For car buyers, size matters

A customer admires a Honda Motor's new hybrid vehicle 'Insight' at the company's showroom in Tokyo on Feb. 19, 2009.

Americans have had a love affair with huge vehicles since time immemorial. Think of the steel and chrome tanks of the 1950s, the V8-powered muscle cars of the '60s and '70s, and the rise of the multi-ton full-size trucks and SUVs that have jammed our freeways in recent decades. Sometimes our heads wins battles against our hearts.

We may swoon at the roar of a hemi, but we live by the balance in our checking accounts. As oil prices hit the stratosphere and don’t look to be returning to Earth any time soon, we’re more and more willing to consider parking smaller more fuel-efficient cars in the driveway.

J.D. Power and Associates recently announced that sales of more fuel-efficient compact cars will likely outstrip those of mid-size models by year’s end. By 2015, they expect compact and sub-compact cars to comprise 20 percent of sales, while mid-size cars will sink to just 14 percent. Five years ago, dealers sold a quarter-million more midsize vehicles than compacts. By year's end, we will see that trend reversed.

This is not a bad thing. As Americans go out looking for better deals, they’re pleased to be finding smaller cars with all the amenities synonymous with high-end gas-guzzlers. Take Hyundai’s compact Elantra, for example. It starts at $16,445, and when you add leather seats, a navigation system and a rearview camera, the price tag jumps to $23,305. But to get Hyndai’s mid-size Sonata similarly equipped, you’ll pay nearly $30,000.

Carmakers are reaping the rewards of this paradigm shift, too. Not only are they moving units off their lots, but rise of the compact gets them a step closer to a lofty goal set by the Obama administration back in July: doubling fleet averages to 54.5 MPG by 2025.

That’s what they call a win-win.

About the author

Joel Patterson is the Associate Producer of Marketplace Money.

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