Sun, Sep 04, 2005 - Page 10 News List

Analysts expect fuel prices to revive car sales

BLOOMBERG

Toyota Motor Corp, Honda Motor Co and analysts expect many US consumers to shift back to cars from less fuel-efficient light trucks as gasoline prices surge on refining capacity lost to Hurricane Katrina.

"I think we'll see a boom in the car segment," said Jim Sanfilippo, an auto-industry analyst for Automotive Marketing Consultants Inc in Bloomfield Hills, Michigan, on Thursday. "With US$3 a gallon or more for gasoline, there's a huge potential for people to migrate back to cars over the next few months."

Combined sales of small cars, the most fuel-efficient auto category, for the three largest US-based automakers and the three biggest Japanese brands rose 11 percent last month, according to Bloomberg Data. Demand for the largest sport-utilities, among the least fuel-efficient trucks, dropped 17 percent.

US consumers over the past two decades eschewed sedans and coupes in favor of pickups, minivans and SUVs. Light trucks have outsold cars every year since 2001, and accounted for 55 percent of US auto sales this year through last month.

Last month's 3.8 percent increase in US auto sales, to 1.48 million vehicles, was led by a 9.7 percent rise in cars. Light trucks dropped 1 percent.

Regular-grade gasoline, averaged nationwide, jumped 16 cents on Thursday to a record US$2.867 a gallon, according to data released on Friday by AAA, the largest US motoring organization. Pump prices are 55 percent higher than they were a year ago.

"We're going to see a return to cars, and people moving from larger SUVs to smaller SUVs," said Jim Press, president of Toyota's US sales unit, in an interview. "Hybrids are just on fire."

Toyota and Honda, the No. 1 and No. 2 Japanese automakers in the US, strengthened their US foothold in the 1970s and '80s with small cars that traveled farther on a gallon of gasoline than products from General Motors Corp, Ford Motor Co and Chrysler, now the US unit of DaimlerChrysler AG.

Even as the Japanese companies have added larger truck models, they continue to be viewed as having more fuel-efficient vehicles, said fund manager Daniel Genter, president of Los Angeles-based RNC Genter Capital Management.

"The perception of the consumer is that the imports have a head start, certainly what we're seeing with Toyota and in particular with Honda," Genter said in an interview on Thursday.

Honda's Civic small car had one the largest increases for any high-volume model last month. Sales rose 26 percent to 34,762. Toyota's Corolla, Civic's chief competitor, had a 6.4 percent increase.

Ford next month will begin selling three mid-sized cars: the Ford Fusion, Mercury Milan and Lincoln Zephyr.

"I don't like to pay US$3 a gallon for gas, but I can't think of a better time to be introducing the Fusion, the Milan and Zephyr and having two hybrids available," George Pipas, the company's sales analyst, said on Thursday.

"The traditional sport-utility segment is declining, it's seen its best days," Pipas said.

Honda also sold 6,562 gasoline-electric Civic, Accord and Insight hybrids, a monthly record.

Toyota, the world's largest seller of such vehicles, boosted sales of its hybrid Prius hatchback and gas-electric Highlander and Lexus RX400h SUVs to a combined 15,382, Press said.

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