Americans swooped up small cars at a pace that sent the segment soaring last month without increased incentives or a slew of new models. And as gas prices climbed, several truck categories that were hot a year ago lost share despite rich incentives.
Automotive News reported the industry posted its best May ever, with 1.6 million units sold. Results were buoyed by compact cars, whose share of total industry sales rose to 15.7% last month from 14.8% in May 2003 and from 14.7% in April 2004, said Jesse Toprak, director-market analysis and pricing at edmunds.com. That's despite the fact that compact cars, which include the Toyota Corolla, Honda Civic and Ford Focus, had the industry's lowest average incentives last month of $1,696 per unit. The segment tallied sales of 254,850 units last month vs. 209,242 in April, Edmunds.com said.
"Consumers are rediscovering compacts," said Ernest Bastien, VP-vehicle operations at Toyota Motor Sales USA's Toyota Division. "The small-car segment was not as strong a few months ago as it is now," said Tim Peyton, senior manager-national advertising, American Honda Motor Co.
Very strong national advertising in the first quarter by several small-car marketers contributed to the jump in the segment's sales, said Doug Scott, a VP at NOP World Automotive. Honda doubled measured spending on Civic in January and February to $22 million versus a year ago, according to TNS Media Intelligence/CMR, while Mazda North American Operations, launching its Mazda3 small car, spent $32 million in the first two months of the year. Toyota's Corolla was supported with $7 million in measured media during that time frame, according to CMR.
But sales were helped along by "some anxiety about fuel prices," said Mr. Scott, and Mr. Bastien, too, said small cars' fuel economy "tends to tweak" consumer interest.
Ford said its Focus line had its best May ever with sales of 29,898 units, 32% higher than a year ago. But the marketer, which spent $8 million in measured media on Focus in the first two months of the year-only one-third of what it spent during those same months a year ago-saw its small car line's year-to-year sales of 96,312 fall 5% from the same period in 2003. Bradley Roney, Focus marketing manager, however, said the small-car line is selling briskly in June-about 15% higher than a year ago.
purchase requests up
Honda's Mr. Peyton said the automaker dialed up second-quarter national and regional marketing for Civic, including TV spots from independent Rubin Postaer & Associates, Santa Monica, that alternate messages for fuel-efficiency, five-star crash ratings and a $159 monthly lease deal. Through May 2004, Honda sold 136,234 Civics vs. 127,979 a year ago, according to Automotive News.
Autobytel and its affiliates, which got roughly 1 million online requests to purchase vehicles from January through April, said its online purchase requests for Civics rose 37% in the first four months of 2004. Toyota's Prius, a compact car with a gas-sipping hybrid engine, enjoyed the biggest request increase-73%. Toyota has a waiting list of more than 20,000 for the incentive-free Prius, which is already sold out for the current model year.
By contrast, Toyota's Sequoia full-size SUV saw sales skid 17% in May to 5,003 units vs. the same month a year ago. Sales slid 4.6% to 23,377 through May compared with the previous year, Toyota said.
Toyota certainly wasn't alone. Despite increased incentives from April to May, market share for midsize sport utilities and full-size pickups slid in that period, Edmunds.com found. Midsize SUVs lost the most market share from May-to-May from 13.2% to 12.1%.
Autobytel said requests for full-size SUVs plummeted by 20% from January through April. Requests for Chevrolet's full-size Silverado pickup plunged by 48% and 22% for the Ford Expedition large SUV.
But the compact's newfound traction may not last. "SUVs and trucks continue to be of high interest to consumers," cautioned Mr. Bastien, who said gasoline would have to stay at $3 per gallon or more for at least six months to significantly affect consumer's vehicle-buying intentions.