Greener Detroit ready for spiking small car demand | Gas prices are main buying motive

By March 2, 2012No Comments

Gas prices are spiking. But this time, Detroit is ready. When prices soared in 2008, the city’s three U.S. automakers were caught flat-footed. They didn’t have competitive small cars and relied on trucks and SUVs for profits. When gas prices peaked at $4.12 in July of that year, sales from the Big Three plummeted more than 20 percent. That same month, sales of the fuel-sipping Toyota Corolla jumped 16 percent.

Fast forward to February 2012. Overall U.S. auto sales rose 16 percent to 1.1 million last month, largely on the strength of Detroit’s small cars. The annual sales pace hit 15.1 million, the best rate in four years.

The difference: U.S. automakers spent billions in the last four years to roll out new models such as the Dodge Dart and Chevrolet Cruze.

The timing is fortunate. Buyers are shifting to small cars again. Twenty-three percent of new-car sales were small cars in February, up from 17.9 percent in December, according to auto information site

Three years ago, just 16 percent of the cars and trucks GM sold got over 30 miles per gallon on the highway. Now, it’s close to 40 percent.

Japanese carmakers are also benefitting. In 2008, they saw sales slide because they couldn’t make their most efficient cars, like the Toyota Prius hybrid, quickly enough to satisfy demands. But this February, Toyota Motor Corp.’s sales rose, led by a 52 percent jump in the Prius. Honda Motor Co.’s sales were also up, thanks to a 36-percent increase for the small Honda Civic.

Bigger vehicles from both U.S. and Japanese automakers are also less vulnerable to gas spikes, since they get better gas mileage than they did in 2008. Ford’s new Explorer SUV, which came out last year, sits lower and is more aerodynamic to save fuel. It gets up to 28 miles per gallon on the highway; its 2008 predecessor didn’t even get 20. Honda’s new CR-V gets up to 31 miles per gallon compared to 27 for the 2008 model.





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