Consumers Increasingly Shying Away From Small Cars

Trouble is brewing on the horizon for the U.S. automotive industry as it prepares for tougher fuel economy standards calling for the industry's fleet of new vehicles to average 35.5 miles per gallon by 2016.

The Obama administration announced the new standards Sept. 15 against the backdrop of plummeting sales for small fuel-efficient cars that already are on the market.

According to new sales figures, the "lower small car" or subcompact segment suffered a 15 percent drop in the sales year to date through last month, while the "upper small car" or compact car segment is off 28.5 percent. The small specialty car segment is off 15 percent.

By make, for example, Toyota Yaris sales are off 41 percent year to date, Honda Fit sales are off 8.2 percent, and Chevy Aveo sales are off 30.6 percent.

Used car buyers also are showing less interest in smaller cars. Kelley Blue Book officials say residual values for small cars have plummeted while they have gone up considerably for large cars and sport utility vehicles.

Adesa, a large wholesale auto auction company that conducts sales all over the country, reported that while pickup truck prices plummeted 17 percent in value from August 2007 to August 2008, they have risen 23 percent since then. Meanwhile, the auction house said, compact car prices went up by 17 percent from August 2007 to August 2008, but have fallen 15 percent since then.

In a study by AutoPacific, a California-based industry research firm, small car buyers were unhappy with their vehicles.

[Source: News Chief]