US small-car production may outstrip demand

• Source: Global Times
• [15:48 August 31 2009]
• Comments

Sales, Gas Prices

This year through July, small cars accounted for 18.5 percent of US sales, according to Autodata Corp. of Woodcliff Lake, New Jersey. Gasoline for the period averaged $2.17 a gallon, a 39 percent drop from $3.53 a year earlier, according to motorist group AAA.

Global Insight estimated that small cars' share of US sales may rise to 22.3 percent in 2015.

At that percentage, the total US auto market would have to exceed 33 million to absorb the annual production capacity of 7.5 million small cars projected by CSM. The record for total sales of cars and light trucks was 17.4 million in 2000.

"Fuel prices are the No. 1 issue," said Jeff Schuster, an auto analyst at market research firm J.D. Power & Associates in Troy, Michigan. "If they remain in the range we're at, this product push and capacity change is certainly at risk. American buyers tend to prefer larger things and larger spaces."

In the next six years, small-car production capacity will rise 58 percent to 1.35 million at GM, 61 percent to 870,000 at Ford and 83 percent to 495,000 at Chrysler, according to CSM.

By 2013, there will be 46 compact and subcompact car models in the US, up from 36 this year and 28 in 2005, according to J.D. Power.

(Bloomberg)