Is there a future for tiny, high-tech luxury cars?

Is bigger always better? Texans love everything bigger and in some cases bigger is in fact better. Imagine trying to sleep two people in a twin size bed and then think of how much easier it would be in a king size bed. In that case bigger is definitely better!

For decades the automotive industry and American car buyers have held the same belief, that bigger and more powerful was always better. But are things changing? Most definitely! We can thank the skyrocketing gas prices, economic turmoil and new government regulations for altering our dreams of owning a large SUV or V8 powered sedan.

In the past few years the auto industry has been taking a page from the tech industry, by packing more stuff in a smaller package. Have buyers accepted it? When the economic downturn started at the end of the last decade many car owners were forced to abandon their large SUVs and trucks for smaller more fuel-efficient models. Three-four years later car buyers now place even more emphasis on fuel-efficiency than before. The small-car segment continues to grow at a faster pace than other segments and through July of this year it was 17 percent of all car sales.

Small Cars

Are these small cars the same as the small penalty boxes that small cars were in the 1980′s and 1990′s? Definitely not. Detroit’s automakers have historically put very little effort into their small cars, since profits were small and the car buyer simply didn’t want them. Today Ford and GM have pulled a 180 with models like the Ford Fiesta and Chevy Cruze. GM and Ford now have small cars that are at the top of their respective classes in terms of fuel-efficiency, quality and styling. Car buyers have taken notice. The Chevy Cruze managed to hold onto the top-selling car spot in the U.S. this summer.

So what's next?

Today’s car buyers have downsized, but still demand popular features like navigation systems, Bluetooth and leather seats. Options that were available on their gas-guzzling SUVs. Automakers have answered this by offering many of these features on models that years ago didn’t even come standard with air conditioning! The Honda Civic can now be equipped with a navigation system and leather seats straight from the factory, but in the 1990′s there were Civics on dealer lots without a simple radio and manually operated windows.

As smaller becomes more of the norm, is there a future for small luxury cars that are packed with the latest technology? With cars like the Mini Cooper, the answer is yes. Americans have always believed that a luxury car had to be big. Look at the Cadillac Escalade, a large SUV that guzzled gas, but made you feel like the king of the world. Everyone wanted to be you! Just as Ford and Chevy now offer more appealing small cars for the economical car buyer, the luxury automakers have started to downsize their lineups. Most recently Audi has dropped the large V10 engines from its high-performance models for more efficient turbocharged V8s and Volvo has announced plans to only offer four-cylinder engines in its future models. Luxury is no longer defined by the size of your engine or how big you car is.

Mercedes-Benz, high tech luxury car, luxury car — Super sleek!
Mercedes-Benz

Luxury automakers have also given many previews of what we can expect to see in the near future. At the Shanghai Motor Show earlier this year, Mercedes-Benz previewed its next-generation A-Class with the A-Class concept, a compact hatchback that is much smaller than the Mercedes-Benz S-Class flagship sedan. The A-Class, which is expected to come to the U.S. for the 2013 model year, will be powered by a small turbocharged four-cylinder engine and dual-clutch transmission that sends the power to the front wheels. The A-Class concept was packed with tech features like a collision avoidance system that is designed to warn drivers about possible collisions and an infotainment system that fully integrates with your smartphone.

Smaller than the A-Class?

What about something even smaller than the A-Class? The name Cadillac has always been synonymous with big sedans and SUVs, but last year GM’s luxury brand gave us a look at its future with the Cadillac Urban Luxury Concept. At a very short 151 inches long, the Cadillac Urban Luxury Concept measured 50 inches shorter than the standard Cadillac Escalade SUV. Don Butler, vice president for Cadillac marketing stated, “While small in size, this concept is an exploration of what Cadillac could be in the future, as the brand continues to focus on redefining industry standards for advanced vehicle design and integrated technology.” A turbocharged 1.0L three-cylinder engine mated to an electric motor and dual-clutch transmission powered the concept. GM predicted that the tiny concept car could get up to 65 mpg on the highway. Compare that to the 18 mpg that the Escalade gets. The Urban Luxury Concept was also packed full of tech features like unique touch pad controls that can connect you to the internet and GM’s OnStar with advanced voice recognition interaction.

As luxury automakers continue to downsize their models with even more tech features will car buyers be willing to write the check? Prior to the Mini Cooper in 2001, it was unheard of for a tiny car to have a price tag close to $30k. But even though the Mini Cooper was tiny, it was packed full of features that many tiny cars at that time did not offer. The Mini proved a success and lead to other automakers moving their small car’s upmarket.

As more American’s have realized that a large luxury SUV is no longer a status symbol and a sign of a person’s wealth, more car buyers will continue to downsize, but at the same time demand many of the same high-tech features that their prior vehicles had. A luxury car will no longer be defined by its size, but by its attention to detail, style and how technologically advanced it is. A small car priced at $40,000? Get ready for it!