The Best New Cars

Detroit's back is against the wall, and that's good news for car buyers. As the Big Three shift into survival mode, they're starting to churn out their best vehicles in years -- perhaps decades. Ford, GM and, to a lesser extent, Chrysler are closing the quality gap with foreign carmakers and building vehicles -- such as the new Chevrolet Malibu and Cadillac CTS -- that are generating excitement.

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Overall, it's a buyer's market. The industry just finished its slowest year since 1998, as many Americans -- spooked by soaring gas prices and falling home values -- voted no to new-car purchases last year. With a recession possible, the year ahead looks even grimmer. But a tough climate for carmakers translates into opportunity. Dealers still have to move merchandise, and they're selling even the most enticing cars at bargain prices. For example, when we went shopping for Kiplinger's Best New vehicles, we found the Chevy Malibu at dealer cost and the Cadillac CTS at cost plus $1,000.

No matter which new model you're interested in, our annual buyer's guide gives you the tools to choose a vehicle and negotiate a fair value. We start by sorting the hundreds of 2008 models by price and category, then we rank thm for performance, value, safety, roominess and our driving impressions. Finally, we pick a Best New and Best in Class vehicle in each category. In the tables that begin on page 81, you'll find the top vehicles in each category. For comprehensive info on more than a thousand 2008 cars and SUVs, go to Kiplinger.com, where you can search and sort the data.
What's hot, what's not

If you're like many buyers, you're gravitating toward reliable, fuel-efficient vehicles. That trend is boosting sales of Toyota's Prius hybrid, the subcompact Honda Fit, the Nissan Versa and Toyota Yaris, and the ever-popular Honda Civic, Mazda3 and Toyota Corolla. Midsize and large sedans took a hit amid the lull in sales last year. But midsize sedans are still attractive to pump-price-conscious buyers because the vast majority come with thrifty, four-cylinder engines. Result: The Toyota Camry still tops the best-seller list, and the Honda Accord, redesigned for 2008, is still in second place.

So it's no surprise that the Asian auto juggernaut continues to take market share from the domestic carmakers. Toyota now ranks second in U.S. sales (behind GM), and is on track to overtake GM in both U.S. and global sales.

Now Detroit is fighting back. Witness the Malibu's extreme makeover, with a head-turning design and European-derived architecture. "The new Malibu is probably the first really good Chevy since the 1960s," says Erich Merkle, director of forecasting for IRN, an automotive-industry consulting firm. Merkle says that although he had not owned a U.S.-made vehicle since 1995, he bought a Ford Fusion last year because it rates well for dependability -- and he liked the styling.
Greener horizons

Hybrid sales shot up by a third in 2007, to 350,000, thanks largely to increased production of the Toyota Prius. For 2008, GM introduced a Malibu hybrid and a redesigned Saturn Vue hybrid, as well as the first full-size SUV hybrids, the Chevrolet Tahoe and GMC Yukon. And Toyota redesigned its Highlander Hybrid for 2008.

After checking out the competition, Meridee Williams chose the hybrid Highlander. Williams commutes 60 miles a day round-trip from her home in Pasadena, Cal., to her business in Claremont, and she was tired of paying a small fortune to fill up her Range Rover. She wanted an SUV because she usually travels with her German shepherd, Czar, and feels safer in a larger vehicle. Like many hybrid owners, she was motivated by a combination of environmental consciousness and a desire for better gas mileage. The new technology was the clincher: "I love the computer that tells me my miles per gallon and the gauge that shows when I'm on battery power," she says.

Diesels get up to 30% better mileage than gasoline-powered vehicles, but they're scarce among 2008 models. New clean-air standards that took effect in 2007 forced manufacturers to retool their diesels to reduce soot and nitrous oxides, which contribute to smog. The few that are available -- the Mercedes-Benz E, GL, M and R classes, and a Jeep Grand Cherokee -- still don't meet emissions requirements in California, Connecticut, Massachusetts, New York and Vermont. But that will change later this year as the 2009s are introduced. New diesels from Acura, Audi and BMW, as well as Jeep, Mercedes-Benz and Volkswagen, should pass muster in all 50 states.

You'll pay a premium of up to $5,000 for a hybrid or diesel model, and you probably won't get it back from savings on fuel. That price gap will eventually decrease, but not until sales increase. Hybrids still account for only 2% of vehicle sales, while diesels represent about 3% of the market.

Alternative-energy-vehicle sales will get a boost from the new energy bill. Washington finally realized that the car industry and its customers aren't going to save the planet without prodding from policymakers. The energy bill aims to reduce U.S. dependence on foreign oil and cut greenhouse-gas emissions. Tough new rules raise manufacturers' fleetwide average fuel efficiency for both cars and light trucks to 35 miles per gallon (from a current 27.5 mpg for cars and 22.2 mpg for light trucks) by 2020. The thousands of extra dollars it will cost to produce a more efficient vehicle should be offset by savings on fuel. The bill also requires the use of more alternative fuels.

