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Where has all the love gone for small cars in Canada?

So far this year, sales of subcompacts such as the Toyota Yaris and Honda Fit are down 19.4 per cent – in a new-car market up by 4 per cent on the year. Just two of the top 10 best-selling cars in Canada this year are fuel-efficient little grocery-getters – the Hyundai Accent at No. 6 (22,226) and the Nissan Versa at No. 10 (14,405).

In Pictures: Entry-level models are moving off the lots in record numbers - but not as quickly as slightly larger compacts

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Auto analyst Dennis DesRosiers believes a weak-ish economy is seriously at play when it comes to small cars sales – especially the most affordable and most fuel-efficient ones.

"Entry-level is very soft this year since these buyers are likely the most hurt by difficult economic times and these consumers are the most likely to move to a used vehicle when income constrained," the head of DesRosiers Automotive Consultants wrote in a note to clients. "And we know that the used-vehicle market is performing well this year."

DesRosiers also thinks that stable gas prices have hurt sales of the most miserly cars. His research has shown "a very close relationship between sales of entry-level vehicles and gas prices" adding that "gas prices have been stable now for about a year and a half, so consumers have moved slightly away from smaller vehicles.

"Interestingly gas prices stabilized but at a relatively high level, so one would have thought that entry level would have held their share better. But given time, consumers get used to these higher prices, adjust their household budgets and are more willing to buy into other, less fuel-friendly segments."

Of course, DesRosiers wrote his comments about gas prices before prices jumped by as much as 12 cents per litre in recent weeks in eastern Canada. Prices are predicted to hit $1.20 a litre in the Toronto area by Christmas.

Paul Timoteo, president of the new-car pricing service carcostcanada.com, believes – not surprisingly – that pricing is at the heart of the matter here.

"What I usually find with this [subcompact] class of car is that they rarely have great deals on them compared to the next class up," he says, referring to compact cars like the Mazda3 and Toyota Corolla. "Many people may start their shopping looking for these [subcompacts], then find for the same price or very little more they can get a bigger and better car which is almost as fuel-efficient.

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"The sales numbers prove this out. I don't have them handy, but if you pull them out you will see, with few exceptions, that C-class models [compact cars] outsell B-class models [subcompacts] quite significantly. Take my new [compact] Jetta TDI. It's just as good if not better on gas/diesel than any B-class car and is a way better car overall for very little difference in overall ownership cost."

Timoteo is bang on. Through the end of October, compacts outsold subcompacts by better than a 4 to 1 margin – 312,064 versus 78,062.

Still, Canadians have quite a long list of perfectly good economy cars from which to choose. Decades ago, small-car buyers faced the prospect of owning a Ford Pinto or worse. But today, Ford's subcompact entry is the all-new Fiesta, a refined, entertaining, well-equipped and safe fuel sipper that went on sale in the summer and starts at less than $13,000.

However, the car's early sales figures don't even begin to approach the showroom performance of the most popular compact. Last month, Ford sold just less than 1,000 Fiestas; in a good month, Honda will sell 5,000-6,000 Civics, Canada's best-selling car. The top three or four compacts typically sell at three to four times the rate of the best subcompacts.

Ford's foray back into the little-car market is interesting for a host of reasons. First, it marks a return of Ford to B cars after abandoning the segment with the demise of the utterly lamentable Aspire. By contrast, the Ford Fiesta is a perky subcompact four-cylinder car that, with the right transmission option, can get an impressive fuel economy and delivers an entertaining ride.

"B-cars [subcompacts] do not have to look like appliances," says Frank Davis, Ford's North American product program boss, before adding "the vehicle engineers did not 'dumb-down' the [Fiesta's] suspension," and for good measure threw in a ride quieter than the bigger Toyota Corolla, along with fuel economy that is "four to five miles per gallon better than B- and C-car rivals."

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In a nutshell, the Fiesta represents a formula at least one auto maker believes will move B cars off showroom lots in profitable numbers. According to the Power Information Network, Ford of Canada is getting nearly $20,000 for every Fiesta sold and cars are typically leaving the dealer in 14 days (the so-called turn rate). No manufacturer is getting close to what Ford is doing with the Fiesta and aside from the Mazda2's 16-day turn rate, every competing model is hanging around the dealer for at least 60 days and as many as 111 in the case of the Chevrolet Aveo 5.

The Fiesta's success, at least so far, should be encouraging for other auto makers. Every car maker in Canada and the United States will need to grow sales and the profitability of fuel sippers in response to stricter fuel economy rules due to come into effect by 2016. Governments in both Canada and the U.S. want auto makers to boost their fleets' average fuel economy by 3 to 6 per cent a year into 2016 and perhaps beyond.

Car companies might have a chance to boost sales if they treat their entry-level models with more respect. The Fiesta is, again, a prime example of how an entirely different kind of small car.

Top-of-the-line Fiestas come chock full of big-car features – front airbags, side curtain airbags and even knee airbags. It has stability control, anti-lock brakes, automatic dimming mirrors and a voice-activated sound system that can synchronize with your phone or music player. A manual five-speed transmission is standard, but spring for the PowerShift six-speed automatic, which uses a double-clutch system increasingly common in Europe, and the Fiesta becomes quite fun to drive and very fuel efficient.

To be fair, the Fiesta faces off against a herd of perfectly capable, small competitors, including the Honda Fit, Nissan Versa, Toyota Yaris, Mazda2, Chevrolet Aveo 5, Hyundai Accent and Kia Rio 5.

In Pictures: Entry-level models are moving off the lots in record numbers - but not as quickly as slightly larger compacts

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