Small, sporty cars once again take a back seat. Baby-boomers move up to more practical size

Was the American love affair with two-seat sports cars merely a passing fling? When it debuted early in the 1985-model year, the Pontiac Fiero promised to usher in a new breed of cars: small, sporty, and inexpensive two-seaters blending performance, utility, and fun.

Indeed, during its first year, General Motors sold 102,000 of its first-ever plastic-bodied, mid-engine runabout. The Fiero plant in Pontiac, Mich., was selling every car it could turn out.

After its initial surge in the popularity charts, however, sales began a steady and spectacular plunge, and last week Pontiac announced that it was pulling the plug on its two-seater at the end of the 1988 model year. Now, as the Fiero is about to fade into automotive oblivion, its demise is raising questions about the future of the two-seater niche in the market.

Two-seaters have been around from the very beginning of the auto industry, but over the decades, they have taken a back seat to roomier, more versatile cars.

``The common wisdom ... in the late 1970s ... was that you couldn't sell inexpensive two-seaters in America,'' says Csaba Csere, an editor at the automotive enthusiast magazine Car and Driver.

Mr. Csere notes that by 1980, the last of the classic, affordable European two-seat sportsters, such as the Triumph and MG, had disappeared. The only two-seaters left on the market were ultra-expensive models built by exclusive manufacturers such as Ferrari.

``Then, all of a sudden,'' he says, ``a whole bunch of inexpensive two-seaters came out and the market went from nothing to more than 200,000 units [a year] overnight.''

The Fiero proved to be by far the most successful car in its class, but other manufacturers also tapped into the sudden surge of market demand: Ford with its EXP; Honda with its own ``plastic-car,'' the CRX; Toyota with the MR2; and more recently, Nissan with the Pulsar NX.

According to figures quoted by Michael Losh, general manager of GM's Pontiac division, the American two-seater market reached its peak in the 1985 model year with a total of about 335,000 sales. At one point, many industry-watchers were predicting a steady increase in that number. But now, Mr. Losh says, the two-seater market is likely to decline to no more than 265,000 units this year - a figure he says is likely to hold steady, at best, through the early 1990s.

(Losh's figures include not only true low-end two-seaters, but also some sporty four-seat models such as the Ford Escort GT, which sell to essentially the same class of buyers.)

Indeed, Fiero isn't the only two-seater to record a sharp decline in sales. Toyota sold 27,841 MR2s in 1986. Last year, however, sales dropped to just 15,847. Sales of the Honda CRX plunged 28 percent to 48,142 last year. Only the Nissan Pulsar NX recorded a gain, with sales up 31 percent last year to 61,765.

There are a variety of explanations for what has happened to the two-seater segment. Some analysts trace the problems with Fiero back to the planning stages during the last energy crisis, when Pontiac designers sold the project to corporate bean counters as an affordable commuter car. But by the time Fiero made its debut, gas lines had faded into memory. And with a small, stodgy four-cylinder engine, a cantankerous four-speed manual transmission, and a soft suspension, it quickly became apparent to critics and many disappointed buyers that the car didn't live up to its sporty image.

Since then, Pontiac has introduced numerous improvements, including a muscular V-6 engine, a smoother five-speed transmission, power steering, and sporty suspension. But by now, Csere says, ``the car's image has been put in stone as a nonperformer.''

Complicating Fiero's image problem: a series of severe mechanical problems - including the propensity of early models to overheat and occasionally catch fire - that resulted in some well-publicized recalls.

Still, Losh insists, Pontiac's market research shows those problems were not the overriding cause of Fiero's decline - or the overall decline in demand for two-seaters and related sporty cars.

What other factors might be contributing? One analyst suggests that as the result of the baby-boom generation's own mini baby boom, many potential buyers are settling for more practical cars that can carry groceries and a clutch of kids.

John Hammond, an auto analyst with the California-based market research firm J.D. Power & Associates, agrees that baby-boomers and even younger drivers are apparently looking elsewhere: ``That market is moving on to different things. The competition is getting more intense, not just with two-seaters, but with other vehicles that are fun to drive, such as the Suzuki Samurai,'' a small, inexpensive four-wheel-drive Jeep clone that has become one of the current trendy vehicles to own.

Still another explanation for slumping demand is a rise in insurance premiums for the mainly young male buyers of sporty vehicles. Sales of the Mazda RX-7, for example, have fallen off from 56,000 in 1986 to between 25,000 and 30,000 in 1988. According to Richard Colliver, a Mazda group vice-president, ``I would say 25 percent to 30 percent of that decline is the result of insurance costs.''

Other factors that have trimmed sales of Japanese models include rising costs, the result of the declining dollar, and a shift in import model mixes.

What strikes many observers as ironic is the fact that even as market demand declines, the shrinking two-seater market is getting more crowded. Just as the Fiero fades away, Ford is readying another two-seater, the Australian-made Capri, for a 1989 debut, while Mazda is preparing to introduce a two-seat runabout of its own.

Analyst Hammond insists that despite Fiero's fairly short life, it still served a very useful purpose. Its unusual styling - markedly different from the look-alike products typically seen at General Motors - and its unique plastic body were strong contributors to revitalizing Pontiac's sporty image. Today, in fact, Pontiac is GM's hottest, healthiest car division.

For that reason alone, the decision to cancel Fiero was what one analyst described as a surprise everyone expected.

``I'm surprised for only one reason,'' says auto analyst William Pochiluk, of Autofacts Inc.; ``I thought that from a technical standpoint they would stick with it,'' because of the way it enhanced Pontiac's image.