People switch from buying big cars

May 1, 2008 12:57:14 AM PDT
California's through the roof gas prices really are putting the brakes on how we drive. The latest consumption numbers show Californians used 4.5 percent less gas this January, compared to January of 2007. This is the second-straight year of decreased use, an unprecedented period of decline, according to state officials.

Gas prices affecting not only how we drive, but what we drive and it's becoming apparent in auto sales. Big and new cars are out, while small and used cars are in.

At the GM dealership in Colma, business wasn't exactly brisk. Not surprising considering how the company is doing overall.

On Wednesday, the number one U.S. automaker announced a quarterly net loss of $3.25 billion. Part of that was due its poor performance last month, when GM sold 19 percent fewer vehicles in the U.S. than it did the year before.

"It's been sliding for a while now," says Auto Broker Kevin Smith, from Carsmith Motors.

Smith is not surprised by GM's performance. Over the past several months, Smith has seen customer preferences shift as a result of high gas prices and other factors that have led to the slowed economy.

"There's definitely a shift toward used vehicles. You can save a lot of money buying a car two, three years old, let someone else take the big hit in the depreciation curve. So we've seen that in our business and I'm sure gm is seeing it too,"

Ford is dealing with its own struggles. Sales of the Explorer, which used to be the nation's best-selling SUV, plunged 20 percent the last quarter. However, for the Japanese automakers, things aren't as bad, perhaps due to their emphasis on smaller vehicles that use less gas.

For the Adams of Daly City, that is precisely what attracted them to the Nissan Altima. They bought it Wednesday evening for their daughter.

"If she didn't have to drive to get to work and back we probably wouldn't have bought the car, but that's the nature of the economy right now and so we're doing the best we can," says Renee Adams, a Nissan customer.

"At least they gave us a free tank when we bought the car," says Ron Adams, a Nissan customer.

GM's $3 billion loss was better than expected. As a result, its shares on Wednesday, went up 13 percent.


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