Fuel savings are not erased, but they are eroded. With the technology we have small, lightweight gas cars could be incredibly efficient. Consumer preferences as well as safety regulations have kept fuel economy down.
Weight wouldn't improve fuel efficiency as much as some people might think, especially at highway speeds, drag is a big factor. The huge reduction in most EV range when towing arises not really from the towed mass but mainly the increased drag, as one example of this. There are loads of other good reasons cars should be lighter though.
But it would help some. Less than the weight, you would simply just need a much less powerful engine. So the model is not: "imagine a 3,500 lbs sedan if it only weight 3,200 lbs." -- the model is "imagine an 86 horsepower engine which is sufficient because the car weighs 1,500 lbs." That would be significantly more efficient.