One thing the energy bill doesn't do is extend tax credits for buying hybrid cars (the credits phase out after a carmaker sells 60,000 hybrids). Tax credits for Toyota and Lexus hybrids are gone. The break for the Honda Civic Hybrid has been slashed in half, to $1,050, and will be gone after December 31. Credits for other hybrids range from $1,300 for the Malibu and Saturn Aura to $3,000 for the Ford Escape.
A Tour of the new sedans

In the under-$20,000 category, fuel sippers rule. But no one in this price class matches the 40-plus mpg of the Smart fortwo (and that's with new testing procedures from the Environmental Protection Agency that have lowered the estimated fuel economy on 2008 models by 2 to 4 mpg, on average). The two-seater from Daimler with a three-cylinder engine is 40 inches shorter than the stubby Mini Cooper and tops out at 90 miles per hour. The Best New Car is the Scion xB, which hit the street last fall with a less boxy redesign and more power under the hood. The Mazda3 gets our Best in Class award. Its practical design has been winning fans -- and sales.

The sweet spot for bargain hunters is the competitive $20,000-to-$25,000 category, packed with entry-level midsize sedans, premium compacts and hybrids. The Chevrolet Malibu earns both Best New Car and Best in Class plaudits. The fuel-thrifty, four-cylinder Malibu LT gets 30 mpg on the highway -- not far off the Malibu Hybrid's fuel economy. Also in this price range are the Honda Civic Hybrid and the Toyota Prius, which earns our Most Fuel-Efficient designation with 48 mpg for in-city driving. Notable newcomers to the category include the Mini Cooper Clubman, a wagon version of the Mini sedan with more rear legroom and cargo space, and the Volvo C30, which has an arresting design, zippy handling and a surprisingly comfy back seat. The Ford Taurus returns, although it's basically last year's Five Hundred with styling tweaks and much-needed extra power

The redesigned Honda Accord tops the $25,000-to-$30,000 category. Honda upsized the model, so it graduates to the large-sedan class based on interior room. The V6 version has more horsepower but still gets a respectable 19 mpg in the city and 29 mpg on the highway. The Nissan Altima Hybrid wins our fuel-sipper award. The BMW 128i debuts in the U.S. this year -- a baby Bimmer already sold in Europe. Also look for the full-size, rear-wheel-drive Pontiac G8 to be at dealers this spring.

Best New Car in the entry-level-luxury, $30,000-to-$45,000 price class is the reworked Cadillac CTS. The exterior is aggressive and the interior well-appointed. Plus, the optional 304-hp V6 makes it wicked fast. The Lexus ES 350, last year's Best New Car, is this year's Best in Class. The Infiniti G37, the new name for the G35 coupe, packs a 330-hp V6 and delivers superb handling.

In super luxury territory, we named the Audi S5 our Best New Car. This stunning four-wheel-drive coupe competes with the BMW 3-series coupe -- although it costs about $10,000 more, in part because its V8 powertrain packs more punch. Best in Class is the BMW 535xi, an elegant, understated luxury car with high resale values, competitive fuel economy and top-notch BMW handling. Also new is the Lexus IS F, a super-souped-up version of the IS 250/350. The Lexus LS 460 returns more or less unchanged -- and it still boasts a price tag $26,000 less than the Mercedes-Benz S550.

The redesigned Audi TT is Best New Sports Car. Starting price for the mild-mannered 2.0T version is an affordable $35,575. The Porsche Boxster ragtop unseats our longtime champ, the Chevrolet Corvette, as Best in Class. Coming this spring is the BMW M3, with a 414-hp V8. Its price starts at $55,000.

SUVs and wagons

The Best New Crossover in the large/midsize category, with the best fuel economy, is the Toyota Highlander Hybrid. It offers seating for seven (a $2,800 option, or standard in the Limited) and more interior room than its predecessor. Best in Class is the Mazda CX-9, a sleek and stylish crossover with third-row seating standard in all models. This category has so many first-rate vehicles, it's hard to pick favorites. The brand-new Buick Enclave has gotten rave reviews. And depending on your budget, your shopping list should include the Acura MDX, Ford Edge, Honda Pilot, Lexus RX 350 and Saturn Outlook.

We picked the Nissan Rogue for Best New Small Crossover. It's sporty and fuel-efficient and comes in an all-wheel-drive version. It was a close call, but the Honda CR-V, with an economical four-cylinder engine, edged out the Toyota RAV4 with a V6 for Best in Class. The Ford Escape Hybrid and its twins, the Mercury Mariner and Mazda Tribute hybrids, tie for Most Fuel-Efficient honors. The Saturn Vue got an attractive makeover for 2008. Its hybrid gets 25 mpg in the city and 32 mpg on the highway.

The newly redesigned Toyota Sequoia scores highest among truck-based SUVs, so it gets both Best New SUV and Best in Class laurels. It's larger than last year's version with way more power. Our Most Fuel-Efficient award goes to the Chevrolet Tahoe/GMC Yukon hybrids, which combine an electric motor with a 6-liter V8 that has the ability to shut off four cylinders when you're cruising down the highway.

The minivan universe has been shrinking, but the Chrysler Town & Country/Dodge Grand Caravan franchise soldiers on. As the only redesigned van this year, it earns Best New Minivan honors by default. Second-row seats that swivel so you can face a removable table make this a family room on wheels. The Toyota Sienna, redesigned last year, is Best in Class. Best Resale and fuel-economy awards go to the venerable Honda Odyssey. Finally, in the world of wagons, Volvo introduced a redesigned Volvo V70, which earns Best New Wagon, plus a redone XC70. The affordable, peppy Volkswagen Passat Turbo gets Best in Class.