The smell of the leather seats was still fresh in the gentleman`s Town Car when he pulled into the dealership and traded the buggy in for another new car-an Escort.
What made the transaction even more startling was that the Town Car owner made an even swap, a six-month-old luxury car for a brand new subcompact economy car, with no cash coming back his way.
That was in 1981. Consumers accustomed to buying two bucks worth of fuel to get them through the week had found that $2 would only get them through the day-and they had to line up at 5 a.m. for that ration.
After the embargo of the 1970s, gasoline prices swelled to more than $1 a gallon, as the Mideast`s powers that be turned the spigots to point to
”OPEC.”
Luxury cars and those powered by V-8 engines were labeled gas guzzlers. To be seen in one of those machines was like being caught in a Nehru jacket.
Since then, nothing has been able to stop the small-car market; but today it is divided into two categories, economy and specialty.
For a variety of reasons, economy car popularity peaked in 1981 and has been on the decline since.
The subcompact share of the car market dropped from 29.4 percent in 1981 to 20.8 percent in 1989 and fell even further to 18.3 percent at the halfway mark of 1990.
The subcompact segment includes such cars as the Ford Escort, Chevrolet Cavalier, Dodge Shadow, Plymouth Sundance, Honda Civic, Toyota Corolla and Nissan Sentra.
Small specialty cars accounted for 16 percent of the market in 1980, slumped to a low of 8.5 in 1988, but has rebounded. It hit 10.6 percent in 1989 and 11 percent in the first half of 1990. It`s the growth segment of the small-car market.
Small specialty cars also are subcompacts, but the focus is on sportiness. These entries include the Mazda Miata; Ford Mustang and Probe;
Chrysler Corp. Laser and Eagle Talon; Mitsubishi Eclipse; General Motors Corp. Chevy Geo Storm, Chevy Camaro and Pontiac Firebird; Toyota MR-2, Celica and Supra; and Honda`s CRX and Prelude.
The obvious question is, why have economy cars fallen? One of every 5 cars sold today is an economy model and that`s a healthy portion of the market. However, in 1981, it was more like one of every three cars sold.
Fuel economy is the No. 1 reason for the decline. The same motivation that got the man to dump his big Town Car for an Escort is working in reverse. Gas isn`t cheap, but consumers have grown accustomed to the price and more importantly, fuel is plentiful.
In 1981, small cars got 20 miles per gallon and big ones got 10. Today, it`s not uncommon for big cars to get 18 to 20 m.p.g. So why strap yourself into a corset to fit in a econobox when you can stretch out and relax in a big car that gets more than respectable mileage?
Small cars haven`t been where the action is lately. The big dollars invested in new product of late have been on such vehicles as mini-vans, utility vehicles and mid- and full-size coupes and sedans.
Since that oil embargo, new vehicles introduced include the Chrysler mini-vans, Blazer and Explorer four-door utilities; the mid-size Taurus and Sable, the mid-size GM coupes and sedans in the Buick Regal, Pontiac Grand Prix, Oldsmobile Cutlass Supreme and Chevy Lumina families; and the full-size Chevy Caprice.
And where has the industry put antilock brakes and air suspensions, not to mention traction control and all the other ride, handling, comfort and safety goodies? In the big cars.
Mileage used to be the prime motivator behind the small-car purchase. Now, it`s affordability.
”People who buy small cars tend to be entry-level buyers, people affected more by economics than other consumers,” said Joel Pitcoff, marketing analyst and research manager for Ford Motor Co. ”They are people more prone to move off to the sidelines when the economy is weak and the market is soft; they try to keep their powder dry when they see clouds on the horizon.
”These are the people who often are rejected for financing when the economy tightens, yet these are the people who primarily finance cars rather than pay cash. They also finance over the longest term possible.”
With the decline in sales of new economy models came another problem. If the new small cars aren`t in demand, the used small cars aren`t, either; so the value of economy cars used as a trade-in have dropped sharply.
