Economy Car

An economy car is an automobile that is designed for low cost purchase and operation. Typical economy cars are small, light weight, and inexpensive to buy. Economy car designers are forced by stringent design constraints to be inventive. Many innovations in automobile design were originally developed for economy cars, such as the Ford Model T and the Austin Mini. Gordon Murray the Formula 1 and Mclaren F1 designer, said when designing his new Murray T.25 city car: “I would say that building a car to sell for six thousand pounds and designing that for a high volume production, where you have all the quality issues under control is a hundred times more difficult than designing a Mclaren F1, or even a racing car. It is certainly the biggest challenge I've ever had from a design point of view.”

The precise definition of what constitutes an economy car has varied with time and place, based on the conditions prevailing at the time, such as fuel prices, disposable income of buyers, and cultural mores. In any given decade, there has generally been some rough global consensus on what constituted the minimum necessary requirements for a highway-worthy car, constituting the most economical car possible. However, whether that consensus could be a commercial success in any given country depended on local culture. Thus in any given decade, every country has had a rough national consensus on what constituted the minimum necessary requirements for the least expensive car that wasn't undesirable, that is, that had some commercially attractive amount of market demand, making it a mainstream economy car. In many countries at various times, mainstream economy and maximum economy have been one and the same.

From its inception into the 1920s, the Ford Model T fulfilled both of these roles simultaneously in the U.S. and in many markets around the world. In Europe and Japan in the 1920s and 1930s, this was achieved by the much smaller Austin 7 and its competitors and derivatives, although it failed to be accepted on the U.S. market even in the middle of the depression. From the 1940s and into the 1960s, the Volkswagen Beetle played both roles throughout much of the world—in Germany and Latin America particularly—but its was let down by relatively high fuel consumption, such that British, French, Italian, and Japanese models, all with better fuel economy, could capture the maximum-economy position in their home countries (which was also mainstream there). Meanwhile, in the US, the Beetle and other imports could command the maximum-economy position, but the mainstream-economy position was commanded by cars that would seem more like mid-range or luxury models in some other markets. By the 1960s a new wave of front-wheel-drive cars with all independent suspension had been launched. By the 1970s the hatchback had become the standard body type for new economy car models. The Soviet bloc started selling poorly built, obsolescent or obsolete cars on the world market, at subsidised prices for hard foreign currency. Many of these cars were seen as the best value proposition, because they were generally larger cars, for the same price as small western models; in the case of the Lada they were let down by very poor fuel economy. In the mid 1980s, the Yugoslavian Zastava Koral (Yugo) (a rebodied 1971-83 Fiat 127), was sold as the cheapest car on the U.S. market, South Korea's Hyundai models also sold well in the US, and have gone on to be successful around the world. Since the 1990s, the automotive industry has become extensively globalized, with all major manufacturers being multinational corporations using globally sourced raw materials and components, with a trend for moving assembly to the lowest labour cost countries. Today, every major manufacturer offers economy cars, including at least one truly small car that may fall into subclassifications such as subcompact car, supermini, B-segment; city car; microcar; and others. The U.S. market traditionally lagged behind other world markets in its adoption of truly small fuel efficient economy cars, but today it is catching up.

Features that in one decade were considered luxury items (for example, power steering, power (servo assisted) brakes, air conditioning, electric windows) would in later decades be viewed as appropriate as standard equipment even in economy models.