High Gas Prices Aren't Giving The Blues To Motown Car Makers

When gas hit $4 a gallon in 2008, Detroit’s Big Three auto makers took it on the chin as American demand for big, fuel-thirsty SUVs and trucks suddenly disappeared. But even with gas prices again hovering north of $4, American car companies are whistling a much happier tune–all the way to the bank.

According to industry reports, new car sales–particularly for small and compact cars–soared for U.S. automakers. Last month, when gas prices were on a steady rise, American small car sales jumped 77 percent compared to a year ago. (Japanese auto makers, recovering from March’s disasters, saw a modest 22 percent increase.) And demand–20 percent stronger than the previous year–will keep Detroit humming to the tune of 13 million new car and truck sales this year, up from 2009’s number of 10.4 million.

Analysts are crediting the markedly different outcome to the lessons learned from the last gas price spike. Jesse Toprak of TrueCar.com told the Detroit News that American car makers “are significantly better prepared for gas price fluctuations. They have cars they can sell and make money on.”

But are Americans jumping at the chance to trade-in old gas-guzzling Betsy for a new, high-tech, fuel-sipping Chevy Volt? Not really. Lou Standfor, a Ford dealership owner in Ann Arbor said:

When gas prices went up three years ago, people got all excited, traded in their big vehicles and were sorry when prices fell, because they needed their truck to tow. I don’t see people doing that today. They are not as anxious to trade in. More are sitting still to avoid making a mistake.

The car gurus over at Consumer Reports recently did a whole analysis to determine if “downsizing” your ride makes sense. (For example, you might not save any money from gas now that a new Toyota Prius costs hundreds of dollars more than its window sticker price.)

This time, high gas prices aren’t killing auto sales [Detroit News]

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