America's Subcompact Car Market Is Now Just Half the Size It Was Three Years Ago, and It's Falling Fast

America’s demand for subcompact cars tumbled 26 percent in 2018, yet another result that points to the eventual demise of all but a few B-segment cars.

2018’s sharp drop – equal to roughly 94,000 fewer sales in the core eight-car subcompact category – follows an equally harsh decline in 2017, when the segment lost more than 95,000 units. Led by a sharp reduction in sales of the top-selling Nissan Versa and year-over-year percentage declines of more than 29 per cent for the Chevrolet Sonic, Honda Fit, Hyundai Accent, Toyota Prius C, and Toyota Yaris, the category’s volume has fallen 48 percent since 2014.

And before you say, “Well, cars are all unpopular these days,” keep 2018’s five million-plus car buyers in mind. Car buyers do, in fact, still exist.

But subcompact car buyers are disappearing much, much faster than car buyers at large. And it may well be because the product execution of subcompact cars is really rather poor.

In 2014, 6.6 percent of the passenger cars sold in America were subcompacts. That figure is now a tick less than 5 percent. (That means fewer than 1 in 20 American car buyers choose one of the most affordable MSRPs.) Meanwhile, the compact car segment’s share of America’s shrinking car market grew from 27.4 percent in 2014 to 30.5 percent in 2018.

That’s not to say subcompact car buyers are merely migrating to compacts. There’s an exodus from across the passenger car sector that’s causing, for example, Hyundai Accent customers to become Hyundai Kona owners. Those buyers can make the climb up the price ladder to crossovers, in part, by maintaining a vaguely similar monthly payment thanks to increasingly popular longer-term finance arrangements.

(A mid-grade Accent SEL is priced at $18,265, or $6,180 less than a front-wheel-drive Kona SEL. Add a couple of years to the Kona’s term, however, and its monthly payment is only $11 more than the Accent.)

But this kind of movement is a common outcome across the entire passenger car market, from Ford Fusion shoppers who become Escape or Edge owners to BMW 3 Series shoppers who become X3 drivers to Audi A8 intenders who end up in a Q8.

Distinguishing the subcompact sector is the degree to which its volume has cratered. There were well in excess of half a million sales in this category only three years ago. At the current rate of decline, there could be fewer than 200,000 in 2019.

Up one segment, there are multiple compacts that individually produce more U.S. volume than that.

With volume in the subcompact segment tumbling below 300,000 units in 2018, the situation is already dire. After all, these cars – Sonics, Fits, Rios, etc. – are known for their low margins at the best of times.

The best of times, of course, are a distant memory. The Chevrolet Sonic, at 20,613 sales in 2018, is down 78 percent from its 2014 peak. In an admittedly challenging year given production difficulties, Honda Fit sales were 56 percent below record pace. Even with a new model and a year-over-year bump, Kia Rio volume in 2018 was still down 48 percent compared with 2012, the last time there was a new Rio. The Nissan Versa has fallen 48 percent over the last three years. Ford experienced a late-in-life Fiesta U.S. sales boost in 2018, but the company nevertheless sold 19,343 fewer Fiestas in 2018 than in 2013.

Beyond the desire for more ride height, an all-wheel-drive option, and semi-rugged styling touches that represent modern tastes, more American car shoppers may also simply be realizing what the overwhelming majority had already determined: subcompacts aren’t worth it.

Fuel economy? The most efficient Honda Fit is rated at 36 miles per gallon overall; no better than the most efficient Honda Civic.

Safety? The Insurance Institute for Highway Safety’s current Top Safety Pick+ list includes no subcompacts, but it does include the Hyundai Elantra, Kia Forte, and Subaru Impreza. (The Top Safety Pick list includes even more compacts, but only two subcompacts.)

Space? Predictably, subcompacts are suboptimal.

Dynamics? Typically lacking in power, subcompacts are further let down by less highway stability, harsher impacts on rough pavement, and more road noise.

Price? In a world of extraordinarily cheap leases, it’s hard to make the case for cheap subcompacts that are missing the features, the power, and the refinement of bigger cars when hoped-for perks such as fuel efficiency aren’t part of the package.

All of this was made abundantly obvious during a three-day stint in a Toyota Yaris hatchback, a courtesy car loaned to me during my Scion FR-S’s valve spring recall fix. Even a seasoned auto journo accustomed to driving a variety of different cars every week can be taken aback.

Not by the lack of elbow room. Not by the excessive NVH. Not by the engine’s protestations when attempting to merge with traffic. Not by the absence of key features such as keyless entry. Not by the car’s unwillingness to hold onto the straightahead position without constant steering correction.

No, any one of those faults, on its own, could be absorbed as an idiosyncrasy. Put them all together, however, and it’s a tale of glaring inadequacy.

To be fair, the current Yaris lift back is by no means the class of the field. Newer subcompacts such as the Rio erase much of the refinement gap, the Nissan Versa Note’s spacious cabin belies its exterior dimensions, and the Fiesta’s on-road behaviour has always made it possible to momentarily forget the little Ford’s position in the Blue Oval lineup.

But on the whole, subcompacts don’t offer owners the kinds of rewards – namely, huge financial savings – necessary to make the cars palatable in the U.S. market. The result, before they disappear from their respective automaker lineups, is a disappearance from America’s driveways.

[Images: Nissan, Chris Tonn/TTAC, General Motors, Toyota]

Timothy Cain is a contributing analyst at The Truth About Cars and Driving.ca and the founder and former editor of GoodCarBadCar.net. Follow on Twitter @timcaincars and Instagram.