Small does not always mean Inexpensive

If you’re a technophile, or just happened to go shopping for a new laptop lately, you may have noticed that the smaller the laptop, the higher the price (with the exception of the Asus Eee). Why is that? Aren’t they using less silicone? Less liquid crystals for the screen? Less precious metals?

Well, for laptops, smaller sizes mean less room to put the parts. If you want a 12″ laptop with a 120Gb drive vs a 40 Gb drive, you’re going to pay more than someone buying a 15″ laptop because the factory has to be more creative to find room to put that part. In addition, they need to keep the parts cooled, which is harder when there’s less air-flow.

Why Small Cars aren’t Always Inexpensive

Now let’s compare laptops with cars. If you want a small car that provides decent elbow and hip room, plus 5-star crash ratings, a premium audio system, room for 4-5 passengers plus luggage, a high-powered engine, and luxury car-like quality, then you’re going to pay the price.

Cars that fit into the “econobox” segment, such as the Honda Fit, Nissan Versa and Toyota Yaris, can be had for well under $20,000, but you won’t get everything that you would in a larger, premium car. If you want a sub-compact car that can do 0-60mph in under 5.5 seconds and still take a turn at 80mph without feeling like you’ll fly off the road, then you’ll need to be willing to pony up a few more thousand.

“Premium Economy” Cars

Over the weekend, as my wife and I were driving on the interstate, we saw a Volvo C30 drive by. My wife commented that it was cute (I’m still not sure about that odd rear hatch window thing) and that I could trade in my truck for one only if it averaged 30 miles per gallon. Wanting to see whether the car was worth the trade, I did some research.

First, I found out that the Volvo C30’s competition was more along the lines of the MINI Cooper S, Audi A3, and BMW 1 Series. Hmm, now I know what price range I’m in (NOT under $20,000). The C30 starts just over $22,000, and can exceed $40,000 with all the options and an upgraded engine.

Wow, that’s no Ford Focus! (Volvo is owned by parent company Ford, and the C30 shares many components, including engine, of the European Ford Focus and Mazda3).

So what do you get for $10,000-20,000 more than a Honda Fit? Well, a very fine interior (the “floating console” is pretty sharp), a much more powerful engine (double the horsepower and torque), “European styling”, and more confidence on corners and highway speeds. Oh, and about 10 less miles per gallon on average.

And this comparison goes across the board for most “premium economy” cars. You’re paying at least $10,000 more, but you’re getting the name, look and driving characteristics to match the price. But the question to ask is what do you need? Gas mileage or a small, fun car?

If you’re going after gas mileage, then a MINI Cooper or A3 aren’t the right choice. But if you want a fun little commuter (or everyday) car, and you’re willing to pay more while getting the gas mileage of a regular mid-size sedan, then go for the premium economy segment.

Personally, my wife has a 2005 MINI Cooper and she LOVES it. I can’t imagine her driving anything else (she’s tried). But when you’re sitting in traffic an hour each way to and from work, having the premium feeling around you makes the ride that much better. But we bought it used and saved $8,000 off a comparably equipped brand new MINI Cooper. You can still have luxury at an affordable price if you know how to look.

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