By on October 3, 2012

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.

Get the latest TTAC e-Newsletter!

61 Comments on “GM And Ford: Small Is The New Big...”

  • avatar

    I haven’t dug through all of the numbers for GM yet, but on the Ford side the increase in small car sales also came with a total increase of 4% in retail sales for September year over year. Truck sales technically went down a bit, but all current truck nameplates actually increased in sales, the decline in total truck volume was entirely due to the discontinuation of the Ranger.

    Ford’s redesigned smaller cars have also been making major inroads in traditionally import-leaning markets in CA.

    The sky isn’t falling, if the market is going to shift Ford and GM will be ready for it when it does.

  • avatar

    For the time being, this is trend is likely to continue.

    However at some point, similarly to the last malaise period, it may reverse of course depending on many different factors. I don’t think people in the last malaise thought it would ever rebound either.

    There is one plain truth, Americans want big honkin vehicles and they’ll find a way to get them.

    • 0 avatar

      Small cars in 1982 were way different than 30 years later. TO younger buyers, those under 50, small doesnt mean “cheap” or “loser”. Old timers who remember the cheap gas 60’s still want bigger, but it is not “one plain truth”.

  • avatar

    If Ford and GM continue to invest in developing class competitive small cars, it could open up new export markets for them.

    An F150 may be a good quality vehicle, but it’s not going to be an easy sell in places with expensive fuel.

    • 0 avatar

      Fuel costs get all the blame, but there is another, and IMO more important, factor: cost of the car.

      Small cars cost less than big cars. In countries where incomes are lower, they will buy smaller cars because they can better afford them. Similarly, when real income is falling, unemployment is high, finances are tight, and used car prices are high, people will buy small.

  • avatar

    Probably worth mentioning that GM and Ford compact sales have shot up, but so has the quality of their compact offerings. Attractive products attract sales.

    As a coutnerpoint, I think people have come to realize that the era of $4/gallon gasoline is here to stay.

    • 0 avatar


      I enjoy my admittedly too small for my 6’5 frame 2012 Focus, but I don’t think you could’ve GIVEN me a 2011 Focus. I’d have sold it, and bought something else.

      • 0 avatar

        I had a ’12 Focus rental back in March and I was absolutely blown away by how good it was. Bought a ’12 Mazda3 HB this summer. The Golf, historically the most “refined” of the compact cars, couldn’t hold a candle to either of them in terms of driving dynamics. It’s a great segment right now, hard to make a bad decision.

        Really though a compact car is enough for most people 90% of the time. We’re just now starting to realize this as a country. A lifted Chevy Suburban with monster truck wheels is not a particularly good commuter car.

    • 0 avatar

      Agreed. The quality of small cars have improved a lot. Even a Hyundai Elantra is a well made, well finished car anyone would be proud to own. The Chevy Cruze and Sonic are a league ahead of the previous Cavalier and Aveo. The Ford Focus and Fiesta are not the rental heaps that the old Focus and old Escorts used to be.

      • 0 avatar
        Freddy M

        Agreed. It’s too bad that these cars end up in rental and government fleets anyway. This isn’t a troll, they’re really good cars.

        It pains me to see brand new Ford Foci decked out with Toronto Parking Enforcement livery for example.

      • 0 avatar

        I rented a 2012 Focus a few months back and I was blown away by how refined it felt, even at the base trim level. Compared to my beater ’97 Escort, it was a god-send.

        Too bad I can’t afford one and with terrible credit, I’ll have to subsist on yet more beaters.

      • 0 avatar

        @Freddy M

        Domestic automakers should represent govt. and corporate/business fleet.

        Who do you think dominates such fleet sales in Japan and Germany?

        Plus I see plenty of Camry, Highlander, Sienna and Prius cabs in NYC, as well as a good no. of Prius decked with the NYPD logo.

        As far as truck sales, don’t count them out yet.

        A big reason for the drop in truck sales was the reduction in fleet.

        As the housing market rebounds we should see more truck sales, esp. since the domestics are coming out w/ new models.

  • avatar

    Every time gas has gone up in price, the peak oil crowd comes out to say truck sales will only be for true working vehicles. I agree with Danio. Americans will continue to want large cars. This is partly because of the size of the country, relative to others, especially European.

    I do agree the quality of small cars has improved, but so too also has the gas mileage of P/U Trucks.

    People will drive what they want to, and in America, that is larger cars and trucks.

  • avatar

    I feel Ford really made a mistake by letting the Ranger die. Not everybody wants a big F150 no matter how many extras and great gas mileage it may produce. I predict that the Ranger will be back but as the same size as the old one, not the current foreign Ranger.

