With gas nearing $4, Americans opt for small cars

DETROIT — Americans are going for smaller cars as gas prices march higher.

New models that get 35 mpg or better, including the Chevrolet Cruze, Hyundai Elantra and Ford Focus, led most major automakers to stronger April sales. Even buyers of pickups chose more efficient engines.

The shift to more fuel-efficient cars was good news for Detroit and Korean automakers, which have plenty of new small cars in stock. But Toyota, struggling with supply shortages since the March 11 earthquake and tsunami in Japan, reported weak sales.

Overall, U.S. sales rose 18 percent from April of last year, to 1.16 million. It was the third straight month that sales hit an annual rate of 13 million or more and a big improvement from last April, when consumers were more cautious about the economy and unemployment was even higher.

While sales remain below their peak of 17 million in 2005, the April gains were another sign of recovery for the auto industry and the economy. Just two years ago, Americans bought just 10.4 million vehicles.

Downsizing is great for Korea's Hyundai Motor, which said sales jumped 40 percent over last April because of demand for more efficient models like the 40-mpg Elantra. Edmunds.com analyst Jessica Caldwell said Hyundai also offered more deals in April than Japanese rivals, which were concerned about supplies. The Elantra alone outsold Nissan's Leaf, Versa, Sentra, Cube and Juke combined.

Car shortages from the earthquake have not hit the United States but are expected to by the end of this month. Monday, Honda warned dealers that the 2012 Civic and other models will be in short supply this summer. It also pushed back the fall launch of the CR-V, a small SUV, by at least a month.

Toyota is already feeling the squeeze. The company's U.S. sales rose just 1 percent in April. Sales of its popular Prius hybrid, which is made in Japan, were flat compared with last April, at about 12,500. In a good month, Toyota can sell around 22,000.

Detroit's automakers say they don't think the earthquake will hurt their profits or U.S. sales forecasts, since they rely less on Japanese parts or have been able to find alternate suppliers.

GM said its U.S. car and truck sales jumped 26 percent in April. In addition to strong small-car sales, crossovers were strong, with the GMC Terrain up 57.5 percent. Crossovers look like sport utility vehicles but are more fuel-efficient because they are built on car platforms.

Ford's U.S. sales rose 13 percent, largely because of a large increase 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 as the summer driving season approached.

But even Mustang buyers had one eye on the gas pump. Ford said more than half of them opted for the Mustang's more fuel-efficient V-6 engine.

Sales were strong even though automakers eased up on deals. 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.

Beijing company gives loan to Saab

Saab Automobile, the struggling Swedish automaker, received a lifeline on Tuesday when a Beijing company agreed to provide a loan to help restart production and open access to the booming Chinese market. Hawtai Motor will provide 150 million euros, or $222 million, in financing, including 120 million euros for a 29.9 percent equity stake in Spyker Cars, the Dutch company that bought Saab from General Motors last year. Hawtai will provide a 30-million-euro convertible loan with a six-month maturity. The deal includes joint ventures in manufacturing, technology and distribution in China.

New York Times

With gas nearing $4, Americans opt for small cars 05/03/11 [Last modified: Tuesday, May 3, 2011 11:45pm]

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