The New York Times' Autos section provides great insight into U.S. Automakers storied inability to create, build, and market successful small vehicles. Their article, "Detroit's Small Packages Arrived, and Left, Early," starts the story with the steep U.S. recession of 50 years ago.
Answering the question as to why GM, Ford, and Chrysler hadn't produced a small, economical vehicle before the '58-'59 recession (that brought with it an unemployment rate of 6.8 percent and plunging auto sales), the Times advises us to look back a decade earlier at the largely failed U.S. experiment in small autos. Conventional wisdom states that Americans just weren't interested in small cars with great fuel economy. But the Times explains that the first U.S. attempt at small cars "had the bad luck of being produced by chronically undercapitalized independent automakers." Therefore, they offered little price advantage over existing base models and suffered with crude powertrains and bare-bones equipment (some models even lacked flow-through ventilation). Even worse, most of the low-tech powertrains offered little advantage in fuel efficiency. Looking through the microscope afforded by the Times, it's quite clear why Americans didn't want to spend their money on ill-conceived compacts when they could spend a few bucks more to get a far nicer vehicle.
These small cars were produced by the likes of Kaiser, Hudson, and Nash. Henry J. Kaiser, who built Liberty Warships for World War II, got a loan from the Reconstruction Finance Corporation who stipulated that the Kaiser's vehicle, the Henry J., must retail for no more than $1,300. The New York Times says the resulting vehicle "reeked of cheap" but "wasn’t particularly cheap to build, and it sold for just a little less than the least expensive versions of standard sedans from the Big Three." The vehicle never sold in significant volume.
The Hudson Jet, while a respectable performer and much better equipped than the Henry J., suffered from ill-contrived styling and actually retailed for more money than full-sized cars. Again, sales did not materialize.
The only U.S. small car maker from this period to get it right was Nash. The styling resonated with buyers, vehicles were well equipped, and prices low. But the Times claims that the single most important attribute that earned Nash good sales numbers with the American buyer was the existence of "a full line of Ramblers in many body styles, including a jaunty convertible." This was the postwar era, and growing families wanted to display their prosperity through ostentatious trim packages, gobs of chrome, and trick features that perhaps the neighbors couldn't afford. Nash happily - and intelligently - responded with its comprehensive lineup. The original Nash sold well from 1950 to 1955.
While tempting to point the finger at Detroit when the '58-'59 recession hit, calling them poor planners for having nothing but ornate behemoths to offer cash-strapped buyers, a closer look at history shows that Americans tastes had soured on the compact car years before. This bad timing led to the Japanese and European auto invasion, and firms like Toyota, Honda, BMW, and Volkswagen have been gaining market share ever since.
Detroit has tried several times since then, getting close, but never quite matching the imports. The Chevrolet Corvair of the 1960s was quite brilliantly conceived and well-executed. It drove well, offered impressive economy, competitive passenger comfort, and an attractive price. But a few crucial faults, a dealer network that didn't know how to properly service the exotic aluminum-alloy engine, and a consumer advocate named Ralph Nader quickly put the nail in the Corvair's coffin. Earlier this decade, Ford rolled out its Focus to cheers and Car Of The Year awards. But nearly a decade later, the vehicle languishes on the original platform, continually losing its competitive edge to foreign compacts that have been redesigned once or even twice in the Focus' lengthy first-gen life.
Time will tell whether the 2011 Chevrolet Volt, Chevrolet Orlando, next-generation Ford Focus, and Ford Fiesta will finally, at long last, bring affordable, reliable, and desirable small cars to American automakers' portfolios. If energy costs and market realities keep exerting themselves as strongly as they have as of late, failure or even mediocrity in the small car game will not be an option for GM, Ford, and Chrysler.