For 2007, Toyota is replacing the Echo with the Yaris—a car that has seen tremendous success in Europe and Japan. With lessons learned from Scion's success, the Yaris has an emphasis on modern styling, high economy, low prices, and strong value. The Yaris will be sold as a three-door hatchback (known as a liftback) and four-door sedan.

Travel to Europe and you'll see small cars from familiar manufacturers bearing unfamiliar names: Nissan Micra, Volkswagen Polo, Suzuki Alto, and Audi A2. Given America's traditional distaste for small hatchbacks, combined with the cost of meeting stringent U.S. safety and emissions standards, importing these cars doesn’t make much sense. However, times have changed, and while one can only speculate on the reasons—rising gas prices, crowded roads, perhaps even some anti-SUV sentiment—the fact remains that small cars are experiencing a resurgence.