Live

Watch CBSN Live

American Small Cars: Has Detroit Finally Cracked the Code?

The Washington Post recently took a long look at General Motors' latest effort to built a small car that Americans might actually want to drive, and came away with the usual soporific conclusions: small cars make sense because gas is probably going to get more expensive but -- and it's a big but -- Detroit hasn't ever been very good at doing small cars.

This of us who follow the auto industry have seen this story many times before. Typically enthusiasm for small cars, such as the Chevy Sonic subcompact featured in the newspaper's analysis, wanes and Detroit marches happily back to what it does well and does profitably: large cars, trucks, and SUVs.
Something is different this time
This time around, however, there's a new wrinkle in the story, and it could break the old cycle in which carmakers like GM built small cars by stripping them down to bare metal (well, almost). Good gas mileage and a low sticker price (under $20,000) meant spartan interiors and limited features. Consumers responded when gas prices were high, but as soon as prices receded, back they went to more upscale models.

That pattern understandably soured Detroit execs on the small car thing and left them convinced that foreign companies simply did small better. Now, however, Detroit thinks it's cracked the code. How do you make small appealing for more than just a few oil-price cycles? Focus on making small feel big.
Putting premium in a smaller package
GM and Ford are both borrowing a page from the German carmakers and pushing the premium automotive experience down into a tinier package. One of the virtues of the BMW 1-Series is that you never feel like you're sitting in a BMW that designed on the cheap -- you feel like you're sitting a smaller version of a 3-Series.

The Chevy Cruze, a compact that's intended to do battle with the Toyota Corolla and Honda Civic, exemplifies this change of heart. Gone is the plasticky interior and the putt-putt motor. The Chevy Sonic, a sub-compact, pushes the argument even farther, by essentially keeping everything good about the Cruze but reducing the overall size. The idea is that drivers should be so satisfied with the small-car experience that it can actually gain some traction beyond entry-level vehicles -- and thus sustain the category through the familiar economic cycle.

No cutting corners
Both the Cruze and Sonic are getting relatively robust powerplants, upmarket interiors, and features lists that are comparable to bigger cars. But even more importantly, they're being marketed as real cars, something that GM can now do more effectively, given that it has reduced itself to four brands in the aftermath of its 2009 bankruptcy.

It's the right historic moment for this move by the U.S. carmakers. There's nothing intrinsically wrong with small cars from Toyota and Honda, but they've begun to seem rote and appliance-like. Small U.S. cars that look and drive more like German cars, but without the steep price tags, are a nice alternative.

Could it all go horribly wrong? Sure, but only if Detroit allows itself to fall back into its old habits of chasing short-term profits at the expense of longer-term strategy.

Related:

Photo: GM Media
View CBS News In