World's Smallest Cars

The plunge in oil prices since their highs last July may have relieved some of the anxiety drivers feel when pulling up to the gas pump, but auto makers are still betting on consumers favoring more fuel efficient cars. After all, it wasn't just high oil prices that were sending car buyers to small cars. Several progressive governments, including Australia, Canada and China, have come out with policies to encourage their citizens to buy gas sippers.

Auto makers have responded by coming out with mini cars that can squeeze in the tightest parking spots. Some have brought back classics such as the BMW Isetta, Fiat 500, and Mini Cooper, albeit more fuel efficient versions. Others are planning to come out hybrids or electric vehicles this year or next year. Many multinational car manufacturers are selling these small, fuel efficient cars abroad, particularly emerging markets where locals earn less money yet want cleaner cars. At the same time, auto companies from China and India are also entering the game and coming out with their small cars with hopes of eventually exporting their cars overseas. Heres a look at some of the worlds smallest autos.


Tata Motors' Reversal of Fortune

Just a year ago, Indian carmaker Tata Motors was riding high. Now it's suffering major losses and there's still no launch date for the Nano

Chairman of the Tata group, Ratan Tata, poses with the Indica Vista. SAJJAD HUSSAIN/AFP/Getty Images

What a difference a year makes. Just last January, Tata Motors (TTM) was on top of the world. It had sewn up a $2.3 billion purchase of the Jaguar and Land Rover brands, had just unveiled the intensely popular Nano—the world's cheapest car—and its shares, along with India's stock market, were soaring.

But on Friday evening, Jan. 30, at the stately Mumbai headquarters of India's sprawling Tata Group, the bad news just kept coming: quarterly losses of $54 million, the first in more than seven years; a nearly one-third drop in revenues on a quarter-over-quarter basis; no solid date for the mass launch of the Nano, which has been delayed by several months after the company was forced to change production sites; and no clarity on how the company intends to pay back the billions of dollars in bridge loans it took out to pay for Jaguar/Land Rover. In spite of the gloomy results, the company struck a hopeful note. "We are seeing an upturn in consumer demand," says Ravi Kant, the CEO of Tata Motors. "[We are] more hopeful this quarter."

The rapid reversals at Tata, which is probably the most internationally visible of Indian automakers, mirror the suddenness with which many Indian companies have seen their fortunes change as global lines of credit have frozen and the local economy has slowed down. Exports are dropping for the first time in nearly a decade. Interest rates have remained high to help control runaway inflation, which for a while last year crossed 12% before stabilizing to just under half that figure. "It's not just Tata; it's the entire sector, even though this is particularly bad timing for them, since they have so much looming debt," says one auto analyst, who asked not to be named because of company policy. "Unless interest rates come down, and salaried professionals feel more secure about their jobs, it's really not likely that car sales are going to go up."
Bad Timing for Tata

In effect, the rules of the game changed just while Tata Motors was set to hit a home run. The No. 3 carmaker in the world's second-fastest-growing car market saw its revenues sag, then go into free fall, as Indians delayed car purchases in a bad economy. Tata Motors had expected blockbuster sales for the Nano, which was to have launched around October 2008. But protests over the way a local government acquired land from farmers before leasing it to Tata forced the company to shut down and move a nearly completed $350 million factory across the country. "Dismantling is a complex problem with moving suppliers, etc.," says Kant. "But there are some interim arrangements to produce the Nano in small numbers to whet the appetite but not satisfy the hunger."

At the same time, India's manufacturing sector has slowed down because of tight credit, and Tata's commercial vehicle sales (where the company owns nearly 60% of the world's fifth-largest commercial vehicle market) have dropped precipitously. And the bills for the purchase of Jaguar/Land Rover, completed when the global economy was gorging on easy credit, came due just as that credit vanished, leaving the company struggling to convert expensive bridge loans into cheaper long-term commitments.

For those looking for a silver lining, though, there's been some good news this week. On Wednesday, the company bagged a $450 million, 12-year contract to build and maintain buses for the city of New Delhi, which is in the midst of upgrading its infrastructure. That should come as a shot in the arm for Tata Motors, which sold nearly 40% fewer commercial vehicles this quarter than the comparable quarter a year ago.

Loan Troubles

And for its Jaguar/Land Rover subsidiary, which declares results separately and is believed to have been profitable last year, there was hope in Tuesday's announcement by the British government that it would guarantee $1.9 billion in loans from the European Investment Bank for car manufacturers and another $1.4 billion in other lending. Tata Motors, which took out expensive bridge loans to pay for the Jaguar/Land Rover purchase, has had trouble raising money to pay those loans back, but it is still unclear if it can use those EIB credit facilities to pay back the bridge loan. "Of course, we plan to apply for as much help as we can get under that program, but the indication we've gotten from the [government officials] there is that the loans are intended to help keep production lines running, not directly pay off accumulated debt," says an official at the company's finance department, who asked not to be named because he was not authorized to speak to the media.