    • 0 avatar

      I will be in the market for a new vehicle soon. I currently have a Rav 4.1 for commuting to work and an older (smaller) F150 for week-end work. I would like to buy one new vehicle to replace the two, but I can’t imagine driving the current monster F150, 7 days a week.

    • 0 avatar
      Chicago Dude

      Honest question: Why not just get the Escape? Better fuel economy, better ride, by the time you exceed the towing capacity you’d want something bigger than a Ranger anyway, etc. There just aren’t a lot of people that need the open bed but also refuse to buy a full-size truck.

      • 0 avatar

        I can’t speak for Jeffer, but as another would be Ranger buyer left out in the cold, I can say for myself that getting a small SUV with a trailer for occasional use would suck, cause:

        1. most states require you to license and register (with appropriate taxation) a trailer, thus the towing option versus a truck with bed still costs money

        2. I can park a second vehicle in my driveway all week long, but if I leave a trailer there overnight I’ll get a nasty letter from the homeowner’s assoc.

        3. storage fees for trailer parking are outrageous.

        4. IMAGE. I’m from Texas, I live in Texas, and by God, in Texas we drive pickup trucks!

        Now #4 may sound a little self-serving, but no more so that anyone else buying a 911 or WRX STI as a daily commuter. A decent Ranger would allow me to get mid-20’s in mileage day-in day-out, plus cover most all of my weekend work. The ride’s not nearly as bad as you’d think, and it’s a real truck.

    • 0 avatar

      Derek had a pretty compelling argument a few days ago on how CAFE killed small pickups and station wagons, and the ranger most likely will not be coming back.

      It’s an interesting read, and struck me as one of the most thoroughly researched articles this site has had recently.

    • 0 avatar

      My current vehicle is a ’97 Ranger. The gas mileage sucks but I rarely take long trips so I haven’t spent as much as I thought I would on gas. I try to keep the tire pressure at the correct level and I don’t drive aggressively.

  • avatar
    DC Bruce

    Well, so long as Ben Bernanke keeps dumping money into the economy (which he last said he would keep up until at least 2015), the price of gasoline is going to stay high. If you noticed, the price of gas started rising right after Obama was elected. While I’m not fan of the president, I don’t think he deserves the blame for this one. Rather, the Fed started dumping money into the economy in 2008 and has continued to do so ever since.

    The value of commodities, like oil, remains relatively constant so long as the supply/demand relationship does not change. So, when you devalue the currency (which has been happening in the US and on a global basis), the price of the commodity is going to rise. Gold is the other obvious example of this phenomenon.

    Which is a long way of saying that the apparent popularity of smaller cars is a direct response to a period of sustained high gasoline prices which, because of monetary policy of this and other governments, is likely to continue.

    It is good news that domestic nameplates are building much better small cars than they were, which easily withstand comparisons with models from foreign nameplates.

    • 0 avatar

      “If you noticed, the price of gas started rising right after Obama was elected.”

      Huh? Oil prices are down 40% since 2008.

      • 0 avatar

        The average price of a regular gallon of gas at U.S. pumps was $1.84 when Obama took office in January 2009.

        You have to search for that as the networks find it a non-story since their candidate is the incumbent.

      • 0 avatar

        That might be true for the country, but most of the stations around here are still over $4/g to fill my STi. Regular is over $4 near my work (just outside of Chicago) and AFAIK inside Chicago is even more.

        My average for the year is just under $4/g. I doubt it was that high for 2008 (I’m comparing $ to $, not inflation adjusted. Inflation adjusted, it very well could be chaper today)

      • 0 avatar

        Retail prices are up significantly since the January 2009 inauguration, in fact they have nearly doubled. Failed economic policies have played a role along with other factors outside of Washington’s direct control.

      • 0 avatar

        “You have to search for that as the networks find it a non-story since their candidate is the incumbent.”

        $4 gas under a left wing administration isn’t merely a non-story, it’s actually a good thing if you deeply understand it like we do! CNN – “Rising gas prices aren’t as bad as you think.” Youtube news clips

      • 0 avatar

        “Huh? Oil prices are down 40% since 2008.”

        That’s true, but a bit dishonest IMO, requiring that you cherry-pick the data from the oil price peak in summer 2008, but not from when the President was elected in November 2008 as was stated in original post. Per the price of crude is up about 50% from Nov 7 2008 until now.

        Not that Obama has that much control over the price of oil.

