Small cars are pushing up sales

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May 4, 2011

Small cars are pushing up sales

Anonymous Associated Press Wed May 04, 2011, 11:22 AM CDT

Detroit, MI — Small cars sold briskly in the U.S. last month, as gasoline prices approached $4 a gallon and some buyers worried about shortages of Japanese-made vehicles.

Analysts expected overall industry sales in the U.S. to increase 19 percent from April of last year.

Sales last month were led by highly fuel-efficient models such as Chevrolet's Cruze, Hyundai's Elantra and Ford's Focus

Don Johnson, GM's vice president of sales and marketing, said consumers shifted into smaller cars starting in March and the trend continued in April. Unlike 2008, when a rise in gas prices caught the industry off-guard, GM and other companies now have good small cars and can quickly boost production of them, he said.

“We're probably the best prepared ever for this shift,“ he said.

The average price of a gallon of gas nationally this week is $3.96, up $1.06 from last year. Gas is already over $4 per gallon in New England, the Midwest and on the West Coast, according to federal statistics.

While widespread vehicle shortages related to the March 11 earthquake in Japan have yet to hit the U.S. market, they're expected to by the end of May. That may have spurred people to buy cars like the subcompact Honda Fit in April. On Monday, Honda Motor Co. warned dealers that the 2012 Civic, as well as other models, will be in short supply this summer. It also pushed back the fall launch of the CR-V small SUV by at least a month.

Earthquake effect

So far, GM says the earthquake won't affect its profit, although it has had to slow production because of a lack of parts from Japan. Chrysler Group LLC said this week that the earthquake will cost it between 50,000 and 100,000 vehicles this year, but it won't have an impact on earnings.

Hyundai Motor Co.'s sales jumped 40 percent, largely because of fuel-efficient models such as the Elantra, which gets an estimated 40 mpg on the highway. The car's sales more than doubled. With the Sonata midsize car, the two made up 71 percent of Hyundai's sales.

General Motors Co. sold more than 25,000 Chevrolet Cruze compact models in April, the best performance for the 36-mile-per-gallon car since it was introduced in October. Ford said sales of its new Focus compact rose 22 percent from last year.

GM said its U.S. car and truck sales jumped 26 percent in April, led by the shift to small cars. Johnson said the Chevrolet Equinox and GMC Terrain crossovers posted big sales increases. Crossovers look like sport utility vehicles, but are more fuel efficient because they are built on car platforms.

People switched to more efficient engines, which use less gasoline.

Johnson said 39 percent of the vehicles GM sold in April had the most efficient four-cylinder engines, up from 27 percent last April. Thirty percent had six-cylinder engines, down from 36 percent. Almost half of Chevrolets sold had four-cylinder engines, Chevrolet Chief Alan Batey said.

Ford Motor Co. said its U.S. sales rose 13 percent, largely because of a 26 percent jump in car sales. But it wasn't only the most efficient cars like the Fiesta and Focus that buyers demanded. Sales of the Mustang sports car rose 59 percent car as summer driving season approached.

Ford said that the impact of gas prices could be felt in its largest vehicles. Half of all pickup buyers chose Ford's new V-6 engine.

Sales were strong despite automakers' decision to ease up on deals in April. Total U.S. incentive spending by automakers fell $250 to $2,118 per vehicle from March, according to Edmunds.com. That was the lowest level since October 2005, when automakers pulled back sharply on discounts following the employee-discount-for-everyone deals that summer.

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