The head of Ford Motor Company basically said that given the US Market, Ford did NOT see how it could sell enough of the Ford KA in the US to break even. Ford believes that to many people will reject buying such a small car if they had to drive it on the same highways as big trucks.
Both Ford and Chevrolet believe that the Market for "City Cars" in the US has been filled by the SMART car. i.e. the people who were willing to buy a Ford Ka or a Chevrolet Beat already owns a SMART Car and thus NOT in the market for a new car. Furthermore the lowest price cars have always been the car market with the lowest profits, do to the fact most people looking at such small cars tend to put price over any other factor (Much more then larger car buyers). Without a $1 a gallon gasoline tax to encourage people to think in terms of MPG in addition to purchase price the market for such cars is a very tight market.
One last comment, I am in the market for a new car, I had to junk my old 1995 Jeep Wrangler and am presently using a 1997 Dodge Dakota. I have looked at small cars, and I want a very high mileage car, but when I do the numbers, keeping my paid for Dakota saves me more money then buying a new small car with twice the fuel economy assuming $4 a gallon. That remains true up till about $11 a gallon (At which point the price of gasoline justifies me to switch from a 18 mpg Dakota to a 42 mpg Chevrolet Cruze Eco. Thus it is more economically for me to keep my Dakota then to trade it in for a Eco.
If a car gets 50 mpg, that price points only drop to about $10 a gallon, thus as long as my Dakota is running, I am better off using then buying new. It is people like me that both the head of GM and Ford have both endorsed a $1 a gallon tax.
Side note: I did the calculations last month and I am NOT going to do it again here, but it was based on $4 a gallon gasoline, I drive 20,000 miles in a year AND my Dakota gets 20 mpg (It is a Five Speed Manual transmission, KBB retail value in 2008 had been $400, today KBB saying it is worth $2000). I generally get about 18 mpg, if I keep it under 50 mph. In addition I have reasonable alternatives, I use my bicycle to get to and from work, but I have to Drive to the County Courthouse on a regular basis. If I want to go to Pittsburgh (Just 70 miles away), the Amtrak round trip fair is only $28 (Which is about the same as the cost of gasoline for the same trip, at $4 a gallon).
My point is something like the Beat or the Ka would appear to me right now, I am looking for a high mileage car even at the loss of top end performance (i.e. I do NOT need a car that can go Zero to 60 in 8 seconds flat). I looked at the SMART car during the Cash for Junker program but could not get financing so I kept my Jeep at that period. I am looking at the Chevrolet Cruze Eco at the present time for it is four doors and get EPA 42 mpg. During the 2008 high gasoline prices I owned a 80cc moped that I drove all over the place, till the engine died. Enjoyed that little bike, took Allegheny Mountain quite well for an 80 cc engine (at a fast 25 mph up a 5 mile grade). Loved getting 90-100 mpg with it. The difference between taking it and my Jeep was NOT that much time difference, when I went to the Ebensburg Courthouse, 21 miles one way, My Jeep did it in about 40 minutes from the time I left my office till I arrived in the Courthouse, the Moped took about 50 minutes. The main problem for the Jeep was that at the end and start of any trip, it had to go at about the same speed as the Moped do to the type of road I had to run it on till I entered the local limited access expressway. Once on the Expressway, the speed difference was tremendous, but that ended once I left the Expressway. Thus overall average speed for the Moped vs the Jeep was NOT that great. When I took my Moped to Pittsburgh (A 72 mile trip), a trip the Jeep did in one hour 45 minutes, the Moped did in three hours on back roads, 2 1/2 hours if I took the same roads as the Jeep.
Yes, the Moped was noticeably slower, but NOT that much slower then a Car, if you exclude the interstates and other expressways. To put this is proper prospective, I have bicycled up to Ebensburg from Johnstown, it includes a three mile uphill grade till the top of Allegheny Mountain. It took me three hour up to Ebensburg, but only two hours back. The Moped did the same trip to Ebensburg in less then 1/3 of the time (50 minutes as opposed to three hours on bike). i.e. a 300% gain of the Moped over the Bicycle. The Jeep time saving over the moped was only 10 minutes or about 25%. Was using 500% more gasoline worth the time savings of 25%???
Jeep 20 mpg
80 cc Moped 100 mpg
500% of 20 mpg equals 100 mpg
10 minutes is 25% of 40 minutes
Most American reject the above numbers given the relatively historic low prices for gasoline in the US. In the 1950s and 1960s gasoline sold for 25 cents a gallon ($1.39 in 2010 Dollars). Today it is near $4,00 a gallon (Prices had drop in the last few weeks but $3.59 in 2011 dollars is NOT 25 cents in 1970 dollars for that was only $1.39 in 2010 Dollars).
Inflation Calculator:
http://www.westegg.com/inflation/In reverse inflation terms, $4 today is the same as .72 cents in 1970. I was 12 at that time and remember in the early 1970s, BEFORE the Arab embargo, my Father complaining about gasoline being high at 35 cents a gallon. We had high inflation in the 1970s, so by the time gasoline prices reached over 72 cents a gallon (about 1980), the value of the 72 cents had dropped to 63 cents. Now you had a jump in 1980-1981 to the highest prices gasoline had been since 1918, but that was followed by a relatively rapid decline do to the Oil Glut of the 1980s.
Here is a chart on gasoline prices in the US in 2010 Dollars in red (actual dollars are also on the chart, but in black on the bottom of the chart):
http://www.inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htmhttp://www.inflationdata.com/inflation/inflation_rate/Gasoline_Inflation.asphttp://www.inflationdata.com/inflation/inflation_rate/Gasoline_Inflation.asp