Small Cars Hit the Big Time

April sales figures for cars and trucks sent a clear and resounding message to the auto industry: Make smaller more fuel-efficient cars or die. Here are the facts:

  • About one in five vehicles sold in the United States was a compact or subcompact car.
  • Sales of traditional Sport Utility Vehicles are down more than 25 percent this year—and full-size pickup sales have fallen more than 15 percent.
  • For the first time, fuel-efficient four-cylinder engines surpassed six-cylinder models in popularity.
  • The Toyota Prius, a mid-size car, posted the single most dramatic gain in sales—up 53 percent up—compared to one year ago. Among all passenger vehicles, it ranked number eight in April sales.
  • Sales of subcompacts soared. Sales of the Toyota Yaris increased 46 percent. The Ford Focus jumped 32 percent, and the Honda Fit had a record month.

And here’s how auto industry executives and analysts responded:

  • “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. (New York Times)
  • “The era of the truck-based large SUVs is over,” said Michael Jackson, chief executive of AutoNation, the nation’s largest auto retailer. (New York Times)
  • “We continue to see that fuel efficiency will remain one of the top priorities for purchasing consumers,” said Bob Carter, general manager of Toyota’s U.S. division. (Associated Press)
  • “This shift appears to be a permanent situation,” said Jesse Toprak, chief industry analyst for the auto information Web site Edmunds.com. (New York Times)
  • “What we did not count on is oil being nearly $120 barrel,” said Mike DiGiovanni, General Motors sales and market analyst. (Chicago Tribune)

The New York Times warned, “Automakers ignore the move to smaller vehicles at their own peril.”


  • Need2Change

    It’s not a move to smaller cars. It’s a move to more fuel efficeint cars. Sales of V6 Camrys are down, while 4 cyl. Camrys are booming.

    I bet the small Mazda RX8 isn’t selling well due to it’s poor gas mileage. And if Ford could build an Explorer that got 30 mpg, it would fly out of dealerships.

    I just don’t understand why the industry didn’t see this coming. Automotive sales in China, India, Brazil, and other countries are booming, the world population is growing, and the world has a finite amount of oil.

  • Skeptic

    A spokesman for GM said: “Our new V12 Suburban will crush your tiny econoboxes like the insects they are! We will return to profitability with our new S-U-V-12 line of vehicles.”

  • Gerald Shields

    And yet I see an ad for the Cadillac Escalade. Hmmmmm.

  • VaPrius

    I see the GM boardroom now:

    “It was a fluke, oil will be back to $20 a barrel next week, I’m positive!”

    “Fine! Make the darn small cars! But take out that stupid 4 cylinder junk and put in a V8 Hemi for real men!”

    “Hey, if we lose money again we can blame it on the unions. Again.”

  • Need2Change

    The US auto makers also spent a lot of time and effort fighting CAFE, when they should have spent it on market research and engineering.

    I think the logic went something like this.

    “We make $10K for every $40K SUV we sale, and only $2K for every $20K economy car. Let’s keep selling SUVs. And let’s fight CAFE since it won’t allow us to sell millions of SUVs.”

    It never occurred to them that people would stop buying 12-18 mpg SUVs.

  • VaPrius

    But they still haven’t figured out that they don’t have to make economy cars. They need to make efficient cars. Toyota, Honda, and most of the European manufacturers do this, and yes they too have some inefficient vehicles. But I don’t classify the Corolla, Camry, Prius, Accord or Civic as economy cars. With them you get a great value and efficiency.

  • LostUSA

    Fuel efficiency is the name of the game.

    I was a strong buy American consumer for 20 years; my wife and I’s favorite car is still the Lincoln Towncar for the luxury, quietness, space and drive. However, my last 3 cars have been Japanese. Two years ago I leased a car based SUV (Nissan Murano – another great car) because it got better gas mileage than the Chevys that I considered, all truck based. About a year ago I bought a used Honda Civic for son because of the quality and gas mileage. The American dealerships offered competitive gas mileage, but the quality was questionable on their rush to market vehicles. And my last car bought in March was a Toyota Prius for the quality and gas mileage.

    For the last 2 years, I’ve given American hybrids a strong consideration, but the American car companies don’t seem to know how to make an efficient one and they can’t make them in quantity. Consequently they lost my business, and propping up the American companies is just bad business. I can’t afford to drive their cars. Note, even my Murano which looked good 2 years ago was only driven 100 miles last month.

  • AP

    VaPrius,

    If you hadn’t noticed, the Chevy Malibu gets better mileage than the Camry, has higher quality materials than the Camry, and actually looks good (unlike the latest Camry, which was delayed 6 months so they could copy the Mazda 6 styling – I still get them confused!). The Camry is the number one vehicle traded in for the Malibu. And yet you say GM isn’t changing, while Toyota copies.

    I guess the answers are easy for you if you don’t open your eyes.

  • steved28

    Actually the gas mileage (4cyl) Camry vs. Malibu is a wash. 21-31 vs. 22-30.

