Pauls Valley, OK, Pauls Valley Democrat

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May 4, 2011

Small cars are pushing up sales

Detroit, MI — Small cars sold briskly in the U.S. last month, as gasoline prices approached $4 a gallon and some buyers worried about shortages of Japanese-made vehicles.

Analysts expected overall industry sales in the U.S. to increase 19 percent from April of last year.

Sales last month were led by highly fuel-efficient models such as Chevrolet's Cruze, Hyundai's Elantra and Ford's Focus

Don Johnson, GM's vice president of sales and marketing, said consumers shifted into smaller cars starting in March and the trend continued in April. Unlike 2008, when a rise in gas prices caught the industry off-guard, GM and other companies now have good small cars and can quickly boost production of them, he said.

“We're probably the best prepared ever for this shift,“ he said.

The average price of a gallon of gas nationally this week is $3.96, up $1.06 from last year. Gas is already over $4 per gallon in New England, the Midwest and on the West Coast, according to federal statistics.

While widespread vehicle shortages related to the March 11 earthquake in Japan have yet to hit the U.S. market, they're expected to by the end of May. That may have spurred people to buy cars like the subcompact Honda Fit in April. On Monday, Honda Motor Co. warned dealers that the 2012 Civic, as well as other models, will be in short supply this summer. It also pushed back the fall launch of the CR-V small SUV by at least a month.

Earthquake effect

So far, GM says the earthquake won't affect its profit, although it has had to slow production because of a lack of parts from Japan. Chrysler Group LLC said this week that the earthquake will cost it between 50,000 and 100,000 vehicles this year, but it won't have an impact on earnings.

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