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Small Cars Boosted by Green Consumers and MPG Regulations, Business and Industry Trends Analysis

Light trucks, including pickups, vans, SUVs and crossovers, remained the largest part of the U.S. auto market throughout 2017, gaining 2.4% in sales in the month of August 2017 alone, compared to the same month of the previous year (passenger car sales for the same period were down by 8.5%), according to .  Small car sales (including compact and subcompact models) were down by 22.75% in June 2017 compared to June 2016, according to the Automotive News Data Center.

Environmental concerns and tougher federal mileage standards have put tiny compacts and subcompacts in the spotlight.  The big three U.S. manufacturers (GM, Ford and Chrysler) have been reinventing themselves, and new compact car designs were obvious choices for many new models.  Ford is heavily marketing its Focus model, which, for about $30,000, is long on new gadgets such as voice activated entertainment and safety features while remaining short in stature.  The Chevrolet Cruze, loaded with state of the art technology, is another recent entry to the market.  The Cruze boasts up to 42 mpg on the highway.  GM is banking heavily on this car, which includes an exceptional list of convenience features, to give it a big boost in the small car market.

Daimler (Mercedes) hopes to profit through a 2010 alliance with Renault-Nissan.  The companies are collaborating on small car technology and power trains.  The firms are working together on new generations of their small cars, including Renault’s Twingo.  In 2014, Nissan-Renault and Daimler opened a new engine manufacturing facility in Decherd, Tennessee, on the site of an existing Nissan powertrain assembly complex.  In 2015, the firms broke ground for an assembly plant in Aguascalientes, Mexico.  Nissan revived its Datsun brand for 2014, planning to offer six models in emerging markets starting at about $3,000.

The MINI, currently built by BMW at an English plant in Oxford, is another little car worthy of note.  Its first incarnation debuted in 1957 in England in response to an oil crisis in the Suez.  Sales were high for the minute car and soared in the U.K. when Queen Elizabeth II was photographed at the wheel of a MINI on the streets of London.  The car was sold in the U.S. up until 1968, when it was dropped because it could not meet emissions regulations.  The BMW Group acquired the MINI company in 1994 and re-released the brand in the U.S. in 2001.

BMW launched a small, two-door i Series model in 2008.  This has been a winner for the firm, attracting new customers.  Volvo launched a Volvo C30, a two-door hatchback, and Audi’s A3 model is a five-door hatchback with 200 horsepower.  Fiat has had good success with the 500 and 500e electric version.

Many non-U.S. manufacturers are redesigning subcompact models such as the Toyota Vitz, the Honda Jazz and the Nissan Tiida for the U.S. market.  These models have been highly popular in Europe and Asia, and with modifications to meet U.S. emissions and safety standards, are likely to meet the growing demand for fuel-efficient cars.



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