Smaller cars are again in demand

DETROIT — Scott Piechocinski roamed the rows of a CarMax dealership in Charlotte, N.C., on a recent afternoon, searching for something small to replace his son’s 2001 Nissan Pathfinder sport utility vehicle.

He’s not alone: As gas prices marched higher and now top $3.50 per gallon across the nation, car buyers across the country increasingly are abandoning SUVs and pickups in favor of smaller crossovers and cars.

“Fuel is money,” Piechocinski said. “You have to be realistic.”

The trend also is showing up globally and could rival the industry upheaval that followed the last big oil price shock in 1980. That earthquake caught Detroit automakers lacking in fuel-efficient models buyers were demanding and set the stage for the rise of Asian competitors Toyota and Honda Motor Co and others.

General Motors Corp., Ford Motor Co. and Chrysler LLC rebounded in the 1990s when fuel was relatively cheap and they piled up big profits selling SUVs and pickups. But now history is repeating itself — with a vengeance.

Sales of large SUVs plummeted 28 percent in the first quarter this year, while subcompact sales rose 32 percent, according to Autodata Corp. Thriftier four-cylinder engines, once despised by Americans for their perceived lack of power, are selling in record numbers.

April sales results to be released on May 1 are likely to show an even more pronounced shift, predicted Jesse Toprak, chief industry analyst for the auto information site “That’s simply a function of the dramatic increase in oil prices that we’ve seen in the last few weeks.”

The trend away from SUVs started well before gas prices began climbing in 2005, in part because of the introduction of “crossover” vehicles — those with SUV styling but built on the more nimble and fuel efficient car chassis. SUV sales peaked at 3 million in 2003; they’re expected to fall to half that number this year, and the change caught Detroit unprepared.

Ready or not, Detroit has seen small cars become the largest segment of the U.S. auto market, accounting for 18 percent of new car sales. Last year U.S. consumers bought a record 2.8 million of them, and with sales up 4 percent in the first quarter this year, the record almost surely will be shattered.

In the U.S., gasoline prices are driving the small car boom, but worldwide, it’s people in emerging economies gaining wealth, said Mike DiGiovanni, GM’s executive director of global markets and industry analysis.

“A middle class is starting to develop, and they’re trying to move up scale from smaller cars to the larger compact-size cars,” he said.

Demographics also play a role. Baby boomers are trading in larger vehicles as their nests empty, and their children are now of car-buying age. Half of the next generation will pick small cars for their first set of wheels, said George Pipas, Ford’s top sales analyst.

“Gas prices are important because they’ve accelerated these shifts, but the shifts were going to happen anyway,” Pipas said. “SUVs were not going to roam the Earth in this decade as they did in the 90s.”

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