      • 0 avatar

        Must we always have AM radio demagoguery by people who don’t understand commodities market whenever there’s a thread on small cars? US presidents have very little influence over global oil prices. Politicians try to convince us that presidents have more influence over these things to manipulate us, and it seems to be working.

        In any case, for those foolish enough not to be able to connect an economic crash to global oil prices, there probably isn’t much actual economic theory or evidence that will convince them of much of anything, besides more demagoguery.

      • 0 avatar


        The $1.84 price was an anomaly that occurred right around the time the economy collapsed in 2009.

        4/2007: $3.20/gal
        7/2008: $4.12
        11/2008: $1.61
        5/2011: $3.90
        4/2012: $3.87

        And click on “8 years”.

        Whenever anyone mentions this, you know they’ve been a victim of cherry-picked data. The graph is far more informative than the political talking point.

      • 0 avatar

        re: Luke

        >>the $1.84 price was an anomaly that occurred right around the time the economy collapsed in 2009.<<

        But the other trolls insist the oil/gas is priced worldwide, so your view makes no sense. Likewise, since fewer Americans are working than in 2009, oil/gas shouldn't be priced so high, except that the current administration is inflating away the value of the dollar.

      • 0 avatar


        No matter how many times you remind people like that, the average AM radio listener is too busy drowning out logic with the trash that comes out of the mouth of Rush, etc.

        Cheap gas will NOT last forever and we are seeing that right now. Our European and Canadian counterparts pay even more than we do and have been doing so for years. It’s time to get used to it and accept that cars with terrible gas mileage are not a great investment in the time of $4/gal gasoline.

      • 0 avatar

        @thornmark: Please, just look at the graph and understand what it’s telling you. That way we can get past the partisan rhetoric and get to the actual issue.

        If you want to compare it to employment numbers, you can’t get those in Excel format from the St. Louis Federal Reserve bank website ( and see what it looks like. Remember that graphs are more convincing when cover longer periods of time, especially when they don’t start at cherry-picked data-points like November 2008 (the height of the financial crisis and great recession), or 1995 (an unusually hot year that climate change deniers tend to use to start their analysis).

        Anyway, here’s the graph for total workers from the St. Louis fed:
        You can get a speadsheet containing both employment and gas prices from that source, if you so desire.

        Here’s the combined graph:,GASREGW&scale=Left,Right&range=10yrs,Max&cosd=2002-08-01,1990-08-20&coed=2012-08-01,2012-10-01&line_color=%230000ff,%23ff0000&link_values=false,false&line_style=Solid,Solid&mark_type=NONE,NONE&mw=4,4&lw=1,1&ost=-99999,-99999&oet=99999,99999&mma=0,0&fml=a,a&fq=Monthly,Weekly%2C+Ending+Monday&fam=avg,avg&fgst=lin,lin&transformation=lin,lin&vintage_date=2012-10-04,2012-10-04&revision_date=2012-10-04,2012-10-04

        I see the correlation that you propose, but it’s not strong enough to have the effect you suggest. But you’ve got the both data, and the picture — so if the relationship is more subtle, you’e welcome to make the case. And don’t hold back on the math and statistics — I’m pretty sure I can follow it.

    • 0 avatar

      The retail gas price was $4.054 back in Jul 2008. It is now $3.75.

      Yes- gas price was $1.59 back in Dec08- that’s because it was the bottom of the economic crash. Do you really want to go back to Dec 08?

      • 0 avatar

        Econ 101: Economy crashes, activity stalls, demand drops, and–surprise–oil prices drop. But that doesn’t fit the Obama-the-socialist-raised-gas-prices-because-he-hates-America meme.

      • 0 avatar

        It’s pretty sad I had to scroll down 8 replies to find someone with sense.

        Some people DO want to go back to Dec 08 and have a do over without any financial rescue and economic stimulus. They also have some drilling equipment in their backyard, all ready to go and disturb some pristine polar bear habitat.

        I think this bears repeating: anyone who complains about gas prices bought the wrong car. Cheap gas is a sign of a socialist state like venezuela or something similar. Oil is not cheap to extract from the ground anymore, China is hoovering up increasing amounts, and there is some hedging over the potential for oil disruption out of the Middle East.

      • 0 avatar


        The spike in the price of oil in 2007 was due to all the speculation until the BUBBLE burst in earl and the “last man” got stuck holding the bag.

        The price of oil really has little to do w/ actual supply and demand and instead, has much more to do w/ the immense amount of speculative $$ playing in oil futures (the amount of $$ in oil futures now compared to in 2000 is simply mind-boggling).

        And the price of gas in the US is higher now relative to the price of oil than in 2008 due to US refiners EXPORTING fuel to overseas markets where they can get a higher price (hence fuel being the no.1 US export).

