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http://www.freep.com/money/autonews/...e_20051027.htm

Japan's high-mileage cars coming at right time

October 27, 2005

BY JAMES HEALEY
USA TODAY


Top Japanese car companies are preparing a new wave of 40-plus miles-per-gallon subcompact cars for America just as high gasoline prices and fuel shortages have made U.S. motorists acutely interested in such vehicles.


The three models from Toyota, Honda and Nissan will hit the market close to one another next spring, starting at about $12,000 and expected to sport fuel economy ratings of roughly 40 m.p.g. in mixed driving, even better on the highway.


Nissan's Versa, the biggest and probably least fuel-efficient of the new trio, is recording 38 m.p.g. in combined city-highway use in Nissan tests, the automaker says.


Gas prices, currently declining, are expected to rebound to $3 or so about when the new subcompacts go on sale.


In a twist, all three -- referred to in the auto industry as B-class or B-segment cars -- will emphasize premium features rather than being marketed as bare-bones econo-cars.


"The typical B-segment car sold elsewhere in the world isn't quite up to the standard for American customers, who expect more roominess, more comfort, more features," says John Weiner, director of car product planning for Nissan North America.


Details aren't final, but expect the Versa, the Toyota Yaris and the Honda Fit to offer high-end sound systems, multiple air bags, antilock brakes and other features previously rare in the smallest cars.


Yaris will have "a surprising and upscale interior," promises Jim Lentz, general manager of the Toyota brand in the United States.


While it might seem as if the Japanese makers are capitalizing on the memory of this year's $3 gasoline, that's coincidence. All have had U.S.-market small cars under development for several years.


"The onslaught is more a competitive response to the success Scion has had attracting buyers than it is a response to fuel prices," says Jeff Schuster, head of global forecasting for auto consultant J.D. Power and Associates. Scion is Toyota's youth-oriented brand of inexpensive small cars.


An industry-leading 45% of small-car owners eventually trade up to pricier, more profitable models known as premium compacts, such as Honda Civic and Toyota Corolla, according to an analysis done for USA Today by Power Information Network.


Within that group, "The No. 1 model to which every one of the" entry-level, small-car "owners trades is a premium compact car from the same brand," says PIN's Tom Libby.


For example, between July 1 and Oct. 16, 23.1% of the people who traded Hyundai Accent small cars replaced them with bigger Hyundai Elantras, according to the PIN data.


In the same period, 16.2% of Chevy Aveo small-car owners who replaced their cars did so with bigger, more expensive Chevy Cobalts and 16.9% with Chevy HHRs.


Those loyalty numbers might seem small but are enormous by auto industry standards.


In an age when buyers typically shop for a deal, not for a specific vehicle, cheap small cars promise brand loyalty and lower marketing costs.


"We hope to capture some of these people young and keep them within our family of vehicles for many, many years," Weiner says.


The Toyota, Nissan and Honda newcomers aren't the first to the small-car party. Automakers from often-overlooked, low-price Suzuki to pricey Audi have B-class cars.


But the big-name Japanese makers will bring a marketing heft and sales-volume potential to the small-car segment previously missing. That competition should help hold down prices while broadening choices for buyers who don't want to spend big bucks for gas-electric hybrid vehicles or settle for spartan fuel-sippers.


The coming small-car battle could reprise the 1970s and early '80s, when gas was expensive and sometimes scarce. Fuel-efficient Japanese cars were in the right place at the right time as owners fled fuel-thirsty Detroit models.


This time, though, Schuster says, "Detroit brands have more in their arsenal." Chevy has Aveo; Ford Motor is working on a B-class car; and DaimlerChrysler's Mercedes-Benz brand is mulling a B-class.

Geotpf

I wonder if they are going to keep the Scion xA now that the Toyota Yaris is coming out-especially if they make a five door hatchback version of the Yaris.

emiller

I dont ever want to drive something that small. Get hit and you die.

JUMBO

The xA replacement will more than likely be built on the Yaris chassis, and we should see it in 07.

emiller, your tC is only 650 lbs heavier than an xB, and not too much larger. People die in big cars, too. It's about build quaility and engineering.