10 of the Best Small Cars

8 March, 2024 By Bruce Newton

The sales of small cars may have tanked in Australia, but there are so many reasons why smaller is often better.

It wasn’t that long ago that small cars were the most popular vehicles sold in Australia.

The Toyota Corolla and Mazda3 were the number one sellers every year between 2011 and 2015 and the small car segment consistently claimed the biggest share of a one million car market.

But looking back now, we can see that was a brief interlude as new car buyers shifted away from locally built large cars to imported SUVs and utes.

In 2011, small cars held a 22.2 per cent share compared to 5.5 per cent for small SUVs, 9.9 per cent for medium SUVs and 11.2 per cent for 4x4 pick-ups.

Nowadays small cars claim 9.1 per cent of the new vehicle market, 4x4 utes 17.8 per cent, small SUVs 14.7 per cent and medium SUVs 19.5 per cent, making it the biggest selling segment of them all.

However, the fall in popularity of small cars doesn’t mean they lack quality. While an SUV might deliver those adventurous looks, a higher seating position and the functionality of the traditional wagons they’ve replaced, the small car still has a lot to offer.

Small cars are usually lighter than an equivalent SUV, so that means they use less fuel. That helps your hip pocket and the environment because less petrol being used means less CO2 is being emitted.

Further aiding the bank account is the purchase price for small cars – even though they have climbed in recent years like the rest of the market – it is still cheaper than equivalent SUVs.

For instance, the cheapest Hyundai i30 five-door hatchback is $24,000. The cheapest Hyundai Kona small SUV is $32,000.

Being lighter in weight and with those kilos usually centred lower down, usually means a small car is a nimbler handler than an SUV.

It’s not just enthusiast drivers who should care about that, but all of us because sharper and more responsive handling is important in an emergency situation.

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But if you are an enthusiast driver then you’re going to enjoy that trait in some of the high-performance hot hatches and sedans offered by different brands in this segment. Even as overall sales have dwindled, these cars have stayed popular.

On a more aesthetic level, small cars also come in a wider variety of appearances than ‘cookie cutter’ SUVs. There are both hatches and sedans to choose from, they’re often big enough to comfortably fit adults in the rear seat and substantial luggage securely in the boot.

So here are 10 of our favourite small cars worthy of your consideration and another four honourable mentions. Let’s check them out.

Small cars under $40,000

Hyundai i30 - $24,000

The cheapest car in this entire line-up is also one of the best.

Launched as a hatch in 2017 and as a fundamentally different sedan in 2020, it offers a convincing combination of driving competence and equipment. If you’re out there shopping for a safe, simple car that your kids can start their motoring life in, then the i30 should be on the list.

The hatch has the distinction of being the subject of one of the most comprehensive local tuning programs ever undertaken by Hyundai Australia, and it shows in the way it drives.

The base model 2.0-litre five-door hatch is a sweety, but the sad news is it’s about to disappear from Hyundai showrooms because production sourcing is shifting from Korea to Europe. There will still be turbo-petrol models, a mild hybrid and even the feisty N. But it will be missed, not least because the price is inevitably going up.

The sedan, which used to be called the Elantra, has been freshly updated and now includes a frugal petrol-electric hybrid range to go with the 2.0, the turbo and the exciting N. However, the sedan does not get an ANCAP star rating. That’s because it hasn’t been tested by the local safety authority or its European partner EuroNCAP.

Kia Cerato - $27,060

Unlike its sister brand Hyundai, Kia has a basically interchangeable range of five-door hatches and four-door sedan Ceratos. They come with the same 2.0-litre or 1.6-litre turbo-petrol engine choices (no hybrids here) and front-wheel drive mechanical underpinnings, the same specification levels and the same prices through both model walks.

The basic drive experience of the Cerato is competent and confident, definitely benefitting from local tuning. The higher up the range you go the more involving it gets, with the flagship GT Turbo the one for practical drivers with a bit of an enthusiast leaning.