    • 0 avatar

      Making incorrect, misleading statements, dragging politics into things and raising contentious off the subject issues is the work of a troll.
      Common, they arn’t called the B&B for nothing.

    • 0 avatar

      Be careful with the words being used. The Government doesn’t have much control over the VALUE of oil, but they very much have control of the PRICE of oil.

      Crude is universally traded in US dollars. True to DC’s point, if you pour trillions in fiat currency into the money supply, you devalue the currency, so it takes more dollars to buy the same amount of oil.

      This is really what is taking place. When the financial system collapsed in unpaid debt, the Fed had to pay for it and by extension you are paying for it through inflation. There is no oil shortage or real change in demand.

  • avatar

    Yup, high gas prices are here to stay. At least as long as China and India are still growing – even if they were to suddenly have economic problems that reduced their growth rates, as long as they are growing that means the finite amount of oil produced each year will increasingly go to them (until they hit the price at which it is a severe impediment to their growth, as we have).

    At the same time, current oil exporting countries are using up more and more of their own oil as they develop.

    So yeah, even with finding magic gooey lakes (well, sandy bogs) of oil up in Canada, there isn’t enough of it that is easy enough to process for oil to be “cheap” again. So I think Ford and GM are just admitting the obvious. Ultimately, this means that all of their vehicles have to be more efficient regardless of CAFE, and the most efficient and cheapest offerings will gradually become more important. SUVs have already been downsized into much more efficient CUVs, if gas prices go up gradually then slowly the CUVs will be squeezed out for more efficient cars, and so on.

    If oil prices go up suddenly again, all bets are off.

    • 0 avatar

      I agree!

      I recently started a job where about half of our company is in India. Those guys are a highly competent, hardworking, and a privelege to work with. They’re also living 1st world lifestyles, as near as I can tel, and the number of Indians who are so prosperous is certainly growing. And India is way bigger that. The USA. The math is obvious.

  • avatar

    After its second or third near death experience (1934?,1962)in the late 1970’s, Chrysler bet everything on severely downsized FWD cars, including premium ones with turbocharged engines. The problem was the drop in oil prices about 1982. Im not saying history will repeat itself, but I would, as an auto exec today, have contingent long term product plans.

    As an engineer, I prize efficiency for its own sake, but the majority consumers in all cultures want the biggest, fastest, most luxurious car they can afford.

  • avatar

    Shifting to a more balanced business model that’s insulated from gas prices and the housing market isn’t just drastic, it’s necessary for GM’s survival.

    A new Silverado is coming out this year, but a 116-day supply of the soon-to-be-lame duck trucks are sitting on lots. Are people waiting for the new one, or does everyone who wants a new truck already have one, and don’t intend to buy again for some time?

    Whatever the reason, truck production has to be made more flexible to demand. You can’t let them pile up like this.

  • avatar

    My car buying evolution probably typical. Once I left home,I drove a sequence of small rigs, VW bug, dodge colt, Subaru XT. Then farming spun me towards 3/4 ton Dodge and Super Duty. Then the family meant Expeditions, then empty nesters led us to a Mustang GT and Explorer sport trac. The wife asked me a few weeks ago what our next car would be and based on our local driving…a plug in hybrid or 120 mile range electric would be perfect. I see no reason to ever drive a standard PU again, they are too big, hard to navigate in modern parking lots, and not that efficient. The smallish ST is perfect for the garage, cruises fine with IRS, can tow 7000, gets well over 20 on the highway and works now. Hard to say what the future will bring but hybrid trucks likely.

  • avatar

    My current pickup (91-S10) and car (2011 Nissan Cube) cover eveything just about right. A slightly larger car with a trailer hitch might do just as well. The pickup offerings interest me not at all and I think it’s time we eat a little bit of reality.

  • avatar

    I don’t even like Obama–yet to say that gasoline prices have risen almost 150% since he was inaugurated because it was $1.84 in Jan 2009 and blame Obama is ridiculous.

    Oil peaked at $150 per barrel in the summer of 2008–when Bush was President. Gasoline was $4 per gallon in late summer 2008 in Nashville–IF you could find it there, ditto for Detroit, more in CA, etc.

    The drop from $4 to $1.60 3 months later in Dec 2008 was an abberation–basically the pendelum swung from one extreme to another.

    So, I could say that the price of gasoline was unchanged from the time Sarah Palin debuted at the GOP convention in 2008 to Clint Eastwood’s brilliant monologue at the 2012 GOP convention.

