Smaller sells

The market has shifted, dramatically:

With gasoline prices topping $4 a gallon, consumers are overwhelming dealerships with demand for the littlest vehicles in the showroom.

Mr. Libby said that the tiny Honda Fit is on a dealer’s lot an average of 11 days before it is sold, half the time of traditional quick sellers like the Cadillac CTS and Mercedes-Benz C300 luxury sedans.

“These are amazingly low numbers for a car of this type,” he said. “If gas prices stay where they are, I think we’ll see this for quite a while.”

Hybrids are even more difficult to buy. Four of the 10 fastest-selling vehicles are hybrids, led by the Toyota Prius, which sells within four days of arriving at the dealer, according to J. D. Power. The average time to sale for the industry in June, by comparison, is 57 days.

But while inventories are low, manufacturers cannot move quickly enough to increase production of popular small cars like the Toyota Corolla, Honda Civic and Ford Focus.

Ford Motor Company, for example is running its Wayne, Mich., assembly plant on overtime and Saturdays in an effort to meet demand for the Focus.

General Motors had planned to add a third shift in September to its small-car plant in Ohio, but recently moved the start date up to August.

A Toyota spokesman said the Japanese automaker was limited by production to selling 175,000 Priuses in the United States this year, no matter how hot the demand.

Honda Motor will open a new plant in Indiana late this year that will increase its output of Civics by 200,000 a year. The automaker has already increased production of the car at factories in Ohio and Canada.

“Even though we’ve got more vehicles in the pipeline than ever before, we didn’t expect to sell 53,000 Civics in May,” said a Honda spokesman, Edward K. Miller.

More signs of the times: GM is postponing a redesign of its full-size pickups and SUVs, and will use the next Transformers movie to plug the tiny Chevrolet Beat. (The first film featured the new Camaro.)

GM and Ford are already selling subcompact cars in other markets. Chrysler, which sells nothing smaller than the much-maligned (but popular) Dodge Caliber, is scrambling to catch up.

Damian P.

Posted by damian at June 20, 2008 01:10 PM