Sales of small cars surge with
rising fuel prices

Victoria Fierson

Intense demand for compact cars has sent sales volume and prices
higher, even on used stock. According to ADESA Inc.’s statistics,
the wholesale prices of used compact cars increased from May to
June of this year by approximately $300 (£165), to $7,376

The automotive industry has seen a surge in the compact car
market in recent months. Supply is low and demand is high, and
four-cylinder, fuel-efficient cars are flying off the lots, leaving
sports-utility vehicles and larger vehicles behind.

Within the used market, dealers are selling compact cars well
beyond their book values and making great returns. There has been a
definite shift in the market.

Doug Deakin, a salesman at DCH Toyota City, said the market for
four-cylinder cars has increased by about 10 per cent to 15 per
cent from last year, the dealer’s most popular sellers being the
Camry and the Prius Hybrid.

Recently, credit companies have relaxed their lending criteria.
Toyota Financial Services Corp. for example still offers monthly
deals on pre-owned compact cars. The four-cylinder Toyota Camry
that gives 30 miles to the gallon is currently being offered at a
4.99 per cent finance rate.

Finance companies are more flexible now because people have
limited or no credit. The companies want to keep the industry going
so are more willing to give loans to less qualified

Incentive intentions absent from GM’s turnaround

Marcie Belles

Though General Motors Corp.’s overall incentive strategy will
remain intact despite the automaker’s latest liquidity-building
initiative, industry players are split on whether rebates and
special financing deals will increase. “There will be no change in
GM’s strategy for incentives,” said company spokesman Randy

GM’s efforts to reduce inventory will likely spur the carmaker
to increase incentives, albeit more prudently, said Jesse Toprak,
executive director of industry analysis for data provider “GM has already increased incentives in the last three
months,” Toprak said. Even so, the automaker is “getting a little
better at optimizing how they spend incentive dollars,” he said.
“They’re able to optimize what they spend on new SUVs and

Whatever GM decides with regard to incentives and subvention,
GMAC LLC “stand[s] at the ready to execute,” said Mike Stoller, a
GMAC spokesman. Despite being majority-owned by private equity firm
Cerberus Capital Management LP, GMAC remains GM’s mechanism for

And, as it has historically, GM’s “incentive strategy changes
from week to week, day to day,” he said. “It’s a fluid process on
their end. They might decide at the end of September what the
incentives will be for October.”