Small-car move­ment is grow­ing

Los Angeles Times - - Business - By Martin Zim­mer­man

Memo to the auto in­dus­try: Small is in.

In case plung­ing sales of gas­guz­zling sport util­ity ve­hi­cles and big pick­ups didn’t get the point across, a new re­port pro­vided fur­ther ev­i­dence that sky­high pump prices were in­flu­enc­ing car buy­ers’ choices.

Small ve­hi­cles ac­counted for 31.8% of all new-ve­hi­cle sales in the first quar­ter of the year, up from 26.3% in the first quar­ter of 2004, ac­cord­ing to in­for­ma­tion com­piled by data tracker J.D. Power & As­so­ciates.

“We are see­ing a broad, longterm — but grad­ual — move­ment to smaller ve­hi­cles,” said Tom Libby, the Troy, Mich.-based se­nior di­rec­tor of in­dus­try anal­y­sis for Power.

Gaso­line prices, which this week hit a U.S. record av­er­age of $3.103 a gal­lon, are the rea­son. Sales of small cars and fuel-ef­fi­cient gas-elec­tric hy­brids rose along with mo­torists’ frus­tra­tion at the pump, Power found. Mean­while, owner loy­alty to large SUVs and pick­ups fell.

The trend clearly is af­fect­ing pow­er­train choices as well. Four­cylin­der en­gines ac­counted for 35.7% of the new ve­hi­cles sold in the U.S., up from 27.5% three years ago, Power found.

Mid-size crossovers such as the new Ford Edge have re­sisted the trend, in part be­cause of their fuel econ­omy ad­van­tage over truck-based SUVs and the buzz gen­er­ated by a flurry of new mod­els in the seg­ment. Own­ers of large cars also have re­mained sur­pris­ingly loyal, Power found.

A sharp down­turn in gas prices could slow the pace of small-car sales, but sig­nif­i­cant re­lief at the pump doesn’t ap­pear to be in the cards for a while.

That’s bad news for com­pa­nies that sell a lot of SUVs and pick­ups, which typ­i­cally are far more prof­itable than smaller ve­hi­cles. Much of the Detroit Three’s re­cent fi­nan­cial strife has re­sulted from a lack of pop­u­lar, fuel-ef­fi­cient cars to re­place their sud­denly un­pop­u­lar be­he­moths.

“We’re ex­pect­ing the smal­l­ve­hi­cle seg­ments to con­tinue to grow, re­gard­less of gas prices,” said Bob Sch­nor­bus, Power’s chief econ­o­mist. “But higher gas prices cer­tainly will help th­ese seg­ments rel­a­tive to oth­ers.”

San­dro Campardo Euro­pean Pressphoto Agency

COM­ING TO THE U. S.: BMW’s 1-Se­ries, on dis­play at the 77th Geneva In­ter­na­tional Mo­tor Show in Switzer­land in March.

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