Home News Americans are buying cheaper cars – The Mercury News

Americans are buying cheaper cars – The Mercury News


Americans are buying cheaper cars – The Mercury News

Gabrielle Coppola and David Welch | Bloomberg News (TNS)

Toyota Motor Corp. and Honda Motor Co. notched big U.S. sales gains and General Motors Co. grew retail deliveries to start the year as demand for lower-priced models help automakers defy expectations for a broad slowdown.

Toyota said Tuesday that deliveries rose more than 20% in the first quarter, buoyed by the compact Corolla sedan and RAV4 crossover. Honda’s CR-V crossover and Civic compact drove the Japanese automaker to a 17% sales increase. GM reported a 1.5% drop in units sold during the quarter due to lower purchases by corporate fleets, but increased sales at retail by 6% with its Chevrolet Trax compact showing the biggest gain.

The early results underscored the importance of affordability for car buyers after pandemic-driven shortages and high interest rates drove up costs in recent years. The pricing bonanza that juiced automaker profits during the pandemic is fading as production normalizes. Now that inventories are rising, car companies are doling out more incentives and prices are starting to slip.

Budget cars and compact SUVs made eye-popping share gains in the first quarter, with sedan growth matching SUVs at Toyota. Large pickup trucks — one of the industry’s priciest segments — lost ground in January and February, according to researcher GlobalData. Several brands, including Jeep, Tesla and Ford, reduced prices to win back inflation-weary consumers and spur demand in the sluggish electric vehicle market.

“I’m surprised about how resilient the market has been,” said David Oakley, an analyst with GlobalData. “Affordability is a massive issue for the industry, and it will be going forward. But right now it seems they’re weathering the storm, and people are somehow making it work.”

GM said sales of its large and pricey SUVs, including the Chevrolet Tahoe and GMC Yukon, tumbled. Meanwhile, purchases of its new Chevy Trax, a compact SUV with a starting selling price of just $20,400, jumped almost six fold as part of the company’s push into affordable vehicles.

The company is seeing slow progress on solving production problems in its electric-vehicle battery operations that make the company’s new Ultium battery pack. While the volume is still relatively small, GM had its best quarter with the new-generation of EVs, selling 5,800 of the Cadillac Lyriq and 1,668 electric Hummer trucks.

The industry’s yearly sales pace, known as the seasonally adjusted annual rate, rose to about 15.8 million in March, up from 14.9 million a year ago, according to the average estimate of eight analysts surveyed by Bloomberg. The 3.8 million vehicles sold in the first quarter mark a 6% increase from a year ago, but a 3.1% drop from the final quarter of 2023, Edmunds said.

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