Economy car is a term mostly used in the United States for cars designed for low-cost purchase and operation. Typical economy cars are small (compact or subcompact), lightweight, and inexpensive to both produce and purchase. Stringent design constraints generally force economy car manufacturers to be inventive. Many innovations in automobile design were originally developed for economy cars, such as the Ford Model T and the Austin Mini.
The precise definition of what constitutes an economy car has varied with time and place, based on the conditions prevailing at the time, such as fuel prices, disposable income of buyers, and cultural mores. It typically refers to a car that is designed to be small and lightweight to offer low-cost operation. In any given decade globally, there has generally been some rough consensus on what constituted the minimum necessary requirements for a highway-worthy car, constituting the most economical car possible. However, whether that consensus could be a commercial success in any given country depended on local culture. Thus in any given decade, every country has had a rough national consensus on what constituted the minimum necessary requirements for the least expensive car that wasn't undesirable, that is, that had some commercially attractive amount of market demand, making it a mainstream economy car. In many countries at various times, mainstream economy and maximum economy have been one and the same.
From its inception into the 1920s, the Ford Model T fulfilled both of these roles simultaneously in the U.S. and in many markets around the world. In Europe and Japan in the 1920s and 1930s, this was achieved by the much smaller Austin 7 and its competitors and derivatives. From the 1940s and into the 1960s, the Volkswagen Beetle played both roles throughout much of the world, particularly in Germany and Latin America – due to high fuel consumption, British, French, Italian, and Japanese models, all with better fuel economy, were able to capture the maximum-economy position in their home countries.