”That only worsens the situation because the less the trade is worth, the more the down payment the consumer must come up with; and the more he or she has to finance for a longer period of time,” Pitcoff said.
Considering that the small car buyer is price-conscious, you`d think the offshore entries such as the Ford Festiva, Pontiac LeMans and Hyundai Excel from South Korea or the Chevy Geo Metro and Subaru Justy from Japan and Yugo from Yugoslavia would reap the benefits of high sales from low initial purchase prices.
Yet sales of those cars are softer than subcompacts in general. Quality caught up with these vehicles-that is, the lack of quality. Yugo at less than $4,000 and the Excel at less than $5,000 were grabbed up quickly by price sensitive buyers who soon found that low purchase price was offset by high long-term service and repair costs.
Enter the specialty cars.
Small car buyers found themselves burdened with an image problem. Buying an economy car meant you were cheap and were saddled with a small, cramped, sluggish, box on wheels.
Specialty cars gave economy car buyers an out. They got respectable mileage and offered respectable looks, too.
The epitome of an economy car that didn`t look or act the part was the Miata. It had people waiting in line to buy, often at up to $10,000 over sticker.
The Probe followed and, though demand has eased considerably, for a brief period there were more buyers than cars to be bought.
Chrysler had a string of successes in the Plymouth Laser and Eagle Talon, offshoots of the equally popular Mitsubishi Eclipse. The subcompact sport coupes could boast of 20 m.p.g. fuel economy yet zero-to 60-m.p.h. times of less than 10 seconds.
Geo Storm, an import produced by Isuzu of Japan but marketed by Chevy in the U.S. is the latest contender with its sports car looks, ride and handling and economy car miserliness with a gallon of gas.
Looking ahead, corporate average fuel economy regulations are expected to get stricter. That means automakers must come up with ways to sell more high- mileage cars to meet the law.
For the last few years, automakers have tried to encourage small car sales by holding annual price increases on the subcompacts to a minimum while sharply boosting the stickers on big cars. It`s one way to avoid what Detroit finds distasteful, lowering the price of cars to entice people to buy them.
Perhaps the most practical approach is to give consumers products that will bring them to the showrooms without regard to the sticker, such as Miata, Talon and Storm.
The recovery in the specialty segment is significant because it clearly indicates that people are willing and able to buy small cars if they look good and perform well.
Some look and perform better than others, which leads us to our choices of the best small cars. See the accompanying story.
Notes
A remake of the Ford Tempo and Mercury Topaz compacts at Ford is planned for 1993-`94. A small 2- to 2.2-liter V-6 engine reportedly is a possible option to the standard 4. Ford plans an aerodynamic styling remake for the Mark VII in 1992 and a name change to the Mark VIII.
A flurry of reports is being heard about the GM Impact battery-powered car. It`s earmarked for the 1993 model year, so we hear; 2,000 would be built and battery replacements would be part of the warranty. It looks as though smog-bound California would get the initial production.
Make it 30 dream cars in the Joe Bortz stable. The Highland Park collector found and bought the 1957 Chrysler Ghia Diablo, which started life as the 1955 Chrysler Ghia Dart, for display at auto shows; it was redesigned for the `57 show circuit. The 22-foot-long Diablo convertible features a 383- cubic-inch hemi V-8 engine and push-button automatic transmission. Diablo, along with Bortz`s 1955 Chrysler Ghia Falcon, will be displayed at the annual Concours de Elegance at Pebble Beach, Calif., in August. Bortz also leaves in August for the Soviet Union, to finalize plans to display at least two of his 30 dream cars at the Riga Motor Museum in Latvia, the only car museum in the Soviet Union. Bortz, whose parents came from Latvia, offered the cars in the spirit of improving relations with the homeland; he was invited to exhibit a pair of dream cars at Riga for a year.
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Jim Mateja`s column appears Sunday and Monday.