It’s worth noting the two cheapest models in the range, the S and Sport get a four-star rather than five-star ANCAP rating because some safety equipment you’d expect as standard is optional here.

On the flipside, all Ceratos are covered by Kia’s excellent seven year/unlimited km warranty.

The current Cerato will be replaced by an all-new model in early 2025 that will be named K4. Little is known yet except it will definitely be a bigger car.

Mazda 3 - $30,470

The high-quality Japanese brand has built a lot of its success on the Mazda3, which 10 or more years ago in a previous generation was Australia’s top-selling car. The rise of SUVs put paid to that.

This generation was launched in 2019 as both a hatch and sedan and like the Cerato, is priced identically across both body styles and six specification levels.

Speaking of pricing, the new Mazda3 went up as much as $4500 at launch and more than $5000 since then, which is pretty outlandish. Mazda hasn’t been alone in this upward spiral, but it’s certainly had a decent crack.

If it’s any consolation, the current Mazda3 is a higher quality product than its predecessors. The hatch’s exterior styling is modern and sleek if a bit lacking in boot space. The sedan is more formal and also more spacious in the rear seat and boot.

Inside, the presentation is minimalist and functional, eschewing much of the complexity other brands pile on.

The driving is familiar. A carry-over range of four-cylinder petrol engines and smartly tuned handling deliver confident manners bordering on the sporty.

Toyota Corolla - $29,270

Toyota is the goliath on the global stage when it comes to small cars, with the Corolla selling more than 50 million across more than 50 years in 150 countries.

In Australia it’s been a cornerstone of Toyota Australia’s success since it arrived in 1966. The current range is the 12th generation.

While hatch and sedan are priced the same and have the same choice of 2.0-litre petrol and 1.8-litre petrol-electric hybrid drivetrains, the sedan is built on a longer wheelbase, which means it offers better rear seat and boot space. Like the Mazda3 hatch, the Corolla isn’t great for rear seat passengers or luggage.

Toyota has worked assiduously improving this generation Corolla since it first popped onto the scene in 2018. Most importantly it has upgraded safety, while the addition of Apple CarPlay and Android Auto connection was a 2019 highlight. You’ll pay $2500 extra for the hybrid, which is worth it for the fuel savings and performance advantages it delivers.

Subaru Impreza - $31,490

At the time of writing, we’re right at the cross-over point for the new sixth generation Subaru Impreza, which is now in dealerships and will soon start rolling out to customers.

Having not driven it yet, we’ll reserve judgement on how it performs. But one thing we can say given its long and consistent history, is it will be distinctly a Subaru. And that distinct character is supplied by the horizontally opposed (or boxer) engine layout and standard all-wheel drive.

The petrol boxer is a chunky characterful engine that delivers a distinct soundtrack if not especially distinct performance or frugality.

All-wheel drive provides a surety on slippery surfaces that used to be a big advantage over front-wheel drive cars until the arrival and deft tuning of traction and stability control.

The outgoing Impreza was quite spacious inside, but not cutting edge in its presentation or safety equipment level. We’ll wait to see how the new model stacks up.

The Impreza only comes as a hatch while the related but now separately named high-performance WRX only comes as a sedan and wagon.

Honourable mentions under $40,000

BYD Dolphin - $38,890

Toyota Yaris - $24,800 (officially classified as a ‘Light Car’)

Small cars over $40k

Volkswagen Golf - $39,190

Now well into its eighth generation, the Volkswagen Golf is a car with premium pretensions but without the cost attached to luxury brands like BMW and Benz.

The Golf’s greatest talent in recent generations has been the ability to make its passengers feel they are having a special experience. It comes from the textures of the materials, the design of the interior and the way it drives. It feels welcoming, confident and savvy.

These days as SUVs take over, the Golf range has been cut back a fair bit in Australia. There’s no wagon and the mainstream line-up offers only a 1.4-litre turbo-petrol engine and then its straight into the GTI hot hatch and the even-hotter all-wheel drive Golf R hatch.

