(The Birmingham Post Via Thomson Dialog NewsEdge) Until the price of petrol went through the roof, selling small cars to Americans was a hopeless proposition.

As British manufacturers such as long-gone Morris and Austin discovered 60 years ago.

Even a couple of years ago the average American on the turnpike regarded subcom-pact cars, or minis, as tiny, cheap "econoboxes" with noisy, underpowered engines but no frills. Few ever bought them.

But as petrol prices settle in about $3 per gallon, the market for tiny cars is rapidly growing and changing as their styling, interiors and features continue to improve.

"I don't think there's a segment that's come to life quite so quickly and robustly," said Jim Sanfilippo, senior industry analyst for Automotive Marketing Consultants in Bloomfield Hills.

Analysts say eight tiny cars are now fighting it in the US market and that number is likely to grow as demand increases.

Sales of the diminutive vehicles, called "B-Cars" in the industry, were up 43 per cent in the first seven months compared with the same period last year. So far this year, sales have hit 151,848 and analysts say the total for the year will easily surpass the 175,387 sold in all of 2005.

Still, it's just a small fraction of a market dominated by larger vehicles. Sales of cars and light trucks so far in 2006 total more than 9.8 million.

The trend, though, has drawn interest from all the major car companies.

Executives at Ford Motor and DaimlerChrysler's Chrysler Group hinted recently that they've got new subcompacts in the pipeline.

Toyota - which last month sold more cars in the US than Ford and which is on course to overtake General Motors as the world's biggest carmaker by volume - Honda and Nissan all entered the market this year with great success.

Demand for the Honda Fit and the Toyota Yaris is so high that dealers sell the cars at or above showroom price before they arrive at the showrooms.

General Motors' Chevrolet has been in the market since 2003 with the Aveo, a tiny car built in South Korea by the company's GM Daewoo affiliate.

The Aveo is the largest-selling subcompact in the US and the company is banking on increased sales when it unveils a redesigned four-door version.

The Yaris has been the greatest success so far, with 32,822 sold as of July 31. Even though it was just introduced in March, the funky car is closing in on the Aveo for the top spot in the class.

"We have basically sold out every single month," said Jim Turner, managing partner of O'Brien Auto Park in Urbana, Illinois, a group of eight dealerships that includes Toyota. "We pre-sell them before they get here, and they've pretty much been sticker price. Suffice it to say it's been a huge hit."

Honda also has been having trouble meeting demand for the four-seat Fit. At Howard Cooper Honda in Ann Arbor, Michigan, graduate student Joshua Bornfield, aged 26, was disappointed to find none of the cars on the lot.

He is looking to buy his first new car, and prefers a sub-compact because of price and petrol mileage.

"If I were able to afford a more expensive car, I don't know that I would pick anything bigger at this point," he said. "I'm looking for fuel economy."

Petrol prices are indeed driving the increased interest, but the cars are selling because they're much better than the old econoboxes, said Dan Gor-rell, a partner in Strategic Vision, a San Diego-based market research firm and consultant to carmakers.

"The B-cars of today are far better, more functional, more styled than those of the past," Mr Gorrell said.

A few years ago, the Toyota Echo flopped largely because it looked and felt cheap, Mr Gorrell said. In contrast, the rounded Yaris is much nicer inside and out.

"The options and equipment rival luxury cars of ten years ago," said Jesse Toprak, chief economist for Edmunds.com, an automotive website. "They're not your mother's subcompact any longer."

Chevrolet has realised this with its 2007 Aveo, which is made of better materials than its predecessor, said GM spokesman Jim Burke.

When the car is unveiled it will have options such as remote keyless entry, heated outside mirrors and steering wheel audio controls.

"There's a surprising level of content in the vehicle," Mr Burke said. "Things that you aren't used to seeing in the economy segment." Nearly all the subcompact cars get 35-40 miles out of every gallon of petrol, and all are pleasant inside and out, Mr Sanfilippo said. Prices range from under $10,000 (pounds 5,263) to around $16,000 (pounds 8,421).

Mark Fields, Ford's president of the Americas, said breakthroughs in design and materials have made the interior space of small cars equivalent to that in larger vehicles.

He predicted that sales in the B-Car segment would grow to 600,000 by the end of the decade and said Ford is looking seriously at entering the market.

Ford research shows that fuel economy has risen to among the top three factors that drive auto purchases, along with quality and safety.

Technology, including side air bags and stronger materials, have made the tiny cars safer. Mr Sanfilippo said: "There's not that concern any more. You can drive safely."

Eric Ridenour, the Chrysler Group's chief operating officer, said last week that his company is discussing a B-Car with potential manufacturing partners. We definitely see a pretty good-sized market, but not huge," he said, adding that it's a difficult segment in which to make money.

When DaimlerChrysler announced that it would sell its tiny two-seat Smart car in the US in 2008, company officials said it would be marketed in urban areas where traffic congestion and parking shortages make smaller cars more practical.

But so far this year, the surge in tiny cars isn't limited to big cities.

The Yaris, for instance, is selling well in the rural Midwest, where people are adjusting to higher fuel prices.

"We're 120 miles south of Chicago in the middle of corn fields and people are buying them," said Mr Turner.

All of which must strike British car industry workers with memories of the post-Second World War era as ironical.

That's because in the fight to win dollar exports with which to replenish Britain's drained reserves, companies such as Morris Motors targeted the US market with models such as the Morris Minor. Although the car was to become a British classic, its pre-war, sub-1,000cc, four-cylinder engine was no match on the interstate highways of America for the big home-built V8 Fords, Buicks and Chevrolets that poured out of Detroit.

With petrol then costing pennies per gallon, there was just no reason for Americans to buy British.

The Minor, together with other brave but ill-considered export models like the Austin Atlantic and the Nash Metropolitan, sank without trace.

The exception is the successor to the original Mini, the revolutionary baby car designed by Alec Issigonis and launched by BMC in 1959.

Now built by BMW at Oxford, Mini is doing well in America. The US is our second biggest market behind the UK," spokeswoman Ellysia Graymore said.

"Last year we sold 45,000 Minis in the UK and 40,000 in the US. Next week sees the start of a massive drive across America for which more than three thousand Mini owners have signed up."

Copyright 2006 Birmingham Post & Mail Ltd.

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