Financial Resource Center


Why You Might Want a Small Euro Car

by Jerry Edgerton / July 14th, 2010

In past decades, Detroit auto companies have stumbled trying to sell the U.S. consumer on small cars that were popular in Europe. But with gas seemingly perched permanently near $3 a gallon and Americans shopping more for high mileage, Ford Motor Co. and General Motors are betting that will change. Two Ford models and one Chevrolet already selling well in Europe will go on sale here soon. All three aim to get nearly 40 miles per gallon (mpg) in highway driving. The three models could expand consumers' choices among small cars, analysts say. The 2011 Chevrolet Cruze, sold in Europe as a model in GM's Opel lineup, will go on sale this fall. The Cruze and the 2012 Ford Focus, available next year, will compete directly with compact car leaders such as the Honda Civic, Toyota Corolla, and Volkswagen Golf. The smaller 2011 Ford Fiesta, available next month, will challenge small, high-mileage cars already selling well here, such as the Honda Fit and Nissan Versa. These new Euro cars will offer options not typical in the small car category, such as leather seats and navigation systems, says Jessica Caldwell, director of pricing and industry analysis for auto information Web site "People may be willing to consider these smaller cars if they are getting all the features and comfort that you expect in larger cars," she adds. In addition, those ratings of 40 mpg in highway cruising will be an attraction. "People have come to accept that gas will remain expensive, and high mpg has become a major shopping point and a major factor in car advertising," says Caldwell. Where high gas mileage meets low price is the sweet spot for these new vehicles. The mileage ratings compete with—though do not equal—those for hybrid models. But the price gap is large. For instance, a Honda Civic hybrid rated at 40 mpg city and 45 mpg highway has a list price ranging from $25,000 to $27,000. The 2011 Ford Fiesta—rated at 30 mpg city, 40 mpg highway—will start at just $13,300—though it quickly will jump into the $17,000 range as you add options.
New Euro cars will offer options not typical in the small car category, such as leather seats and navigation systems.
Here's a closer look at three Euro cars that might change your buying plans.

Ford Fiesta

First to make it across the Atlantic, the Fiesta became available at dealerships starting in June 2010. Fiesta comes both in a sedan and the more stylish-looking five-door hatchback. The engine is a 118-horsepower, l.6 liter four-cylinder. Early reviewers have been enthusiastic, giving the Fiesta points both for fun-to-drive demeanor and stylish interior design, as well as its high gas mileage. Despite the short 13-foot length that should make city parking easy, test drivers found plenty of room inside. The base S model will come with pretty Spartan equipment, so you may want to upgrade for some of those nice options like the SYNC system, which lets you make Bluetooth® phone calls or choose songs on your iPod with voice commands. Ford hopes that Fiesta, already the second best-selling car in Europe (after the Volkswagen Golf) can generate some volume here as well.

Chevrolet Cruze

The Cruze is the poster car for a small car with big-car features. The arcing-roof styling resembles the look of the mid-size Chevy Malibu. Almost exactly the same size as the Honda Civic and Toyota Corolla (but bigger than the Ford Fiesta), the Cruze has safety equipment that, not long ago, was found only in luxury models. Electronic stability control, which helps avoid rollovers, is standard, and so are 10 air bags. The interior has a slick, high-tech look. Under the hood, the standard power plant is a 1.8-liter, 138 horsepower, four-cylinder engine. The optional 1.4-liter turbo-boosted engine is both faster and more economical than the nonturbocharged 1.8-liter engine. When packaged in the Eco version, which includes an aerodynamic grille design, the Cruze should hit 40 mpg on the highway. Slated to go on sale late this year, the Cruze does not yet have official mpg ratings from the EPA. The base Cruze will start around $16,000 while the top-end LTZ version is likely to be priced in the low $20,000s—a range similar to category sales leader Honda Civic.
"People have come to accept that gas will remain expensive, and high mpg has become a major shopping point."

Ford Focus

The 2012 Focus, similar in size to the Chevy Cruze, will go on sale early next year. This Euro version will replace the current Focus on sale here—which reviewers have long complained was inferior to the model that Ford sold in Europe. The new, more stylish model will come in sedan and five-door hatchback versions. The standard engine will be a 2.0-liter, 155 horsepower version. A turbocharged option likely will be available later. As with the other small Euro models, Ford expects the Focus will achieve 40 mpg in highway cruising; EPA ratings are not yet available. The base model is likely to cost about $17,000. But a full menu of options—including rearview safety camera, navigation system, and keyless ignition—could boost the price of loaded models into the low $20,000s. Ford and General Motors will have hard work taking a bigger share of the two million or so small cars sold in the U.S. every year. Perennial leader Honda Civic, which comes in everything from four-door sedans to sporty coupes in the Si version, is the sixth-best-selling model of all vehicles in recent months. The high-mileage Honda Fit and Nissan Versa offer sizable hauling capacity for cars their size—especially the Fit, with its fold-flat rear seats. But the new Euro model small cars—with their creature comforts, affordable prices, and high gas mileage—deserve a look if you are new-car shopping. Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of "Car Shopping Made Easy."
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