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Compact Luxury Cars are Long on Amenities, Short on Love

Posted by: David Welch on May 20, 2010


To hear some auto industry executives tell it, even luxury cars will get a downsizing in the next few years as new fuel economy standards kick in and a global economic recovery pushes fuel prices back up. Americans, being the pampered consumers that we are, will still want our creature comforts, but we’ll be willing to accept a smaller car loaded with them. Or so goes the speculation.

For that to become reality, these phat little cruisers had better find some love soon. As nice as they are, the tiny luxury cars aren’t selling. Take the Audi A3. I gave it a test drive a couple weeks ago. Loaded to the roof with luxury amenities like satellite radio, heated seats and the like—plus a clean-diesel engine—the small wagon I tested is priced at $37,500. (It starts at $27,270) Like BMW’s 1-series, you can get a luxury brand name, great driving performance and all kinds of posh features.

The problem: Audi has sold just over 2,000 copies of the A3 this year. BMW has sold fewer than 4,000 of the 1-series through April. With regular unleaded gasoline selling for $2.84 a gallon on average, according to AAA, they’re a tough sell for Americans who equate luxury with size and roominess.

Don’t get me wrong. The A3 is a terrific car. Its clean diesel engine gets a combined 34 miles per gallon in city and highway driving. It’s zippy and handles wonderfully. Inside, the A3 has the great craftsmanship of larger, more expensive Audi cars like the A6. If you really want a small luxury car, this is a nice one. But after climbing in and out of the back seat of the A3 and 1-series, gas prices will have to rise a lot higher for these little luxury cars to take off. Americans will be enamored with their big sedans for a long time to come.

Reader Comments


May 23, 2010 1:47 AM

Ha ha... I guess, in a nice way you're saying Americans are fat..

Brian Jeff

May 23, 2010 11:02 PM

I've been a loyal BMW driver for 10+ years, and would consider a 1 series if it offered a meaningfully higher level of fuel economy, but the price is too close the the 3 series and the fuel economy savings don't justify the investment in my mind.

I think the A3 has the same issue.

Would like to see BMW bring back smaller engines, like the 318, with newer technology to deliver the performance of 6 cylinders from a few years ago.


July 7, 2010 4:20 PM

Have to agree with Brian Jeff, here. The prices of the 1-series and the A3 are way too close to the next level up car. And the mileage gain is not great. Perhaps if the smaller car came with a perky diesel or fuel-sipping hybrid powertrain than there would be more reason to give up some room.

terryreport com

August 5, 2010 10:33 AM

One big reason that small cars don't make it in the States is that people use their cars very differently here than in Europe. How many Europeans, for example, would even consider driving their car 1,000 to 2,000 miles to visit family? Over there, those trips happen on trains or planes. Plus, we have a different climate and topography. A small car in the wind zones of west Texas or Oklahoma gets blown around too much.

I was interested in the A-3 when it came out with a starting price of 25K. When you add options, it gets to 30 in a blink. For 32 or so, you have a lux car with more room and more zoom.

If they suit your driving needs and local conditions, however, a smaller car is much more fun to drive. You don't have that feeling of ponderousness or feel like you are steering a boat through water. I drive a Ford Focus SVT (same as the Mazda3 Speed) and it has saved the day on several occasions with go-cart quick steering. I would never go back to a soft steer, big car that can't get out of its own way.

Doug Terry

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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