Gas price spike boosts sales of fuel efficient cars

By Ben Rooney, staff reporter


NEW YORK (CNNMoney) -- Despite higher gas prices, auto sales rose in the Untied States in April, including a larger-than expected gain for General Motors.

GM reported Tuesday that U.S. sales were up 27% last month versus a year ago, driven by strong demand for fuel-efficient passenger cars and crossovers.

"Rising fuel prices have led many to re-think their vehicle choice," said Don Johnson, GM's vice president of sales.

Sales of the company's flagship economy car, the Chevrolet Cruze, were the best since it was launched in 2008.

But GM (GM) wasn't the only one benefiting from renewed interest in fuel efficient cars.

Hyundai said total U.S. sales in April were a record 61,754 units, up 40% from last year and the second best month in the automaker's history. Kia Motors, which is partly owned by Hyundai, also reported record sales for the month.

"Hyundai picked up the slack for Japanese automakers," said Jessica Caldwell, a senior analyst at Edmunds.com.

Caldwell said Hyundai was "dangerously close" to selling more cars than larger rival Nissan, which reported a 12% sales gain for April.

Toyota Motor (TM) reported a 1.3% increase in total U.S. sales, while Honda Motor (HMC) said sales rose 9.8% in April.

Jesse Toprak, vice president of industry trends at TrueCar.com, said U.S. auto sales were helped last month by the "limited hysteria" over shortages of Japanese cars following the earthquake and tsunami that struck the nation on March 11.

"A lot of customers ran out and bought in April with the fear that these cars would run out," he said. But he added that Toyota and Honda may have missed an opportunity by failing to have sufficient cars in stock.

The general trend in auto sales reflects a growing appetite for cars that get better fuel mileage, now that gas prices are approaching record highs, analysts said.

In April, the national average price for a gallon of regular gas increased more than 30 cents, rising above $4 a gallon in many parts of the country.

"The change in consumer preference for smaller vehicles will be in place as long as gas prices stay or go above where they are now," said Toprak. "It's unlikely that we'll see a change in this pattern unless gas prices go down dramatically."

While Japanese automakers have traditionally led the market for fuel efficient cars, the main U.S. automakers have been increasing production of smaller cars in recent years to catch up with the shift in consumer sentiment.

Ford (F, Fortune 500) said sales rose 16% in April, driven by sales of the Fiesta, Fusion and Focus.

"With gasoline prices eclipsing $3.90 a gallon, consumers are placing an even higher priority on fuel efficiency in every size and kind of vehicle," said Ken Czubay, Ford vice president of sales and marketing.

Chrysler, the nation's third largest automaker, reported a 22% gain in sales. To top of page

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