DETROIT -- When the engine blew on his eight- year-old Toyota Matrix last year, Shane Wilson needed a new car fast and wanted something good on gas.
He shopped the usual suspects: small Honda and Toyota models he'd owned in the past. Then he surprised himself by buying a Chevrolet Cruze.
"I thought American cars were pretty horrid and that they tended to fall apart," said Wilson, 36, an accounts manager for the Internal Revenue Service in Seattle. "But the Cruze was fun to drive and the interior was light-years better than American cars used to be."
Small cars, once the Achilles' heel of U.S. automakers, are becoming a strength.
Sales of General Motors Co.'s Chevy Cruze compact are up 10 percent this year, while Ford Motor Co.'s Focus compact sales have soared 90 percent.
Last year, GM, Ford and Chrysler Group LLC's share of the compact and subcompact market in the United States rose to a four-year high of 26 percent, from 20 percent in 2010, according to researcher LMC Automotive.
After losing a generation of car buyers to Japanese automakers such as Toyota Motor Corp., U.S.-based companies are building their comebacks on cars they once dismissed and discounted in favor of high-profit SUVs.
Small cars from Detroit are no longer utilitarian econoboxes. They have high style and high-tech features, such as voice-activated stereos, previously found only on bigger, more expensive models.
"Remember when smaller cars used to be cheap and cheerful?" Ford CEO Alan Mulally asked reporters March 6 at the Geneva motor show. "Now the consumers want the finest quality, the finest fuel efficiency, safety and design."
While SUVs and pickups still have higher profit margins, Detroit has discovered that small cars are the foundation of a successful automaker.
Since compacts are often a buyer's first car, they represent the initial step in building brand loyalty.
Toyota, Honda Motor Co. and other Japanese companies used small cars as their wedge into the U.S. market in the 1970s, while GM, Ford and Chrysler spent more development dollars on bigger models that burned more fuel.
The weakness of that strategy was exposed in 2008 when the average U.S. price of unleaded gasoline peaked at $4.11 a gallon. The lack of competitive compacts accelerated the collapse of U.S. automakers.
Ford posted a record loss of $14.8 billion for 2008, and GM and Chrysler entered bankruptcy the following year.
"That was a defining moment for Detroit," said Jessica Caldwell, director of industry analysis at auto researcher Edmunds.com in Santa Monica, Calif. "That really pointed out the weaknesses in their small-car lineups and it hit home that they needed strong models throughout their portfolio."
As U.S. fuel prices return to those levels, small-car sales are rising, too. Compacts and subcompacts will account for 19 percent of U.S. auto sales this year, up from 13 percent in 2005, LMC forecasts.
Regular unleaded gasoline averaged $3.80 a gallon on March 11, up 8.3 percent from a month ago, according to AAA.
Without the Cruze and Sonic subcompact that have debuted over the last two years, GM wouldn't weather the rising gas prices as well, said Don Johnson, the automaker's U.S. sales chief.
"We wouldn't be in as good a shape as we are today," Johnson told analysts and reporters on a March 6 conference call. "Cruze continues to be a more and more important part of our portfolio."
U.S. automakers see rising fuel prices as an opportunity to poach car buyers from Toyota and Honda, which have just fully restocked showrooms after natural disasters in Asia cut inventory in 2011.