Small Cars Back Again; This Time Automakers Ready

Consumers are buying smaller cars in response to fast-rising gas prices. We've been here before, most recently when gas prices spiked in 2008. This time around is different; American automakers GM and Ford are finding success as consumers switch from SUVs and trucks to economy cars. NPR's Sonari Glinton reports.

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LIANE HANSEN, host:

As the rising cost of gasoline shifts consumer demand to fuel-efficient cars, American carmakers are finding new success in the small-car market.

As NPR's Sonari Glinton reports, in the first quarter of this year, General Motors and Ford posted the kind of profits they haven't seen in a decade.

SONARI GLINTON: If you want to find out how much things have changed in the American auto industry in the last few years and months, you can drop by your local dealership. That's what I did.

Mr. JIM FLYNN (Sales Manager, Fairlane Ford): Let's walk over to this. I want to show you something here in a window sticker.

GLINTON: Meet Jim Flynn. He's a sales manager at Fairlane Ford in Dearborn, Michigan. Flynn walks over to a Ford Fiesta, a subcompact car. He points to the window sticker and the miles per gallon.

Mr. FLYNN: I'd say in nine out of 10 purchasers right now, this is weighing heavily.

GLINTON: With gas prices well over $4 in Michigan, Flynn says there's one question every single customer is asking.

Mr. FLYNN: What's the best fuel economy vehicle you have? That's really, I'd say, nine out of 10 of them. I had a father and daughter this morning. She's a college student, and they're looking for something with good fuel economy to put her in, on the road in the morning.

GLINTON: Flynn says 10 years ago, customers could've cared less about the gas mileage. He was one of them.

Mr. FLYNN: Myself, I could lease an F-150 for $275 a month. That's no longer the case. And when you're spending $100 to fill a vehicle up now, you want to make sure you have a specific use for it as opposed to it just being a daily driver.

GLINTON: Flynn used to drive an F-150. Now, he drives a compact car - a Ford Focus. Not everyone is making such a drastic downshift, but many are - and it's showing in the numbers. Sales of Ford's compact car, the Focus, were up 22 percent last month.

Chevy's new compact, the Cruze, is selling far better than the car it replaced, the Chevy Cobalt, did a year ago.

Ms. MICHELLE KREBS (Analyst, Edmunds.com): A lot of strange things that we've never seen before are happening in the marketplace right now.

GLINTON: Michelle Krebs is an analyst with Edmunds.com. She met up with me at the Fairlane dealership. Krebs says there are many reasons the American car companies are winning over small-car customers. One of them is...

Ms. KREBS: The earthquake and tsunami in Japan has disrupted production of small, Japanese, fuel-efficient cars. We're going to see shortages for quite some time, probably. So that opened the door to competitors.

GLINTON: Krebs says it's not just the lack of supply that's hurting the Japanese. Their small cars have gotten - well, less cool.

Ms. KREBS: What we're seeing with some of these new entries by the Americans and the Koreans is, they feel like cars for younger people.

GLINTON: Krebs says there's been a huge push with the American automakers to dig deep on creature comforts and design of their small cars.

Ms. KREBS: And so they're attracted to younger buyers, but they're also attracted to older buyers who want to feel young. And you know, we baby boomers never want to get old. So while, you know, a Ford Fiesta may be aimed at somebody who's 25 years old, that makes it cool with someone who is 55 years old because they think they're young.

GLINTON: Krebs says she can't remember the last time the American car companies were hip and cool - or for that matter, fuel-efficient. Sonari Glinton, NPR News.

HANSEN: You're listening to NPR News.

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