More Car, Less Gas Seven models that get great gas mileage without sacrificing style or performance
By Lawrence Ulrich

(MONEY Magazine) – It's become the game everyone hates but everyone plays: watching the dials spin at the gas pump, holding your breath like a roulette player, wondering how high the stakes can climb for a lousy tank of gas.

The easy advice is to cash in your current vehicle and start playing with smaller chips--that is, a fuel-hoarding compact. But what if a sensible shoebox doesn't fit your lifestyle, or your family?

The reality is that Americans love their trucks, sedans and sports cars. Most of us aren't ready to give them up, even with a $2-a-gallon pump pointed at our heads.

So instead of the usual bland suspects, we've rounded up a tastier assortment: models that deliver the great mileage you want, but don't sacrifice what you demand--performance, style, room, comfort, even luxury.

We tested them in similar conditions, driving gently to maximize fuel economy. Our tests, which combined city and highway driving, carefully measured actual consumption to separate the truth from the sometimes-iffy Environmental Protection Administration (EPA) ratings.

Biggest surprise? That the hybrid king, the gas-electric Toyota Prius, didn't have what it takes to earn a nod. By our reckoning, it makes too many compromises in the name of economy. Worse, its overall 39 miles per gallon fell short of expectations, and wasn't much better than cars--including Toyota's own Corolla--that beat the Prius in other critical categories. In fact, the Prius' highway mileage was matched by the diesel VW Passat and the diesel Mercedes E-Class, both dramatically bigger, faster, plusher, more rewarding cars.

Since no minivan holds a big mileage edge, we didn't highlight one. But the Toyota Sienna and Honda Odyssey remain MONEY's top picks; both delivered 20 mpg in testing.

That left seven models. All are cars and trucks we'd recommend in their own right, with economy as a happy bonus. Have no fear: There's not a penalty box in the bunch.

LUXURY CAR MERCEDES E320 CDI BASE PRICE/AS TESTED: $49,795/$55,085 EPA MILEAGE: 27 mpg city/37 highway OBSERVED MILEAGE: 32 mpg

What if you could brush 40 mpg in a big, fast, full-on luxury sedan? That's no longer a rhetorical question, thanks to the brilliant Mercedes E320 CDI.

What you get is the same E-Class sedan that's among the best luxury cars in its class, only it's driven by a turbocharged diesel engine that proves a car can save gas and still kick, um, tail.

During the '80s, more than three out of four Mercedes sold in the U.S. were diesels. That number shrank dramatically in the 1990s, and Benz last offered a diesel here in '99. Mercedes has since made a technical leap to modern "clean diesels," whose sophisticated electronic fuel injection makes them vastly quieter and cleaner than the smelly, clattering engines of the past.

Its 3.2-liter inline six-cylinder is the smoothest-idling diesel I've tested. And in sharp contrast to squirrel-powered hybrids, the Benz diesel is actually faster than the V-6 gasoline version, sprinting from 0 to 60 in 6.8 seconds. The massive torque inherent in diesels makes for eye-opening power at any speed.

The frosting on this sumptuous cake? The big Benz managed 39 mpg on highways, even at a 70-to-75-mph cruise, and 32 mpg overall. The engine adds just $1,000 to the E-Class' base price. And with diesel fuel costing an average 30¢ less per gallon than gasoline, the Benz keeps that much more money in your pocket.

Now the bad news: Until cleaner, low-sulfur diesel fuel arrives in late 2006, the Mercedes is available in only 45 states (see "Why Diesel Deserves a New Look," page 96). Also, Mercedes will ship only 3,000 of these thrifty sedans this year--and no wagons. Sure it's expensive, but there's no better way to drive decadent and still flaunt your good citizenship.

