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US buyers turn toward small cars
US buyers turn toward small cars

US buyers turn toward small cars

Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede.

Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede.

In what industry analysts are calling a first, about one in five vehicles sold in US was a compact or subcompact car during April, based on monthly sales data released on Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.

The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickups and large sport utility vehicles have dropped sharply.

In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April.

"It's easily the most dramatic segment shift I have witnessed in the market in my 31 years here," said George Pipas, chief sales analyst for the Ford Motor Company.

The trend toward smaller and lighter vehicles with better mileage is a blow to Detroit automakers, which offer fewer such models than Asian carmakers like Toyota and Honda. Moreover, the decline of SUV's and pickups has curtailed the biggest source of profits for General Motors, Ford and Chrysler.

Once considered an unattractive and cheap alternative to large cars and SUV's, compacts have become the new star of the showroom at a time when overall industry sales are falling.

Sales of Toyota's subcompact Yaris increased 46 per cent, and Honda's tiny Fit had a record month. Ford's compact Focus model jumped 32 per cent in April from a year earlier. All those models are rated at more than 30 miles per gallon for highway driving.

Previous spikes in sales of small cars were often a result of consumers trading down during tough economic conditions or gas-price increases. When the economy improved or fuel prices dropped again —as they did after the oil-price shocks in the 1970s eased —buyers invariably went back to bigger vehicles.

But with oil prices expected to remain high for years, auto industry executives are seeing a turning point.
"The era of the truck-based large SUV's is over," said Michael Jackson, chief executive of AutoNation, the nation's largest auto retailer.

Sales of traditional SUV's are down more than 25 per cent this year. In April, for example, sales of GM's Chevrolet Tahoe fell 35 per cent.

Full-size pickup sales have fallen more than 15 per cent this year, with Ford's industry-leading F-Series pickup dropping 27 per cent in April alone. Sales of pickups, though, are expected to strengthen with the economy, because of their use as commercial vehicles.

The rise in sales of more fuel-efficient vehicles occurred during one of the industry's worst months in more than a decade. For the month, G.M. sales dropped 23 per cent and Ford slid 19 percent, while Toyota fell by 5 percent. The figures were adjusted for the fact that this April had two more selling days than a year ago.

But there are indications that the trend toward smaller vehicles will reduce the nation's fuel use. In California, motorists bought 4 percent less gasoline in January than they did the year before, a drop of more than 58 million gallons, according to the Oil Price Information Service.

"That is an incredible year-over-year drop," said Tom Kloza, the organization's chief oil analyst. "Some of it clearly has to do with changes in the vehicle fleet."