  • RandalH

    Car companies cling to large vehicles for two reasons: 1) they still sell far more large cars than small cars, and 2) they make more profit from them. This is the reason why, in spite of the Prius, Toyota still sells a ton of Tundras and other monster vehicles.

    I think the older you are the more skeptical you are of the permanence of trends. First of all, there have been several periods of time when gasoline prices have spiked, starting in the 70′s with the initial oil shock (driven by OPEC and Nixon’s price controls) and again in the 80′s. When I bought a Honda Accord in the mid-80′s small cars brought a premium price and the lots were full of large cars. But, oil prices went down again and people started buying SUVs like crazy. Except for a minivan when our kids were small, I’ve never owned anything but 4 cylinder, small cars. But Americans love big cars and will buy them when they can, even if they have to sacrifice in other areas of their lives. I’ve never understood it, quite frankly. I was probably influenced by my father who bought small cars (an English Ford Anglia and later one of the first VW Rabbits to be imported into the country) even when gasoline was barely 30 cents a gallon. Like me, he was stingy and didn’t want to pay any more for gasoline than he had to. And people made fun of him for it (I mean, how many people in East Tennessee were driving English Fords in the ’60s?).

    I think time will tell if this current oil price trend is permanent and a result of supply and demand, or it is driven primarily by speculation in the commodities markets. If it’s the latter, prices may crash yet again and the SUVs will be flying off the lots.

  • Vaprius

    AP-
    Research a little better. After a few minutes of digging I found one reference to your ‘quote’ on the trade-ins. J.D. Power disagrees with you and GM.

    “According to GM, more than 40 percent of trade-ins on the Malibu are non-GM vehicles, citing the Toyota Camry as the most traded-in vehicle. However, according to J.D. Power, only 1.4 percent of Malibu buyers traded-in a Camry, so that statistic has to be taken with a grain of salt. “

    Although it stands to reason that the Camry would be one of the most traded in vehicle – ’cause it’s so damn popular there’s one at every other house. Just an expression, I have not doen the research to verify. But it has been one of, if not the, best selling car in the US for the last decade.

    That said, my point was that the Camry, Corolla and so forth are not low end, I wanna get the cheapest thing I can find to get me from point A to point B, for the least amount of money, cars. They are value propositions. They are vehicles that you like driving and it won’t cost you an arm and a leg to purchase or operate. They may not be sexy, but they will never let you down. People LOVE value purchases. They will pay A LOT OF MONEY for value purchases.

    Value purchases is not what American manufacturers understand, nor will they ever likely understand. They think, and to their credit consumers have taught them this, that purchasing a vehicle is 100% emotional. That is why trucks and SUVs are more profitable. Because they can charge more because buyers think they are worth more. Ego and emotion have ruled our purchasing decisions (myself include).

    And, while they may not have been in they past, my eyes are open now.

  • LostUSA

    When I refer to quality, I consider the reliability reports from a good site, such as Consumer’s Report. The GM and Ford economy cars are second to Toyota and Honda.

    If a value purchase to you is largely based on the cost of the vehicle, buy an Aveo or Focus (low price, good gas mileage cars). However, if you looking for a car that will last 10 or more years and you might feel comfortable sending your child off to college in, value may take on a different meaning.

    You can find cars that are inexpensive (< $15K) or high quality (something that will last 10 years) or offer good gas mileage (>35MPG). In most cases, you have to pick 2.

  • Anonymous

    It is not clear to me if a person can buy a Malibu Hybrid with a 6 speed transmission, but assuming that is an option, then the Malibu 4 might get around 25 city and 33 highway. But this still falls way short of the mileage of a Camry Hybrid (33 city, 34 highway).

  • alboyce

    hehehe

    Mini Cooper – power AND mileage, plus quality, great resale.
    and it’s FUN>

  • Armand

    Great…if there weren’t enough assholes overpaying for a Honda Fit, not it’s going to get even worse….

  • Armand

    The automotive industry DID see this coming. But they employ what is called tombstone technology. The same as what the FAA does, nothing is done in the name of saving money until something goes wrong.

    But they have made SO MUCH money that they can weather these changes.

  • GR

    I drive an awesome Suzuki hatchback that gets really good mileage. I hope to keep driving this until I get my next car which I hope will be a plug-in hybrid.

  • Jeff Shaw

    Frustrating that we don’t have the options Europe has. 61 mpg for half the cost of a Prius.

    http://www.toyota.ie/models/aygo/

  • randall adkins

    with due respect sir, until you make what we want to buy you will die on the vine. those greedy oil men have sealed your fate and we believe you are in bed with them….so keep making the gas-guzzlers and your idle threats and see who gets crushed.
    randall adkins
    304-412-4733

  • carLover

    I’ve seen lots of articles here like that, the decrease in sales of SUV, trucks and the bulky rides. Small and smart cars are in the heat. Is it more convenient and useful? Lots of good reviews about these hatchbacks. Maybe car manufacturers need to produce more cars like these if it’s in the trend.

    Got this blog about Shocks.

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