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Automakers Struggle as Small Car Sales Slide

Midsize models also taking a hit as cheap gas lures shoppers to SUVs and CUVs.

by on Apr.12, 2016

Dodge will now offer just 3 versions of the Dart.

Desperate to reverse declining sales of some of its smallest passenger cars, Fiat Chrysler Automobiles is trimming back the line-up of its compact Dodge Dart line and cutting as much as $1,600 off the sticker price of the three remaining models.

The Detroit maker isn’t alone. Across the industry, automakers are struggling to shore up demand for their sedans and coupes, especially the compact and smaller models that have been especially hard hit by the past year’s sharp dip in fuel prices.

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Manufacturers are ramping up incentives, trimming model lines and, in some cases, cutting production or moving it offshore in a bid to reduce production costs.

“We are repositioning the Dart lineup to better align production and dealer inventory with consumer demand and preference,” Tim Kuniskis, FCA’s head of passenger car brands.


Smart Reveals New ForTwo Cabrio

America’s smallest car goes topless.

by on Aug.28, 2015

The newly redesigned Smart ForTwo Cabrio will offer a three-position canvas top.

The new Smart car hasn’t yet landed in showrooms in the U.S. but the German microcar maker is already rolling out a second version, with a third on the way.

The redesigned Smart ForTwo Cabrio gets a new canvas “tritop” that can open up like a sunroof or fold back more like a conventional convertible. Set to formally debut at next month’s Frankfurt Motor Show, the two-seater will reach showrooms in mid-spring 2016.

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“Our new smart cabrio really exudes joie de vivre in the city – which is what our brand stands for”, said Smart brand boss Annette Winkler. “I am sure that we will delight our present 220,000 cabrio customers and win lots of new fans with this successful lifestyle icon.”


Little Smart Has Big Ambitions for New ForTwo

But is there a market for microcars in truck-happy U.S.?

by on Aug.25, 2015

Two extremes of the Daimler AG family, the 2016 Smart ForTwo with a row of Western Star trucks.

Size matters. That’s long been a guiding principle in the U.S. auto industry, and with fuel prices down sharply this year, it seems truer than ever as American motorists once again shift from fuel-efficient small cars to larger SUVs, CUVs and pickups.

And that raises a serious question about this year’s launch of what will be the smallest car on the U.S. market, the 2016 Smart ForTwo. After a seemingly endless delay, parent Daimler AG has launched an all-new version of the microcar just as potential competitors, such as the Mini Cooper and Fiat 500 struggle to reverse double-digit sales declines.

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Nonetheless, “We hope there is much more potential” for a brand that has so far failed to live up to its initial promise, says Annette Winkler, the head of the Smart brand during a first U.S. media drive of the new ForTwo model.


Ford Cuts Shift, 700 Jobs, at Key Michigan Plant

Cutbacks spread as American motorists shift from small cars to SUVs.

by on Apr.24, 2015

The Ford Focus has been losing momentum despite receiving some updates for 2015.

Weak passenger car sales have prompted Ford Motor Co. to eliminate a shift at a Michigan assembly line that builds compact and battery vehicles, including the Focus and Focus EV.

With gasoline prices dropping to their lowest level in years, demand for SUVs has been rising while prompting a sharp slide in sales of smaller and alternative-fuel vehicles, like this built at the Michigan Assembly Plant in Wayne, Michigan. The announcement, which will impact 700 Ford workers, comes on top of General Motors’ decision to temporarily idle production of the Chevrolet Volt plug-in hybrid at a plant nearby.

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“Ford will be working to redeploy affected hourly employees (affected by the cuts) and they will be considered first for southeast Michigan opportunities as they become available,” the automaker said in a statement.


Chevy Sees No Impact on Volt Sales from Battery Lab Explosion

Fuel price surge actually a plus for sales, maker believes.

by on Apr.16, 2012

Chevy marketing chief Chris Perry introducing the 2013 Impala at the NY Auto Show.

An explosion at the General Motors battery lab is unlikely to have any impact on the newfound sales momentum of the Chevrolet Volt, contended the brand’s marketing chief.