After an undersubscribed rights issue, Tata has sold millions of dollars of commercial paper at interest rates as high as 11%, according to data collected by Thomson Reuters (TRI), making it the second-largest seller of commercial paper in India. In December, to raise cash to pay back loans that were coming due in the first half of 2009, the company even took cash deposits from investors and others, offering an 11% return on the investment, raising a little over $60 million. With the money from the rights issues, the company has paid down about $1 billion in debt, says Kant. "We are still in talks with the banks," he says. "We are in an upturn, and the cycle will begin to correct itself."

Of all of India's companies, Tata Motors is perhaps the least likely to be swamped by these problems. Part of a well-capitalized group, the company has options others don't, including assistance from its parent company, the Tata Group. As India's economy recovers, car sales will revive and so will commercial vehicle sales, which already saw an uptick in the last month, according to data from the Society of Indian Automobile Manufacturers. Tata Motors' stock, down 52% this past quarter and now trading well below book value, is seen as a good long-term bet. It is already inching up this week, up as much as 5% when the British loan guarantees were announced.


World's Smallest Cars List

1. Audi Metroproject Quattro



Audi first unveiled this super mini luxury car at the 2007 Tokyo Motor Show as the Audi metroproject Quattro concept car. The hybrid car combines a 1.4 TFSI gas engine with a 27 horsepower electric motor that can go from 0 to 62 miles per hour in 7.9 seconds. Production and sales of the A1 is expected to begin this year.


2. BMW New Isetta



BMW came out with the original Isetta 1953, after World War II, to meet the need for cheap, short-distance transportation in Europe. The bubble car was sold in Spain, Belgium, France, Germany, Britain, and Brazil. BMW is now bringing back the new Isetta in the form of an electric car, which should arrive in American showrooms in 2012, to help meet California's zero emissions vehicle legislation.


3. BYD FO Mini




Battery manufacturer-turned electric car maker BYD spent five years developing the F0 mini compact car. In September 2008, BYD started selling the 1.0 liter gasoline engine F0 starting at $5398. The car was originally called the F1 but changed to F0 to avoid copyright violations with the Formula 1 racing league.


4. Copen Daihatsu



The Copen is Daihatsu's sportiest model and probably the only convertible/ open car among 660 cc class kei cars in the world. (Kei car is a micro car with engine no bigger than 660 cc) The two-seater roadster goes from zero to 60mph in a respectable 11.7 seconds, while averaging 44.1 mpg of gasoline. Its electric retractable hardtop goes up or down in 20 seconds. In some overseas markets, mainly in Europe, a larger 87-horsepower, 1.3-liter engine version is also available. Since its launch in 2002, Daihatsu Copen has sold constantly more than 500 units a month, 1,000 units a month maximum. Each car is built carefully by skilled technicians selected specially for the Copen. In Japan, price ranges from $17,340 to $21,450.


5. Fiat 500



Italian auto maker Fiat sold the original Fiat 500 from 1957 to 1975 as a cheap, practical city car. Fiat brought back the Italian automotive icon in 2007 and updated the body shape and made it bigger as well as souped up the interiors with four seats, seven airbags, and an iPod connector. At the 2008 British Internatoinal Motor Show, NICE Car Company and Micro-Vett unveiled an electric powered Fiat 500 that can go up to 65 miles per hour.


6. Ford KA



Ford (ticker: F) has been selling the smallest car in its portfolio, the Ka, in Europe and Latin America since 1996. On Jan. 1, Ford launched the second generation Ka, based on the Fiat 500, in Britain. The Ka had a cameo in the James Bond film Quantum of Solace. Ford CEO Alan Mulally says that hed like to bring the Ka to the U.S. to meet rising demand for small cars. However, the Ka, which comes with a 1.2 liter gas or 1.3 liter diesel engine, wouldn't arrive in American showrooms until next year or 2011 at the earliest.


7. Geely Panda



Hangzhou, Zhejiang province-based Geely unveiled its mini car, the Panda (not to be confused with the Fiat Panda) at the Beijing Auto Show in April 2008, becoming the latest Chinese auto maker hoping to profit from the Chinese government's policy to encourage Chinese consumers to buy smaller, more fuel efficient car. The 1.3 liter engine Geely Panda gets 48 miles per gallon. Geely is also coming out with an electric version of the Panda powered by a lithium-ion battery pack that travels up to 40 miles per hour.


8. Chevrolet Spark



General Motors took the Daewoo Matiz three-door hatchback and re-branded it the Spark. GM already sells 0.8 liter and 1.0 liter engine models of the Spark in South Africa, the Middle East, India, Latin America, and China (under the Wuling brand). GM will start selling the Spark in Europe in the first quarter of 2010 and in the U.S. in 2011.


9. Honda Life



Unlike bigger rivals Toyota and Nissan, Honda (ticker: HMC) makes its own kei cars including the strong selling Life. Since its launch in 1971, Life has been the most popular Honda car in domestic market with more than 1.5 million sold. In November 2008, the company brought out a new version---the first full-model change in five years. A new Life costs between $10,270 (945,000 yen) and $18,260 (1,680,000 yen).


