False Economy Cars

Why aren’t economy cars more economical?

By Kevin Miller


Volkswagen got its start in the US (and in the world) as a manufacturer of economical cars. As the original Beetle was replaced in the North American market by the Rabbit/Golf, that vehicle was known as an economical car; one that was relatively inexpensive to purchase and that got good fuel economy. While later, sportier versions of the Golf were available with 6-cylinder or turbocharged 4-cylinder engines, there was always a reasonably economical Golf available. Reviewing the statistics for 2005 shows that the last-generation Golf was available with a 2.0 liter 4-cylinder with 115 HP, good for and EPA rating of 24/31 when equipped with a manual transmission.

New for 2006, the re-named Rabbit used a 2.5 liter 5-cylinder engine. With a manual transmission, the fuel economy rating decreased to 22/30. While this drop in ratings is only 2 MPG city and 1 MPG highway, why is Volkswagen’s entry-level car is getting less efficient?

Perhaps you buy in to Volkswagen’s idea of moving themselves up-market, and say that the German automaker is making its cars larger and more luxurious (and therefore more expensive), so the Rabbit needs to have a more powerful engine to attract customers to its nicer cars. Maybe the Rabbit isn’t even an “economy car” any more. What, then, about other automakers?

Toyota’s Scion brand is going the same direction. Their 2006 xA had a 1.5 liter four with 103 HP, good for an EPA rating of 32/37 MPG, and their 2006 xB got a 30/33 MPG rating from that same powertrain. For 2008, the xA has been replaced by the xD, which has a 1.8 liter four with 128 HP and a rating of 27/33 MPG, while the xB has entered its second generation with a 2.4 liter four generating 158 HP, garnering an EPA rating of 22/28 MPG. While the EPA rating methods have changed somewhat for 2008, any way it’s calculated these new Scion models get worse fuel economy than their predecessors.

On the other hand, MINI introduced an updated Cooper for 2007. A European-brand hatchback like the Rabbit, the Cooper could be considered a “premium” small car, and though the Cooper had added features and slightly increased size, its fuel economy rating significantly increased over the previous generation. Also, the Honda Civic, redesigned for 2006, earned better EPA ratings than its predecessor. But the Civic has grown large enough (and expensive enough) that it isn’t considered an economy car, and Honda introduced the smaller Fit in the US to fill its entry-level position.

Looking at a bit more fuel economy data on the EPA’s Fuel Economy website, the 2007 Toyota Yaris sedan which replaced the 2005 Echo sedan saw a decrease in ratings of 1 MPG city and 2 MPG highway. Only the Korean-made “economy” cars seem to be making advances in fuel economy in their segment, as the re-designed Chevrolet Aveo sedan , Kia Rio, and Hyundai Accent all have made improvements over the previous-generation vehicles. Although those cars’ mileage has improved, fuel economy in the mid-30s on the highway is not particularly impressive, as larger cars like the Honda Civic and the Toyota Corolla have better economy ratings than those entry-level cars.

While the EPA test methods and ratings are changing for 2008 in an attempt to more closely reflect the numbers consumers will achieve in real-world driving, the actual fuel economy that actual drivers are getting in their cars will not. As new car buyers are increasingly considering fuel economy as a factor in their car buying decision, automakers need to put a priority on maintaining or improving fuel economy for redesigned and new models, rather than allowing fuel consumption of new vehicles to increase. While CAFE requirements mandate automakers to improve their fleets’ fuel economy, customer demand should also become a driving force in the development of more fuel efficient vehicles.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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  1. It’s true, but everyone’s moving up in either size or engine size or both. Which as you point out is why we have the Honda Fit below the Civic now. I think the current Civic is bigger now than the Accord was 25 years ago. And the Accord is now a very big car.

  2. Of course no mention of the revised testing at the EPA is discussed. While I do not recall the exact implimentation dates, I believe it was bewteen the 2005 and 2007 MY. Most, if not all, EPA mileage estimates were revised downward to more accurately reflect real-world driving habits and economy expectations.

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