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Cool Small Cars Lead to Hot Sales

More consumers are choosing small cars

Small cars are finally getting some respect from consumers. In May, small cars were the second most popular type of vehicle sold in the U.S. with a market share just 0.7 percentage points behind SUVs, the  most popular vehicle category in May. “Small cars are becoming more fashionable now,” says Jesse Toprak, vice president of industry trends and insight at TrueCar.com. “The biggest change in the last three years has been the fact that before then, you only bought a small car if you couldn’t buy anything else. Now consumers are intentionally choosing to get a small car because they’re more fashionable, the designs are improving, and you are able to get all those amenities that you can get in a larger car in a smaller package.”

The growth in small car sales has been a long time coming. In 2005, small cars had 16 percent market share. Last month, small cars had 20.4 percent market share. By comparison, midsize cars had 15.5 percent market share in 2005 and 15.8 percent market share in May 2011 – not nearly as big of a bump. Obviously gas prices are a lot higher than they were in 2005, spurring some consumer interest, but that’s not the only thing.

Small cars are much safer than they used to be. The Insurance Institute for Highway Safety recently announced that in its latest round of small car crash tests, none of the 14 cars it tested received the worst score of “Poor” in any test. Six of the cars were even named IIHS Top Safety Picks for their excellent performance in crash tests. In 2006, the first year the IIHS named Top Safety Picks, only three cars got the honor. So far in 2011, 22 small cars have been named Top Safety Picks.

When people move to a smaller car, “they tend to choose highly contented smaller vehicles,” says Toprak. “They want to downgrade the size of the vehicle and get better fuel efficiency and lower cost of ownership overall, but they also don’t want to sacrifice the amenities they’re used to on a smaller vehicle.”

Automakers have responded to consumer demands. As Jessica Caldwell, the director of industry analysis for Edmunds.com, pointed out at a press briefing this week, a Ford Focus Titanium sedan starts at $22,200 and comes with Sync and MyFord Touch. It also has dual-zone climate control, HD radio, satellite radio, a 10-speaker stereo system, power outlets in the front and rear seats and a universal garage door opener. The Hyundai Elantra Limited, which starts at $20,445, has a standard USB port, satellite radio and Bluetooth. You can add proximity key, navigation and automatic headlights for $2,100.

Small cars have always offered good fuel economy, but today’s small cars have fuel economy that rivals some hybrids. The Elantra gets 40 mpg on the highway, while super fuel-efficient trims of the Ford Fiesta and Chevy Cruze get 40 and 42 mpg on the highway, respectively.

Now that small cars are becoming cool, have strong crash test scores and lots of high-end features, are you more likely to buy one?

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