The maker certainly has to hope so, considering the brief setback in sales that followed word of several fires involving Volt batteries following federal crash tests last year.  Demand for the plug-in hybrid slumped sharply during the first two months of this year – though sales rebounded in March as U.S. fuel prices soared towards record levels.

“They weren’t even testing a Volt battery,” said Chris Perry, vice president of global marketing for Chevrolet, during an appearance at a charity event in Detroit.

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GM appeared to have turned the corner with Volt in March when sales rose to 50% more than their previous peak due to a push to fill the pipeline to dealers across the country.  But last week’s explosion, which injured six employees – sending one to the hospital – has once again raised issues about
the dangers inherent in lithium-ion batteries.


What Gas Crisis? Auto Sales Still Gain Momentum

Buyers spending on fuel-efficient offerings at record pace.

by on Apr.03, 2012

Nissan scores an all-time sales record.

Undeterred by rising fuel price, new vehicles sped out of showroom during March at a rate the industry hasn’t seen since the start of the Great Recession.

Nissan North America sales hit an all-time high, while Audi had its 15th consecutive record month.  Toyota reported its highest March sales since 2008.  On a seasonally-adjusted annual rate, or SAAR, sales shot to 14.7 million for March, well in excess of the roughly 14 million most industry analysts are expecting for all of 2012.

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The question is whether the pace will continue. “I don’t expect it to,” cautions David Sullivan, of the consulting firm, AutoPacific, Inc. He fears the sharp rise in fuel prices will “choke things off” when potential buyers have to divert money from their new car budget to fuel.

But other analysts counter that, if anything, motorists may see that as reason to trade in.  Significantly, General Motors said it sold more high-mileage offerings than at any time in its history – vehicles getting at least 30 mpg on the highway accounting for 40% of its overall mix last month.  Small car sales, in particular, accounted for 29% of Ford Motor Co.’s overall sales – even though demand for the subcompact Fusion actually declined while sales of the compact Focus model were up by a third.


March Sales Hold Strong Despite Fuel Price Worries

More buyers downsizing as gas nips $4.

by on Mar.23, 2012

Improved availability of Japanese products, like the 2012 Toyota Camry, is helping boost March sales.

Sales of new vehicles have remained strong during March as the industry finishes off a robust first quarter – even though some observers had been worried that the market might begin to drag as fuel prices continue climbing towards record levels.

In another sign of strength in the automotive sector, Volkswagen of America has confirmed plans to add 800 jobs at its assembly plant in Chattanooga, Tenn., joining other automakers in adding jobs at assembly plants in the South and Midwest to keep pace with the demand for new vehicles. VW opened that Chattanooga plant last year as part of its plans to rebuild its market share in the US.  (For more on VW’s plans, Click Here.)

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So far this year, sales of VW brand models have increased 40%, officials from the German automaker said this week.

Meanwhile, Kelley Blue Book, KBB, a leading provider of information about new and used cars, estimates new-vehicle sales will reach 1,425,000 units in March.  That works out to a seasonally adjust annual sales rate, or SAAR, of 14.6 million.


Gas Price Hits $3.80, Tops $4 in Four States

But upturn could prove a plus for automakers.

by on Mar.12, 2012

Fuel prices continue their run-up, with motorists now paying $4.00 or more in some states.

U.S. fuel prices now stand at an average $3.80 a gallon for regular unleaded, according to the latest pump survey by AAA, with prices topping an average $4.00 in four states.

The pace of the increase has actually slowed, in recent days, and even dropped briefly last week.  But analysts anticipate that fuel prices could continue their run-up in the days and weeks ahead, especially as spring approaches and American motorists begin traveling more.

Despite concerns about the impact of rising petroleum prices on the economy, many economic indicators have continued to improve, in recent weeks, car sales, in particular, rising at a much faster rate than anticipated.  February’s double-digit surge was significantly better than anticipated and, on an annualized rate, reached the highest level the U.S. market has seen since March 2008.

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Some analysts, in fact, are speculating that the latest fuel price surge might actually be helping the auto industry by driving more motorists into showrooms for small cars.  Demand for compact and smaller vehicles surged to 23% of the overall U.S. market in February, up from 17.9% in December.

