El auto compacto tiene transmisión automática.

Because auto is a masculine noun in Spanish. It is a shortened form of automóvil, which is also masculine, so it takes el:

• el auto
• el automóvil

In Spanish, noun gender is grammatical, so this is something you usually just learn with the noun.

El usually means the, so it normally refers to a specific compact car.

• El auto compacto tiene transmisión automática. = The compact car has automatic transmission.
• Un auto compacto tiene transmisión automática. = A compact car has automatic transmission.

So el is used when the car is already known, identified, or understood from context.

In Spanish, most descriptive adjectives usually come after the noun.

So:

• auto compacto = compact car

That word order is the normal one. Putting compacto before the noun would sound unusual here.

Because tiene comes from tener, meaning to have, and the sentence is talking about a feature the car has.

• tiene transmisión automática = has automatic transmission

If you used es, you would be saying what the car is, not what it has. Spanish often uses tener for equipment, features, and characteristics like this.

The infinitive is tener. In the present tense, it changes from e to ie in many forms:

• yo tengo
• tú tienes
• él/ella/usted tiene

So tiene is the normal third-person singular form of tener.

After tener, Spanish often leaves out the indefinite article when talking about a feature, characteristic, or type of equipment.

So Spanish naturally says:

• tiene transmisión automática
• tiene aire acondicionado
• tiene motor híbrido

In English, you may expect an automatic transmission, but in Spanish the article is often omitted in this kind of description.

Because automática is describing transmisión, and transmisión is a feminine noun.

Spanish adjectives must agree with the noun they describe:

• transmisión automática
• auto compacto

Here:

• transmisión = feminine, so automática
• auto = masculine, so compacto

Yes, you could. That sentence is natural and means something like The compact car is automatic.

There is a small difference in focus:

• tiene transmisión automática focuses on the transmission
• es automático describes the car itself as an automatic car

Both are correct, but the original sentence is a little more specific.

Auto is widely understood in Latin America and is a good neutral choice. But vocabulary varies by country.

You may also hear:

• carro in many Latin American countries
• automóvil as a more formal or full version
• coche in some places, though it is more strongly associated with Spain

So auto is a safe and useful word to know.

Yes, if the subject is already clear from context.

Spanish often omits subjects when they are understood:

• Tiene transmisión automática. = It has automatic transmission.

That works if everyone already knows you are talking about the car. If not, keeping El auto compacto makes the sentence clearer.

They show where the stress goes, and they are part of the correct spelling.

• transmisión → stress on the last syllable: trans-mi-SION
• automática → stress on má: au-to-MÁ-ti-ca

Without the written accents, the words would be misspelled.