STARTER CAR SCION xB BASE PRICE/AS TESTED: $14,995/$17,288 EPA MILEAGE: 30 mpg city/34 highway OBSERVED MILEAGE: 31 mpg

Confronted with the Scion xB for the first time, I had to laugh. The spawn of Toyota's new youth brand looked like a shrunken bread van or a blown-up toy. Who knew the xB would be fun to be seen in, even fun to fling around town? The xB has been selling like crazy in California, and now it's available nationwide. This is an ideal college car--unique, affordable, incredibly roomy, well built for the price--and as with the bigger Honda Element, there's no reason older people won't climb aboard. With just 108 horsepower from its 1.5-liter four-cylinder, the xB takes time to build speed, especially on the highway. But it also fondly recalls some front-drive cars of the '80s, underdogs that were ready to play despite a lack of size and power. It's barely 13 feet long, but nearly as tall as it is wide. The unorthodox shape creates massive utility for such a squirt, with a huge hatch opening and cargo space, plus more headroom than almost any other car or truck on the market. It feels like a Toyota--a very good thing--and the value is evident. Anti-lock brakes are standard; so is electronic stability control, making it easily the least expensive U.S. model with this terrific safety feature.

Part of Scion's mission is to woo the hip customizer crowd, and our xB was decked out. But skip the kid stuff and an xB can be had for right around $15,000. Some will stare, some will even chuckle. But a fun, fresh Toyota for 15 grand will give you the last laugh.

SPORTS CAR CHEVROLET CORVETTE BASE PRICE/AS TESTED: $44,635/$53,320 EPA MILEAGE: 19 mpg city/28 highway OBSERVED MILEAGE: 20 mpg

Some Corvette fans are holding their checkbooks, awaiting this fall's 2005 redesign of the iconic American sports car. But this 2004 model is worth your time, especially the 405-horsepower Z06 version. The Z06 will put up its Detroit dukes against the European exotics, with a four-second blast from 0 to 60 mph and video-game handling. Yet when it's time for a Sunday cruise, the Z06 and 350-hp base model both deliver a no-fooling 28 mpg on the highway, equaling many cars with half the horsepower and a fraction of the fun. How's that possible? The Corvette is light, aerodynamic and all but asleep at 70 mph, loafing in sixth-gear overdrive. Of course, no one buys a 'Vette for mileage; just consider it a fringe benefit.

FAMILY SEDAN VW PASSAT TDI BASE PRICE/AS TESTED: $23,060/$27,430 EPA MILEAGE: 27 mpg city/38 highway OBSERVED MILEAGE: 32 mpg

Even as it nears retirement, making way for a redesigned model in 2005, the Passat remains one of the best family cars out there. Its graceful design is still being copied by competitors. But the big '04 news is the diesel TDI version. As a sedan or roomy wagon, it's the nation's highest-mileage mid-size family car. Ours posted 39 highway mpg, and 32 mpg overall. Strong stuff, especially added to reassuring German handling and the impeccable interior VWs are known for. The savings extend to price: Starting at $23,060, the fuel-sipping diesel is just $200 more than a gas-powered Passat.

SUV SUBSTITUTE SUBARU OUTBACK BASE PRICE/AS TESTED: $24,570/$25,851 EPA MILEAGE: 22 mpg city/30 highway OBSERVED MILEAGE: 25 mpg

What's the big whoop about 25 mpg? Stay with me. The Outback wagon is, for all purposes except heavy towing, a mid-size SUV, with standard all-wheel drive, comparable cargo capacity and 8.5 inches of ground clearance--more than many sport utes. Yet thanks to its lighter car-based design, when it's equipped with the standard 168-horsepower four-cylinder engine, it delivers 30% to 50% better mileage than its trucky competitors. Impatient types will want the 250-hp 2.5XT version ($29,970), which blazes a 5.8-second trail from zero to 60 mph. The lower stance and relatively skinny weight also make the Subie more carlike and maneuverable than tall-riding SUVs. Our Outback topped 29 mpg on the highway, 10 better than most mid-size SUVs.

