GM And Ford: Small Is The New Big

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Beerboy12 Beerboy12 on Oct 03, 2012

    we live in age of debt crisis and weak economic times. We have at our fingertips more information than ever before with the internet. There is a growing awareness that people need to be more efficient & need to spend money more wisely. Big gas guzzling cars are just not in that scope.

  • CJinSD CJinSD on Oct 03, 2012

    This story could have been combined with the one about highway deaths trending upwards. Small cars are less safe than big ones. CAFE is just another tool for Obama to kill Americans, like giving guns to Mexican drug cartels, denying security to our ambassadors on 9/11, or empowering our enemies in Afghanistan.

    • See 3 previous
    • Bd2 Bd2 on Oct 04, 2012

      Actually, the no. of small cars on the road have increased since 2000 and the death toll still dropped. The recent rise probably more has to do w/ driver error - you know, texting while driving.

  • Schmitt trigger Schmitt trigger on Oct 03, 2012

    "CAFE is just another tool for Obama to kill Americans, like giving guns to Mexican drug cartels" Fast and furious was a very significant blunder from this administration. But the guns, with some excpetions, are really killing Mexican -not US- citizens. So it is quite a stretch to equate CAFE with fast and furious.

  • Chicagoland Chicagoland on Oct 03, 2012

    CAFE was enacted by Pres Ford, in 1970's. 55 mph was Nixon, so no it's not a blue/red thing.

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