10. Mercedes Smart For Two



The Smart car was originally started by Swiss watch maker Swatch, which teamed up with Daimler-Benz, to make a two-seat, 8.8-feet long subcompact car that can be parked in the narrowest parking spaces. The Smart ForTwo uses both a 1.0 liter gasoline engine and a 20 kilowatt electric motor that makes it the most fuel-efficient gasoline-powered vehicle that is not a hybrid in the U.S., according to fueleconomy.gov. Mercedes-Benz has sold more than a million Smart cars in 37 countries. The Smart car went on sale in the U.S. in January 2008. Daimler plans to come out with an electric version of the Smart car in 2010.


11. Mitsubishi I



By most accounts, DaimlerChryslers alliance with Mitsubishi Motors was a flop --- except for the birth of the Mitsubishi i. Designed by Frenchman Olivier Boulay --- now back at DaimlerChrysler in Tokyo, the i is arguably the most stylish kei car on the road. It received the Good Design Grand Prix 2006 award from Japans Ministry of Economy, Trade and Industry and won a best car gong from the Automotive Researchers & Journalists Conference of Japan (RJC). Prices range from $11,530 (1,060,500 yen) to $17,230 (1,585,500 yen).


12. Mitsubishi Toppo



The name Toppo comes from the English top (roof) and the Japanese noppo (thin and tall). Mitsubishi launched the original Toppo in 1990 but it was discontinued in 2003. Last year, it made a comeback. One characteristic of the latest model is its high roof. It is 1.43 meters (56 inches), from the floor to the ceiling, which is tall enough to enable an 11-year-old child of average height to change clothes while standing inside the car. Price ranges from $10,160 (934,500 yen) to $17,060 (1,569,750 yen).


13. BMW Minicooper Convertible



British Motor Corporation chief designer Sir Alec Issigonis originally designed the Mini Cooper in the late-1950s, after the British government started rationing gasoline when Britain fought in the Gulf of Suez crisis. The Mini Cooper was the most popular British car ever, selling over 5.4 million units between 1959 and 2000. BMW, which took over the Mini brand when it acquired the Rover Group, resurrected the Mini in 2002. At the North American International Auto Show, BMW unveiled the 1.6 liter engine 2009 Mini Cooper convertible, which goes on sale for starting at $24,550 in March.


14. Volkswagen Skoda Fabia



In 1999, the same year that that Volkswagen acquired Czech auto manufacturer Skoda Auto, they came out with the Skoda Fabia supermini. The car got a revamp in 2007. Already one of the more popular subcompact cars in central Europe, Skoda also makes the the Fabia in the Ukraine, Bosnia, India, China, Russia, and Kazakhstan. The push into key emerging markets has helped Skoda Fabia sales grow 5.9% to 246,561 units last year.


15. Subaru R1E



The Subaru R1e is an electric vehicle concept based on the R1, a 660cc kei car. In partnership with Tokyo Electric Power, Subaru owner Fuji Heavy has been testing the car since June 2006 and will tap that know-how in the Stella, an electric vehicle which is scheduled to be released in Japan this summer. The Stella, which can be charged using a home electricity supply, will reach a maximum speed of 100 kilometers per hour (62mph) and have a range of about 80 kilometers (50 miles). Just as important, Fuji Heavy says its batteries can be 80% recharged in 15 minutes.


16. Suzuki Wagonr



Today, the best-selling kei cars in Japan are tiny minivans. Suzuki started the trend in 1993 when it launched the Suzuki WagonR. The original model was the first kei car to win the Car of the Year award from the Automotive Researchers & Journalists Conference of Japan Last year, its fourth-generation model received the same honor. The top selling car in Japan in any class, the WagonR, achieves fuel economy of 23 kilometers per liter (55mpg) under Japanese test conditions. Price ranges from $9,870 to $18,170.


17. Tata Nano



In January 2008, Indias largest auto manufacturer Tata Motor announced with much fanfare plans to make the Tata Nano or People's Car that would retail for 100,000 rupees or roughly $2,500. However, production of the Tata Nano has not been smooth. Tata has had to relocate the Nano factory to Gujarat after protests erupt from the West Bengal government seizing farmland and turning it over to Tata. Prices of raw materials, including steel and rubber, have soared. The Tata Nano was scheduled to roll off production lines at the end of last year, but now Tata hopes the car will be ready early this year.


18. Toyota IQ



Toyota's (ticker: TM) iQ, which measures just 2.985 meters (117 inches) long by 1.68 meters (65 inches) wide, seats three adults and one small child by taking advantage of some pretty nifty design innovations, such as a flat fuel tank under the floor and a new smaller, but not less effective, air conditioning unit from Denso. It's economical, too. Under the Japanese 10-15 test cycle, the iQ gets 54 mpg, while CO2 emissions from its one liter gasoline engine are among the lowest in the Toyota stable, including hybrids. Prices range from $15,220 (1.4 million yen) to $17,390 (1.6 million yen).


19. Volkswagen Beetle



Volkswagen brought back an updated version of the original Beetle in 1998. After a decade of fairly strong sales, the new Beetle is due for a redesign. Last year, VW head Martin Winterkorn said that a Beetle successor was being developed and would likely be manufactured in Mexico again. The next generation Beetle is scheduled to be ready in 2010.