“If people are looking to replace their vehicle they’re short penciling the fuel economy numbers,” said Joe Phillippi, of AutoTrends Consulting.

But Phillippi cautioned that “there may be a delayed reaction to the fuel price run-up” that, if it continues much longer, could lead to a slowdown in not only car sales but the overall economy.

Monday’s $3.80 average is nine-tenths of a cent above last week’s final average – and compares with $3.51 on this date a year ago.  It’s still 31.3% behind the all-time $4.114 average recorded by the AAA on July 17, 2008.

But there are a number of forecasts predicting the price of a gallon of regular self-service unleaded could reach $4.50, perhaps even $5.00 in the coming months as demand for fuel traditionally rises.

The price has already hit $4.00 in Alaska, California, Hawaii and Illinois – the Hawaiian islands recording the nation’s highest pump price at an average $4.44 per gallon, the AAA said.  In five other states and the District of Columbia, fuel prices are within a nickel of the $4 mark.

The lowest price in the nation can be found in Wyoming, at $3.30.

The fuel price surge is being blamed on a variety of factors, including Mideast tensions and the fear of a war with Iran over the Islamic republic’s nuclear program.  Iran has complicated matters by already cutting off supplies to several parts of Europe, including the U.K.

Ironically, the resurgent U.S. economy has also encouraged the upward trend in fuel prices – as has the strong economic boom in China.  In fact, most petroleum analysts argue that fuel prices are no longer primarily set by U.S. demand.

The surge in prices is nonetheless becoming a key issue in the U.S. presidential race, the various GOP contenders blaming Pres. Barack Obama for the run-up. Fading GOP candidate Newt Gingrich has tried to revive his own fortunes by promising to lower prices to $2.50 a gallon if elected. The former House Speaker has declined to outline how he would achieve that, however, and few believe that even an all-out drilling binge would be able to move the needle at the pump much for several years.

February Auto Sales Match Most Upbeat Estimates

Improving consumer confidence shows up in the showroom.

by on Mar.01, 2012

Chrysler's flagship 300 posts a 480% sales increase for February, the maker up 40% overall. will update the Feb. 2012 sales story as more manufacturers report in.

With Volkswagen posting its best sales in almost 40 years, new car sales continued to gain momentum and to provide a huge lift the US economy during February.

Early forecasts had predicted a strong month and with preliminary results now coming in from VW, Chrysler Group, General Motors and Ford Motor Co. the analysts proved to be, if anything, conservative in their expectations, as all four companies reported substantial sales increases.

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Preliminary indications – with a number of major makers, including Toyota yet to report in – show that smaller passenger cars and crossovers gained significant momentum of their own in February as consumers responded to the threat fuel prices could again run up to record levels this year.


Small Car Surge Buoys March Sales

Ford tops GM, Toyota slump exceeds expectations.

by on Apr.01, 2011

Hybrid sales up, but Toyota takes a pounding on models like the Tundra pickup.

With gasoline prices creeping upward, small cars flew out of showrooms during March even as prices began to climb.

The overall rate of sales climbed 13% to produce a seasonally-adjusted annual sales rate, or SAAR, of 13.2 million units, which is slight above earlier the industry’s forecasts.  A strong economy, rising employment and heavier advertising schedules also appear to have contributed to the increasing sales.

The month brought several surprises, including a sharp downturn at Toyota and a reversal of the normal pecking order among Detroit makers.

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Ford outsold GM for only the second time since 1998, buoyed by demand for such new models as the 2011 Explorer.  (Click Here for more on the GM-Ford fistfight.) Meanwhile,Chrysler enjoyed its best sales for any month in almost three years while GM still managed to post a double-digit increase. Audi and Nissan reported had record sales, while Honda’s sales increased by 19%.

But after seeming to get momentum moving in the right direction during January and February, however, Toyota took more lumps, overall volume dropping 5.7%, despite a 52% increase in sales of the Prius and stronger than expected sales of the fuel-efficient Corolla.