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Gas Prices Rise, Small Car Interest Grows

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  autos arrows plug v2 Gas Prices Rise, Small Car Interest Grows

by Jeff Gilbert
WWJ AutoBeat Reporter

DETROIT (WWJ) The online world is seeing a lot of buzz about small cars, and it appears to be directly connected to gasoline prices that have topped $3.50 a gallon, and are in the $4.00 a gallon range in some parts of the country.

“When fuel prices go up–bang—within seconds, it seems like, we also see increased interest in our web site, kbb.com,” says Kelly Blue Book executive editorial director and executive market analyst Jack Nerad.”  “That’s quickly followed by purchases in that category.”

Four out of five shoppers telling kbb.com that gas prices are influencing their vehicle considerations.  That’s up 11 per cent from January, corresponding to a 29 cent a gallon gas price increase.  Seventy-four per cent of those surveyed say they expect gas prices to go up further, before they come down again.

The findings are similar at the AutoTrader.com web site, where 53 per cent of those surveyed said they are looking for something more fuel efficient.

“This survey indicates what we expected based on previous gas-price spikes,” said AutoTrader.com President and CEO Chip Perry, in a statement. “When gas prices rise, interest on our site in smaller and more fuel efficient vehicles increases. When gas prices go back down, shoppers return to their normal shopping habits.”

AutoTrader interprets the survey results as indicating a conflict between customer desires, and an assessment of what they can afford to operate.

“The fact is: a large segment of the American car-shopping public likes and wants larger vehicles to accommodate their auto needs and wants,” said Perry. “Consumers consider many things when shopping for a car – things like style, utility, price, fuel-economy and more. The current spike in gas prices has put fuel-economy closer to the top of many shoppers’ lists right now.”

Analysts say downsizing doesn’t necessarily have to mean moving into a smaller vehicle.  It can also mean buying a vehicle with a less powerful engine than you originally wanted.  Crossover vehicle sales remain strong, as do sales of smaller SUV’s.

Customers who wants smaller cars will have a lot of new choices.  Ford’s compact Focus is starting to reach dealerships, to compete directly with the new Chevy Cruze.   Chevrolet also has a new subcompact coming later this year, the Sonic, which will face Ford’s Fiesta.  The Fiesta has been out a year, and has been particularly popular in California.

In addition, Fiat is returning to the U.S. for the first time in nearly 30 years, with an all new Fiat 500 subcompact.

“Most manufacturers are in better shape” said kbb.com’s Nerad.  “But, certainly the domestics are in better shape in small vehicles than they were the last time around.  Some of that is by great planning.  Some of that, I think, is pure happenstance.”

Follow Jeff Gilbert on Twitter @jefferygilbert

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