While a lot of attention has been paid to the fact that the CR-Z comes with a 6-speed manual transmission, it is, in fact, also available with a high-tech Continuously Variable Transmission or CVT. CVTs are generally considered to be the most efficient type of transmission in terms of fuel economy, which is why most hybrid vehicles are equipped as such.
Imagine, if you can, the rear gear-set on a bicycle. You will notice up to 10 separate gears starting with the smallest and getting larger towards the middle of the hub. The pedal stroke effort varies depending on which gear the chain rotates. Now imagine that the rear gear-set does not consist of separate gears but is a smooth cone with the wide end closest to the wheel, just like the largest gear on a bicycle. A belt would still rotate around the cone but it can be moved up to the wider part of the cone or down to the narrow part of the cone in one smooth motion. While this is not exactly how the Honda CVT operates, you can see how the principle of a gearless transmission can work. Since shifting conventional gears results in less efficient performance, city MPG suffers as a result. This is why the city MPG rating is significantly higher for the CVT.
To give the driver a sporty feel, Honda engineers have mapped out seven gear points for use when the paddle shifters are used. This gives the driver a greater sense of control and immediacy. The paddle shifters can be used for down-shifting when coming to a stop, increasing engine braking, or they can be used to keep a higher RPM when driving through a corner, allowing for instant exit power. Whatever your preference, both transmissions provide a fun driving experience.