheaper here now and choices are limited, too.
    As for diesel fuel being cleaner, NOx emissions are over double, CO is double, and smog-forming pollution is almost double.
    Diesels make sense in many cases, but some of the claims about it are a stretch...

  19. @Rob -- how did you figure that diesels cost $3-5K more than equivalent gassers? Specifically what car models are you comparing, and are they comparably equipped?
    The VW Jetta Sportwagen TDI (diesel) w/DSG and the SE (gasser) are almost identically equipped. Comparing MSRPs (both w/DSG), the TDI is $2375 more expensive than the SE. Most of this difference had been offset by a $1300 federal tax credit that the buyer of TDI got that the SE buyer did not get, leaving a net difference of $1075. But I believe this tax credit is phasing out.
    The TDI consistently gets better reviews than the SE for its more refined and higher torque engine. The TDI is EPA rated 30/41 while the SE is EPA rated 24/31.
    The JSW TDI has a sophisticated emissions control system and is much cleaner than diesels of the past. It's EPA rated Tier 2 Bin 5, so it's tailpipe emissions equal the average car sold today -- meaning it's cleaner than the average car on the road. NOx from the TDI is indeed higher than the cleanest gassers sold today. But evaporative emissions along the refining and supply chains are much lower for diesel compared to gasoline, and evaporative emissions are also a significant source of pollution.

  20. Like other TDI buyers, I find that my 2009 VW Jetta Sportwagen TDI M6 easily beats the EPA estimates. Over the last few thousand miles, mine has averaged 41 mpg in mixed city/highway driving. I'm no hypermiler, I'm a pretty average driver. Almost nobody seems to average the dismal 34 mpg that the EPA claims the TDI should average. Drivers of my year/model who reported to fueleconomy.gov are averaging 39.6 mpg, which is similar to what one will find reported on the TDI Forum.
    If the SE gasser averages 25 mpg (like the EPA sez, there's no owner reported data on fueleconomy.gov) and the TDI averages 39.6 mpg (like buyers of my TDI actually find), using current US average prices of $2.96 for RUG and $3.20 for diesel, then at the 20,000 miles/yr I average, the TDI has a $752 lower annual fuel cost. The reduced fuel cost would pay for the higher TDI price in 17 months with the $1300 credit, or 38 months without the credit.
    On top of a lower total cost of ownership, the TDI is the better driving car.
    And the TDI also has CO2 emissions about 30% less than the SE if we premise 39.6 mpg vs. 25 mpg.
    Craig H. and I are not the only ones who have done the math and read the reviews. The JSW TDI outsells the JSW SE by 4 to 1.

  21. correction: 2010 VW Jetta Sportwagen SE is EPA rated 23/30 mpg with the DSG or 22/30 with the manual. Both average 25 mpg.

  22. For anyone pining for a $1 gas tax:
    Anytime you fill up, note how many gallons. Say 15, for instance.
    Take out your own checkbook, and write a $15 check to the IRS. Write "donation".
    Just don't screw with the rest of us. Your instincts to have everyone oppressed/taxed the way you see fit si not appreciated.

  23. I think the proposed gas tax is offered in exchange for a reduction in sales or income tax. It is not meant to be an increase in govt. revenue. So chill a little. And stop acting like a pawn of big oil - we live very far from Texas.

  24. @Laura
    The VW diesel is awesome. It would be better if it were in a hybrid.
    Don't look just at the average emisions numbers, because the carcinogenic soot and NOx go un-regulated, but are important.
    MSRP is convenient, but is not well connected to selling price. In real life, the $5K is the diff.

  25. @chezboy
    If diesel hybrids materialize, I suspect we'll see them first from BMW or Mercedes Benz, not VW. The higher price would be harder for VW buyers to swallow. There is already a version of the BMW 320d available in Europe that has features from hybrids including stop/start and regeneration braking. It is more powerful than the VW Jetta TDI AND it gets better fuel economy.
    NOx and particulates for diesel cars are both regulated by the EPA. Diesel cars have particulate filters, as well as either NOx traps or urea injection to reduce NOx.
    The $2.3K difference in MSRP for VW Jetta TDIs vs. a comparably equipped gasser does not morph into a $5K difference out the door. New 2010 TDIs are selling for under dealer invoice.

  26. @chezboy & everyone else discussing the merits of shifting fuel taxes rationally. Thank you. I'm not in support of an outright tax increase but I'd be willing to pay more in fuel taxes in exchange for paying lower income taxes. I'd prefer to control how much I'm paying in taxes by carpooling, consolidating trips or getting off my butt and walking. There will still be plenty of lazy people out there to fund the government.

  27. Supply almost never creates demand. Demand ALWAYS creates supply. When customers want high mileage cars, they will buy them. Consequently, car companies will build them. Politicians creating high CAFE standards won't make people buy cars. Hybrids are expensive and risky. (Batteries are very expensive and will fail.) Diesels are expensive. Until the COST of gas overcomes the COST of cheap cars, we remain in the present.

  28. If there where any 40mpg cars in this article, there would be something to talk about.
    A 40mpg with Auto Transmission, Good Price, Decent Size, is not yet on the market.
    The Hyundai Elantra isn't out yet, but it comes close to the description.