Best of all, the Outback is part of a redesigned Legacy/Outback lineup for 2005. Where Subaru has always put utility first, these new models make a stylish departure from its traditional granola-box designs. Starting at just $24,570, the Subie is a practical alternative to pricey European all-wheel-drive wagons--a Swiss Army knife of a car, packing a range of tools into a tidy and affordable package.

ECONOMY CAR TOYOTA COROLLA BASE PRICE/AS TESTED: $14,995/$16,825 EPA MILEAGE: 29 mpg city/38 highway OBSERVED MILEAGE: 34 mpg

You're still thinking it: How can the Prius hybrid not make this list? Yes, it's the most advanced hybrid yet. It's the car to buy if you need to wear your green credentials on your sleeve. But Toyota builds a better economy car: the Corolla. For starters, forget the Toyota-fueled fantasy of the Prius' 50 to 60 mpg: In testing, our Prius delivered just 39 mpg. (Toyota doesn't argue with such findings; it claims it can't legally publicize real-world mileage, only the EPA test results that help hybrids achieve unrealistic scores.) Now, 39 mpg is still fantastic mileage. But the Corolla matched it on the highway, and trailed by just 5 mpg overall.

Now consider Corolla's advantages. It accelerates like a normal car; the Prius is sluggish. The Corolla steers precisely; the Prius emits a slack golf-cart vibe. Unburdened by battery packs and complex electronics, the Corolla is likely easier and less costly to repair. And the Corolla with automatic transmission starts at $5,500 less than the Prius; the top-shelf Corolla LE model we drove cost $7,000 less than the last Prius we tested. You'd have to drive the Prius for roughly 16 years to make up the price difference in fuel savings, even using the EPA's optimistic figures. Convinced yet?

SUV FORD ESCAPE HYBRID BASE PRICE/AS TESTED: $26,670/$29,155 MILEAGE (EST.): 30 mpg city/35 highway OBSERVED MILEAGE: 33 mpg

Call it the guilt-free SUV: At 33 mpg overall, the Ford Escape Hybrid is easily the most thrifty SUV we've ever tested. On sale in September, Ford's gas-electric SUV manages to sip fuel and produce near-zero emissions while keeping most of the good stuff from the nation's top-selling compact truck, including optional all-wheel drive.

The frugal Ford mates an efficient 2.3-liter four-cylinder gas engine with a nickel-metal hydride battery pack and electric motor, using one or both power sources as the situation demands. Go easy on the gas, and the Escape will drive in electric-only mode up to 25 mph. Like other hybrids, it's especially efficient in city driving because its engine shuts off at a stop, then restarts when you press the gas. (The restart is smooth, but more noticeable than in the Toyota Prius.) Coast or use the brakes, and energy is captured and returned to the battery.

There are a few annoyances. The Escape accelerates with more gusto than other gas-electric models, but it's still slower than the V-6 Escape. The hybrid gets Ford's first-ever continuously variable transmission (CVT), which eliminates gears in favor of a belt-and-pulley system that adjusts gear ratios to maximize power and fuel economy. Like other CVTs, however, it has a telltale rubber-band feel on acceleration.

Also, the electric-assisted steering isn't as precise as the hydraulic system on regular Escapes. The stop-start engine function won't work when the air conditioning is on its maximum setting, so you'll lose a few mpg when you're really cranking the air. And though Ford is touting the tough-truck durability of its first hybrid, the boat-and-trailer crowd should note that the hybrid can tow just 1,000 pounds compared with 3,500 for the V-6 model.

Still, those compromises helped the Ford hit 35 mpg in the city and 33 mpg overall, the latter a huge 60% gain over the V-6. The happy side of the ledger also includes nimble handling and generous passenger and cargo space. And the $3,300 to $3,400 premium over a six-cylinder Escape is offset by a $1,500 "clean fuel vehicle" tax deduction for buyers in 2004.

It remains to be seen how many truck buyers will ante up to save at the pump. But if it's an SUV or nothing, the Escape will help you do just that from high gas prices.

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