High Gas Prices Don't Slow Down April Auto Sales

How this for going against the conventional wisdom — Gas prices are surging, automakers are offering lower incentives, and yet auto sales remain robust.

Car dealership
Car dealership

So much for the idea that as gas edged closer to $4 a gallon people would put off buying a new car or truck. They're still buying, but what they are buying has changed. The people are rotating towards models with more fuel efficient engines.

Takes a look at GM.

Last month sales surged 27%. That's a blockbuster month, especially when you consider GM was offering lower incentives. And what did people buy? Cars.

Last month, 39% of the models GM sold came with 4 cylinder engines. That was up 12% from the same month last year. And at Chevy, almost half the models sold were 4 bangers. No wonder GM has under 50 days supply of cars and 111 days supply of pick-ups.

This ought to be great news for Toyota.

The company has long dominated the hybrid car market and its reputation for fuel efficiency with the consumer is well established. Unfortunately for Toyota, the supply chain disruptions in Japan due to the earthquake and tsunami in March is limiting what dealers have to sell in April. That's the reason hybrid sales dropped 8.8% last month. Sales of the compact Yaris, built in Japan, were cut in half because production over there was restricted.

The bottom line is that auto sales and auto demand remain relatively strong. Yes, if gas prices continue to rocket higher, it will eventually slow down sales. But right now, the four cylinder engine is red hot, and the automakers who can meet that demand are cashing in.

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