    At any rate, as others pointed out, Americans LOVE big cars. We have a big country. And we are inherently more wasteful than Europeans and Asians. We are all about quantity 1st, quality later–in what we drive (whether ‘domestic’ or imported), what we eat, and where we live.

    We’ve built a car-based, suburban-sprawl society that needs cheap oil, and lots of it, to operate.

    If, or perhaps when, the real price of oil hits $150 or $200 per barrel, and gasoline costs $6 to $8, we will be screwed.

    Oil hitting $150 was like lifting the rug to find the rot swept underneath in the financial industy…if it goes there again, won’t be pretty.

  • avatar
    gator marco

    I can see oil crawling up past $125 or so without a lot of fanfare. That would still be under $5 per gallon gas retail. NYMEX is $92 now for November delivery, down slightly from around $110 this summer.

    At $150 a barrel, every Tom, Dick, and George is going to drill anywhere there is vacant ground. Just look at the drilling on private land in North Dakota. There would be enormous pressure to open up domestic drilling in places that are off limits today. Could any administration, Democratic or Republican, take that sort of heat without opening up production somewhere?

    At $200 a barrel, we’d have drilling platforms on St Pete Beach and in backyards in Beverly Hills.

  • avatar

    How much of this is down to the Big Three finally selling small cars that don’t suck? Think about it – from the 1970s through probably the 2000s, barring a few dead-end bright spots that slipped out here and there – small cars were treated as at best a nuisance and at worst the enemy.

    Now, GM, Ford, and Chrysler have all commited to making small cars that are actualy well built, well designed, and competitive with the imports, and they’re actually doing it too, with real products and not just marketing drivel. Of course their sales are up, they’re actually finally making small cars that real people would want to buy. This is the first time in a long while when I could actually recommend just about anything coming out of Detroit to friends and family without any reservations.

    That said, there are two ways this could go if the economy improves and real incomes start rising again and unemployment falls dramatically.

    1) This might not change anything – the cars are good enough now that customers might realize that they actually LIKE small cars for reasons other than fuel economy and purchase price and just keep buying them, maybe loading them up with even more features further helping the Big 3’s bottom line.

    2) They repeat what they’ve done in the past and immediately dump small cars for big cars (or worse, actually big trucks, since you really can’t get big cars anymore), small cars sales tank, and Detroit falls back to their old habits of neglecting their car lines and spending a disproportionate amount of development $ on trucks, leaving them woefully unprepared for the next economic shock.

    • 0 avatar

      I just drove a Ford C-Max hybrid. (Think of it as either a Focus wagon or an Escape wagon.) Not only is it a great compact wagon on its own merits, it does everything well that the Prius does well.

      This aint the Ford that my father dismissed when i was a kid, and I’m finally going to be able to buy American, for a change!

  • avatar

    $5 gas is just around the corner, and if pro-growth energy policies are not in place, it’s going to put the US in a permanent malaise.

    Our country is just not going to be able to operate if the average 2 car family is spending nearly a thousand dollars a month just to get to work, with the combination of monetary easing and anti-energy policies being put in place, I could EASILY see gas being over $6 a gallon in 3 years.

    I know some people think this will be “super awesome” that we all have to drive around in golf carts and take public transportation, but affordable energy is a big part of economic growth and prosperity. Also, the Big 3 will be dead with high gas prices, big trucks and SUVs are what actually pays the bills.

    • 0 avatar

      I don’t think it’s super awesome, but high prices are a market solution to reducing energy waste. When you think the world would be a better place with less waste, it’s hard not to celebrate the silver lining of this stormcloud. But that doesn’t change the fact that its a stormcloud that will screw over a lot of my relatives who have big vehicles and long commutes.

      BTW, Ford has gotten their act together in terms of high volume small cars – and I just drove (and was impressed with) their Prius competitor. They’ll be fine. Not so sure about GM and Chrysler, though they are working on it.

  • avatar

    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.

  • avatar

    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.

  • avatar
    schmitt trigger

    “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.

  • avatar

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

Read all comments

Recent Comments

  • Art Vandelay: Additionally, the AT itself was IBM’s second gen home PC, following the XT. Prior to that you had...
  • Art Vandelay: If you do so much as disturb the dirt in the dried out portions of the Salton Sea doesn’t a toxic...
  • eggsalad: I’m glad that a very limited number of people had the combination of wealth and bad taste it took to...
  • RHD: The one trick pony just has to keep repeating the same trick. EVs are improving every year (every month,...
  • RHD: The steering wheel is pretty nice, though, and part of the side view is elegant. The rest of it is unbearably...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber