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US automobile sales drop to lowest level since 1992

SMALL IS THE NEW BIG While US sales slump consumers are also shunning trucks and sport utility vehicles and opting to buy smaller cars with better fuel economy


While last month’s sales of new vehicles in the US dropped to their lowest level since 1992, figures also show that US consumers are buying smaller cars with better fuel economy over trucks and sport utility vehicles.

“Smaller vehicles are going over big,” Toyota Motor Sales president Jim Lentz said. “With oil prices at record levels, compact cars and hybrids continue to lead the way.”

Other Japanese brands, such as Honda, Nissan Subaru and Suzuki, also reported sales increases last month as consumers opted for small cars.

Overall, sales tracker Autodata reported that despite a weak economy, sales of passenger cars increased by 5 percent last month, while sales of trucks and sport utility vehicles plunged 17.4 percent. Car makers report that more consumers are opting for smaller, more fuel-efficient four-cylinder engines when purchasing new cars, such as the Chevrolet Malibu, General Motors (GM) officials said.

“Consumer preference is shifting and we’re shifting with it,” said Mark LaNeve, vice president of GM North America Vehicle Sales, Service and Marketing.

“Throughout the industry, truck sales have been soft,” he said, after GM reported a US$3.3 billion first-quarter loss as its truck sales plunged.

GM announced deep cuts in truck production through the summer even though inventories have already been thinned by a two-month strike at a key supplier.

Ford Motor Co vice president of marketing and sales Jim Farley also said that sales of vehicles such as the Ford Focus and Mercury Milan were helping the company shift its sales profile away from truck and sport utility vehicles. Overall Ford sales were down 9.8 percent, Autodata said.

However, 63 percent of Ford vehicles sold in April were cars or car-like crossover vehicles, while less than 38 percent were trucks or sport utility vehicles — the smallest percentage in more than a decade.

Farley said Focus sales were the best for any April since 2000 and that the hybrid versions of Ford Escape and Mercury Mariner sold so well they were in relatively short supply.

Like GM, Ford also plans to cut truck production in the next quarter, while boosting production of passenger cars.

George Pipas, Ford’s sales analyst, said the company’s dealers also are reporting that consumers who bought F-150 pickup trucks as a fashion statement in the middle of the decade are now opting to purchase cars.

“People who didn’t need the utility of pickup truck are trading them in,” Pipas said.

Even Toyota and Nissan, which mounted elaborate plans to grab a portion of the US pickup truck market, have been forced to change their plans.

Bob Carter, Toyota vice president, said the Japanese giant’s brand new pickup truck plant in San Antonio, Texas, may not reach full-capacity now until 2009 or 2010. Sales of the heavily-advertised Toyota Tundra pick up slid more than 13 percent last month and pickup truck sales will not improve until the housing market begins to recover, Carter said.

Nissan, which has also seen pickup truck sales drop sharply, has announced plans to build a new line of commercial vehicles at its pickup truck plant in Canton, Mississippi, to help fill up the assembly line.

Chrysler LLC, another Detroit company dependent on truck and sport utility vehicle sales, reported a 17.6 percent decline in sales during last month. An increase in sales of compact cars failed to offset the decline, Chrysler officials said.

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