Hybrids and small, fuel-efficient cars are in short supply, and the auto industry, in general, is having one of its worst years ever.But auto buyers, driven by rapidly rising gas prices, found some appealing fuel-efficient mid-sized and crossover vehicles in the $18,000 to $30,000 range. Sales of some models in this segment surged in June 2008, compared with June 2007, and the increase provided a ray of hope to automakers otherwise struggling to stay afloat.
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The biggest winners were the Chevrolet Malibu sedan (25 mpg), sales up 73.4% in June 2008 compared with June 2007; Honda Accord sedan (24 mpg), sales up 54%; Chevrolet Equinox crossover (19 mpg), sales up 45.9; Subaru Forester crossover (22 mpg), sales up 41%; and Pontiac G6 sedan (25 mpg), sales up 34.2%.
The double-digit surge in sales of some mid-size vehicles highlights the shift in consumer preference away from gas-guzzling SUVs and pickups, whose sales continued spiraling downward in June--by 28.4% for the month.
Rough Month All Around
Overall, sales for June fell 18.3%, one of the weakest selling periods in years, according to Autodata Corp., which tracks vehicles sales. There were three fewer selling days in June 2008 (24) compared with June 2007 (27); the percent change calculation is based on numeric comparison and has not been adjusted to reflect the fewer selling days in the period.Three days made little difference, however, as no automaker was exempt from the sales plunge--even Toyota, which many analysts predicted would overtake General Motors in U.S. sales. GM held its position with an 18% sales drop; Toyota's sales dipped 21%.It may take some time before automakers catch up to the marked shift in consumer preference for fuel-efficient vehicles. If June sales are any indication, demand for these cars is way ahead of supply--and will be for some time to come.
No segment was excluded from the sales slump, including hybrids such as the Toyota Prius and Honda Civic. Both experienced a sharp drop in sales last month--not because of a lack of interest, but because of a lack of availability. Auto buyers purchased the vehicles faster than auto makers could build them, so there are fewer of them left to sell. Sales of the Prius (46 mpg) tumbled 25.5% in June 2008 compared with June 2007; Civic hybrid sales (42 mpg) were off 6.1% (gas-powered Civics sales soared, however, by 23.1%).
"The source of weakness is coming from a distressed consumer," says Bob Schnorbus, chief economist at J.D. Power and Associates. "Consumer confidence is as low as one may imagine it getting, and there are uncertainties about where the energy market is going."
Mid-Size On The Rise
Consumers who did enter the market in June to purchase a new vehicle bypassed SUVs and searched for other options to reduce fuel expenses. Some snubbed subcompact or small cars for mid-priced vehicles. This broad segment includes a mix of sedans, coupes, convertibles, compact SUVs and crossover vehicles that appeal to families of varying sizes. They want fuel-efficiency but may need a larger vehicle that is versatile enough to meet the demands of their lifestyle.
"Some people really don't want smaller cars," says James Hossack, a consultant for AutoPacific Inc., an automotive marketing and product-consulting company. "What they really want is more fuel-efficient vehicles. They want room for the family and their stuff." Also important is safety, says Hossack.
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