The GTI is an icon and one of the most accessible and enjoyable everyday performance cars on the planet.

It’s not all positives of course; interactions with the infotainment system can be unnecessarily complicated and the Golf has had some mechanical controversies in the past that haven’t helped its reputation for durability.

A significant update dubbed Golf 8.5 arrives in Australia in late 2024 or early 2025.

MG MG4 - $38,990

The MG4 isn’t just impressive because it’s an affordable electric car. It’s also the most complete and best-resolved Chinese vehicle yet to be sold in Australia.

It is based on a ground-up electric car platform so there are no compromises such as unnecessary transmission tunnels that compromise interior space.

It looks good externally, has a spartan yet effective interior design and it drives with a degree of confidence and comfort that no other Chinese car can yet match.

The most annoying things are the way so many controls are handled solely through the screen – it’s a distraction rather than a help – and the overly intrusive lane keeping aids need to be better tuned to be less obtrusive.

One of the important things about the MG4 is it isn’t just one car but a complete range of five-door hatchbacks that start with the economy Excite 51 and stretch all the way to the sole dual motor all-wheel drive model, the XPower. So there is choice here to suit a variety of budgets and desires.

BMW 1 Series - $54,800

When BMW first launched the 1 Series back in the early 2000s it was one of few rear-wheel drive cars in the class. That was a move designed to keep the German luxury brand close to its sporting roots.

But the compromised interior space and the economic logic of going front-wheel drive on a platform shared with Mini led to a swap of driving wheels for this third generation launched all the way back in 2019.

If you thought there might be outrage you’d be wrong. The latest 1 Series has proved itself a very competent small car with decent manners, decent space, a solid build quality and the cheapest on-road price you can find for a BMW.

However, the 1 Series is not especially well equipped for the money, while the entry-level triple-cylinder 118i is better at being frugal than fast. Something more closely aligned with real BMW-style performance can be found in the 128ti or the flagship M135 xDrive. A 1 Series update is expected by the end of 2024.

Audi A3 - $53,100

The original German small luxury car entered its fourth generation in Australia in 2022, taking some time to make the trip across the globe thanks to the perils of the COVID era.

It is available as both a sedan and five-door hatchback (or Sportback as Audi calls it), starting off with a 1.5-litre turbo-petrol engine with 48v mild hybrid assistance, then upgrading to a 2.0-litre turbo-petrol engine.

From there it’s into the more exciting S3 and rampaging RS3 models, the latter powered by a distinctive five-cylinder 2.5-litre engine hitched up to all-wheel drive.

As Audi is part of the larger Volkswagen group, the A3 and Golf have quite a lot in common. So the proposition with the A3 has always been that you pay more but you get a more luxurious experience with it.

To be frank, as the Golf has become more upmarket itself, that’s been a harder and harder road for the A3 to travel along. Still a nice car though.

Mercedes-Benz A-Class – $61,900

Just like Audi and BMW, Benz decided years ago that building a small luxury car made lots of sense. But while they went relatively orthodox, the A-Class started off as an egg-shaped curio.

Through the generations it has evolved towards the straight and narrow and is now offered as both a five-door hatchback and a four-door sedan.

Once upon a time it was relatively affordable, but the A-Class has risen steeply in price just like the rest of the Benz range. You would have to be a Benz enthusiast to covet an entry-level A200 because there are cheaper cars that do the job just as well and, in some cases, better.

The real highlight of the A-class range comes with the AMG 35 and 45 S models. The latter is the hot hatch taken to just about its ultimate in both the way it performs and the way it looks.

This fourth generation A-class has been around since 2018 and was updated in 2023. Its successor is expected to start rolling out in 2025 with both battery electric and traditional petrol power.

Honourable mentions over $40,000

Cupra Born - $59,990

GWM Ora - $39,990