November 8, 2008 in Business



This year’s record-high fuel prices drove some consumers to switch to smaller vehicles. Now, as fuel prices have pulled back, many are rediscovering some of the reasons they bought big cars and sport-utility vehicles in the first place.

Perhaps the biggest draw for large vehicles: comfort. Having wide, soft seats to accommodate the ever-growing American physique and space to stash briefcases, totes and handbags has changed from a luxury feature to one drivers take for granted. And as people spend more time in their vehicles, they have come to crave the sense of safety, privacy and insulation that comes with larger vehicles.

Sometimes what seems like a small downgrade can lead to big regrets. Blake Schomas traded his 2002 Chevrolet Suburban, an SUV with room for eight, for a relatively fuel-efficient Chrysler Pacifica. The Pacifica is big, but it carries two fewer passengers than the Suburban and cannot tow as much.

“I kind of regret the decision to get rid of the Suburban, which had a lot to do with the price of fuel,” said Schomas, a marketing manager in Hudson, Wis. While his Pacifica’s fuel economy beats the old truck’s by as much as 40 percent, the new vehicle seems downright small compared with the Suburban. The big problem is that its third-row seat takes up what would otherwise be room for cargo.

Even though average gasoline prices have fallen from a peak of $4.05 a gallon in July to about $2.40, the broad move to smaller cars is still going strong. Sales of compact cars like the Honda Fit, Nissan Versa and Toyota Yaris have risen 28 percent through the end of September compared with the same period last year. Midsize cars like the top-selling Toyota Camry, Honda Accord and Chevrolet Malibu are flat. Nearly every other segment of the auto market is declining, with large SUVs down 36 percent.

Still, some industry experts point out that relatively few motorists are making extreme changes, such as trading in their Chevy Suburban for a Smart car.

CAR SALES DECLINE: AutoNation Inc. posted a loss in the third quarter, with customers finding it increasingly difficult to get a car loan and the overall economy heading south.

Fort Lauderdale, Fla.-based AutoNation, the nation’s largest automotive retailer, said it lost $1.41 billion, or $7.99 per share, compared with a profit of $72.1 million, or 37 cents per share, a year ago.

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