The fortunes of small cars used to be tied to gas prices. Sales of compacts rose when gas prices shot up, when gas came down, big was beautiful again. Sales of small cars are up strongly in America, but this time, it’s different, think two of the US motor industry’s most senior executives. They believe that the trend won’t reverse, and that sales of small cars will go further up.
“I think it’s going to be a permanent change,” Mary Barra, senior vice-president of automotive development for General Motors, told the Financial Times. “I think you’re going to see a shift that doesn’t bounce back.”
GM’s sales of mini, small and compact cars were up 97 percent in September, the only bright spot in an otherwise lackluster sales report.
Bob Shanks, CFO of Ford, expects “that small cars will become an increasingly large portion of the North American market, and in fact the global market.”
Ford recorded a 73 percent year-on-year increase in small car sales in September, the best small car sales month in 10 years.
Sales of the subcompact Fiat 500, which Chrysler markets in the US, were up 51 per cent year-on-year.
Compact and subcompact cars accounted for only a combined 21.5 per cent of the US car market in August, against 24.6 per cent for sports utility vehicles.
Big iron is playing an important role for GM and Ford. If their executives think that small has a big future, drastic changes could be ahead.