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Big Gas Prices Lure Buyers to Small Cars

ANDREA SEABROOK, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Andrea Seabrook.

Your days of being penned in on the interstate by enormous SUVs may be, finally, coming to an end. Numbers released this week show a startling trend -one in five cars sold in the U.S. last month was a compact or subcompact car. The big reason, according to people who watch the car business, gas prices.

One of those industry watchers is Csaba Csere. He's editor in chief of Car and Driver Magazine, and he joins us now by phone from his home in Ann Arbor, Michigan. Thanks for speaking with us.

Mr. CSABA CSERE (Editor in Chief, Car and Driver Magazine): Happy to be here.

SEABROOK: So, when was the last time Americans were this interested in buying small cars?

Mr. CSERE: Probably the last time gas was relatively expensive, which would have been the early 80s. American drivers respond very strongly to gas prices. You know, this is totally predictable.

SEABROOK: Journalists and industry watchers have been predicting this, as you say, for a couple of years now, as gas prices have gone higher and higher and higher and higher. Have we now reached the tipping point where it's so high, the gas prices are so high, that consumers are actually changing their behavior?

Mr. CSERE: Yes. And in fact they really already started in previous years. You know, last year, for example, the bestselling SUVs in the country were the Honda CRV, the Ford Escape and the Toyota Rav 4. All of them car-based SUVs, and all of them on the small side. Gas prices now have been high for about three years, and I think people are believing that this is the new permanence.

SEABROOK: So, are the carmakers responding?

Mr. CSERE: Well, they are, but the car business is a very long lead-time business. It takes roughly three years to make any kind of change in a car. So, you know, the cars that are going to come on the market this fall, they were sort of cast in stone in 2005 and 2006, before this new paradigm had occurred. So we're going to see a lot of small models but we're going to see big models as well because they're in the pipeline and they can't be stopped.

SEABROOK: What does that mean for American companies - Ford, GM - that have made an awful lot of money from big, big trucks and SUVs?

Mr. CSERE: Well, they're the ones that are hurt the most by this because of their sales, the American car companies have traditionally been 60 to 70 percent in the big pickups and the SUVs. But it also, it's not just a question of sales, it's also their profitability.

A company like GM might have been 65 percent of their sales were trucks but probably 110 percent of their profits were from the trucks, and they may have lost money on cars. So, they not only have to shift over to car production but they have to come up with cars that they can make some money on.

SEABROOK: Csaba Csere, in your estimation, is the age of the SUV over?

Mr. CSERE: I think the age of the classical truck-based big SUV is probably over. There's a lot of people who are buying big SUVs as a fashion statement. Those are the people when gas prices go high who decide that they can't afford anymore and go for a more sensible choice.

SEABROOK: Bye-bye, Hummer.

Mr. CSERE: That's right.

SEABROOK: Csaba Csere is the editor in chief of Car and Driver magazine. Thanks so much for talking with us.

Mr. CSERE: My pleasure. Transcript provided by NPR, Copyright NPR.

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