  29. I'm going to play devil's advocate and present some arguments against raising the gas tax that don't involve calling the participants "stupid liberals who like paying taxes": (I'm working through a boring tutorial and could use a distraction)
    First: The scenario is that we determine the average fuel use is 600 gallons per year so we send out tax credits of $600 to each taxpayer to offset the extra dollar on each gallon. The program could be a victim of its own success as the average fuel use drops by 100 gallons. The government has suffered a net loss of tens of billions in revenue.
    Second: Elderly people who don't earn enough to file 1040's each year would have to pay more taxes at the pump but there's no income tax to reduce.
    Third: You'd have to extend credits to businesses as certain ones would be extremely vulnerable to this tax and determining the level of those credits could be very complicated.
    Fourth: People would respond to the gas tax by not only choosing a more fuel efficient car for their next purchase but also by driving less. Thus there would be less wear and tear on the cars and we'd buy fewer new ones over time.
    I'd like to see people refute these arguments. Or you could simply resort to insults and name calling. Either way is entertaining.

  30. The key thing is that road transportation must be self supporting by way of gas taxes. If you build and maintain roads by way of general (e.g. income) taxes paying interest on bonds you give the consumer an the perception of an artificially low cost of driving. This is tantamount to encouraging driving long distances in large cars. I'd be infavor of getting rid of registration fees and offsetting the lost revenue with a higher gas tax.

  31. @Jay^2 Good point. Made me think of something - bicycles. I ride quite a bit and typically search out rail trails or roads with large smooth shoulders for pretty obvious reasons. I'd be happy to pay registration fees if that meant more roads would have shoulders for bicycles. At $0.18 a gallon the average motorist pays around $100 per year. (rough estimate I made up) Take the percentage of roads that currently have bike lanes or smooth 5 foot shoulders and multiply that by $100. Better yet pay $50 on the condition that 50% of the roads will be upgraded to accommodate cyclists.

  32. It's funny that the U.S. Government thinks it can make people buy 40 mpg cars by imposing strict requirements. Everyone "wants" a 40 mpg car. Everyone "wants" American jobs but would rather buy cheap imports. Everyone "wants" to be thin, but would rather eat a McFatburger. What people "want" and they buy are two different things. When an LX car, Suburban, or F250 gets 40 mpg, then people will buy more 40 mpg cars...but not because it gets 40 mpg.

  33. Why does everyone in the green auto press seem to think it's "gas prices" that drive consumer demand? That's only a small part of it. The average car buyer is not a young, single, fresh out of college "sporty, eco-friendly please" buyer. The average consumer is a middle-aged, middle-class family with 4+ people in it. Compacts don't cover that. Sorry.
    Add to that the fact that government incentivizes large, heavy vehicles over smaller compacts (see NHIIS, EPA, and other rules for auto manufacture) and the cultural expectation of roominess and safety and your compacts are basically out of the game.
    Gas prices play a role, but that's too easy. You said yourself that even in higher fuel price markets, like Europe, people still mostly buy mid-sized and larger vehicles.

  34. I just bought a 2011 Hyundai Elantra. I believe it is a game changer. All models, regardless of transmission or equipment, get 29 city, 40 hwy. The EPA classes it as a mid-size. It has more interior volume than a Nissan Maxima. Car and Driver says that the 0-60 time for the automatic version is 8.6 seconds. It is gorgeous and well put together. I think Hyundai will sell a zillion of them.

  35. Taxing gas? For crying out loud, if we'd just stop SUBSIDIZING the petroleum industry -- let the price of gas reflect its actual cost on the global free market -- the problem would be solved. As long as we use public revenue to "stabilize" gas prices, people will buy gas-guzzlers.

  36. Look lets just I don't know let someone like me who have really good credit actually invest I dont know in a fuel efficient vehicle or bring back the tax breaks for people looking to buy a fuel friendly car such as myself who would love to get out of the Tank I drive in now which is losing value by the day.

  37. I think everyone is forgetting the fact that there lots of people in this country who can not afford to run out and buy a new car whenever the gas prices change. For those people who are stuck with gas guzzling cars the raising of gas prices only serves to keep them down. It never helps the cause of saving the environment.

  38. The question "what will get people to buy 40mpg cars"
    Rather simple. In 1967 I bought a MercedesBenz 200Deseil 4dr Sedan. It was COMFORTABLE!! It was QUIET! It handled well. Had all the options You get the picture. But the big thing was that it was a medium sized car NOT A SHOE BOX! and it got 37-48 mpg. I topped 51mpg one time from Sacramento to San Jose. Where are those cars? In Europe because we can't get them here

  39. We bought a stripped Ford Focus two years ago. We love our little car. It has manual windows and door locks. It gets great gas mileage (although not 40 mpg) and it's very comfortable for traveling. We head to Vegas at least 6 times a year and that's about a 4 hour trip one-way for us. Our daughters visited over Christmas and we managed to put all four of us and their luggage into the Ford. Works for us. I would definitely consider the electric model.

  40. @WagonMaster: Here are a couple of GCR articles that answer your question:

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