Small Luxury Cars? Detroit, Don't Bother.

SMALLER CARS WITH LUXURY NAME-plates are on the way. The BMW 1-Series coupe is due to arrive in the U.S. next spring, followed by a convertible.

The Mini Clubman, a wagon version of the popular Mini Cooper, also is due next spring. Mercedes might import the next version of its small B-Class car to the U.S. in a few years, and we already have the Audi A3 and Volvo C30.

That doesn't sound like much, but it's enough to start the usual wave of criticism: Detroit missed the boat again on a hot new segment.

I bow to no one when it comes to criticizing the product programs of Ford, Chrysler or General Motors, but this time I don't think they have been caught napping.

Potential sales volumes in this burgeoning segment are too small; Americans are too big and the prices — starting in the high twenties and soaring to near $40,000 — are too high to attract a significant audience.

In Middle America, bigger is better. Detroit in particular doesn't like small things, whether it's cars or linemen from Appalachian State.

But jibes aside, potential volumes for really small luxury cars in the U.S. are not very attractive. Audi sold 8,000 A3s last year, and Mini sales were 39,000 — in a 16.6 million-unit market. Not exactly a stampede.

Cost-efficient production is a problem, too. In Europe, auto makers have large production runs of these cars. They sell batches of them all over the world, so they can make a profit selling only a few thousand here.

But it makes no sense for GM, Ford or Chrysler to build a small luxury car here and end up selling only 30,000 for $30,000 apiece in North America.

And dolling up high-volume compact economy cars and trying to turn them into luxury models just does not work in the U.S. Cadillac tried it in the 1980s, sprucing up a Chevrolet J-Car with extra chrome and leather seats and calling it the Cimarron. It was a disaster. A gussied-up Opel model called the Catera did not fare much better.

What Detroit should do is something it already does well: build more traditional luxury cars that are big and roomy. But it should engineer them so they get terrific mileage, something like 35 mpg (6.7 L/100 km).

Picture a head-turner like the Chrysler 300 equipped not with a Hemi V-8, but all the latest fuel-saving goodies, such as a small V-6 equipped with cylinder deactivation and stop/start technology, plus a 7-speed transmission.

Or imagine it being powered by an I-4 diesel with direct injection and twin turbos. A smaller engine giving lots of mileage, and American-style luxury performance: It should get to 75 mph (121 km/h) fast, but it doesn't have to do 155 mph (250 km/h) on the Autobahn like Mercedes, BMW or Audi.

Detroit auto makers still have a chance to stay in the luxury car game. They just have to design great-looking cars, as Chrysler did with the 300, and give them great mileage.

Jerry Flint is a columnist for, and former senior editor of, Forbes magazine.