For a refreshing change, it seems that General Motors might be in front of a new automotive trend rather than lagging behind it by several years. Subcompacts are getting hot thanks to high gas prices, stagnant wage growth, and increasing interest rates. As monthly bills grow at a greater pace than paychecks, Americans are discovering that maybe it’s just plain smart to go small. Honda, Nissan, and Toyota are betting on it with new models in the subcompact segment, but Chevrolet’s been there for almost three years now with the Aveo. Built by GM-Daewoo in South Korea, the 2007 Chevrolet Aveo sedan gets a redesign that includes new exterior sheet metal and a freshened cabin with a more upscale appearance. The Aveo five-door hatchback, however, continues unchanged.

It’s a good thing GM decided to update the Aveo for 2007, because the previous car, despite its commanding 40-percent share of the market (thanks mainly due to fleet sales to rental car agencies), was not particularly appealing. But starting in the summer of 2006, this new ’07 Aveo sedan will be available to entice the financially-strapped and financially-wise alike.

Buyers will be able to choose a 2007 Chevrolet Aveo sedan in LS or LT trim. Standard features include an iPod jack in the dashboard, six-way adjustable front seats, cruise control, and a tilt steering wheel. Options include a power sunroof, a six-disc CD changer, dual heated exterior mirrors, and steering wheel buttons for the cruise control and audio systems.

Longer, wider, and taller than the car it replaces, the 2007 Chevy Aveo gets crisp, clean new lines that give it a more expensive appearance. Chrome door handles are even available on this diminutive little sedan. Inside, you’ll find the biggest improvements. All new materials, a clean-sheet dashboard design and control layout, and upscale touches like perforated leatherette upholstery, two-tone décor schemes, and woodgrain trim accented by satin chrome and carbon fiber accents help erase the old Aveo’s budget-class cabin.

Under the hood, the 2007 Chevrolet Aveo sedan contains a 103-horsepower four-cylinder engine that drives the front wheels through a five-speed manual transmission. Chevrolet says this powertrain can get 35 mpg on the highway. A four-speed automatic is optional for folks who can’t, or don’t, row their own gears. Power steering is standard, and antilock brakes are optional.

On the safety front, Chevrolet installs dual-stage front airbags and side-impact airbags, but there are no side-curtain airbags like in the competition. Nevertheless, Chevrolet claims that the 2007 Aveo will achieve five-star safety ratings during impacts with vehicles of similar size and weight based on NHTSA frontal crash-test scores for the structurally-identical 2006 model.

Though Chevrolet is poised to reap potential benefits for being in the right place at the right time, we’re not convinced that the 2007 Chevrolet Aveo sedan is the best car in the class. The Honda Fit, the Nissan Versa, and the Toyota Yaris are promising and should be just as reliable as the larger vehicles sold by these automakers, while Hyundai and Kia provide the peace-of-mind that comes with a 10-year/100,000-mile warranty. Chevrolet is stuck in the middle – selling a Korean car with an inferior warranty – and though the Aveo is more stylish than ever, we think its market share dominance may still depend on sales to Avis, National, and other rental fleets.

Photos by Ron Perry