High gas prices pumping up small-car sales ... somewhat

Rose Laabs wants to squeeze every mile she can out of a gallon of gas. That's why she bought a new Prius earlier this month at Walser Toyota in Bloomington. It's her second Prius, so far.

"Oh gosh," she says. "I've gotten 44 miles to a gallon. I've gotten 52 miles to a gallon on it, depending on where I'm going."

What about Laabs' first Prius?

"I totalled the first one," she laughs. "And it protected me really well."

Laabs is contributing to a boom in Prius sales. So far this year, sales of the hybrid are up 23 percent nationwide. That's according to New Jersey-based AutoData. Lots of people think you'd be nuts to buy anything but a fuel-efficient car these days.

Amin Gomos of Minneapolis is in that camp. He's looking at replacing his 1994 Honda Accord.

"I have a fuel efficient car right now and I would like to get something that's even more fuel efficient," he says. "There's no way I would get something that gets ten miles to the gallon. That just wouldn't make sense now."

Some fuel-efficient cars have been enjoying increased sales.

Overall, small car purchases were up about seven percent through April, according to AutoData.

But high-mileage cars are hardly flying off dealers' lots as you might expect. Even sales of Toyota Corollas and Honda Civics were down in Minnesota last year.

In a slowing economy, lots of folks aren't comfortable spending money on a new car -- even if it's oh-so-miserly burning gas.

At new car dealerships, some makes are hot. Others are not.

"What's hot is Toyotas," says veteran Twin Cities car dealer Paul Walser. "It's Hondas. It's Nissans. It's Mazdas. Those are all good sellers for us right now. And some of the domestic product is slower."

Walser has been in the new-car sales business for 35 years and sells more than a dozen makes of cars.

He says he's managed to sell more cars this year, even though U.S. new-vehicle sales are on track to be lowest they've been in about 15 years.

The brutal market has forced about two dozen Minnesota car dealerships to close in the past year, reducing competition for Walser and other survivors. Walser also tries to give himself an edge by stocking a large selection of fuel-efficient vehicles.

Walser thinks social pressure --not just pain at the pump-- is pushing people toward driving smaller vehicles.

"There's kind of a little bit of feeling out there, I think, that if you drive a big giant gas guzzling hog, that you're a bit of pig, as opposed to being a more responsible citizen driving something smaller," he says.

But small cars can't always meet the needs of soccer moms --and dads-- and other drivers. Walser expects auto manufacturers, though, will eventually come up large cars and trucks and vans that give drivers more space and fuel efficiency.

"It think there will be hybrids and diesels and electric alternatives for larger vehicles that will ultimately satisfy all the consumers' needs," he says.

For now in Minnesota, bigger is still better. Despite steadily rising gas prices, eight of the top ten selling vehicles in Minnesota in 2007 were trucks, vans, SUVs or mid-size sedans.

The top ten best-sellers were in order: the Chevy Silverado 1500, Ford F150, Toyota Camry, Honda Accord, Toyota Corolla, Chrysler Town and Country, Chevy Impala, Honda Civic, Toyota RAV4, and Chevy Silverado 2500.

But total new vehicle sales in Minnesota and the nation have been falling dramatically. Many consumers are hanging on to their current cars, even if they're gas guzzlers.

If you get a new car with a new monthly payment and higher insurance ... your net result may end up being negative.

In many cases, consumers can come out ahead financially by hanging on to the cars and trucks they own. Even if they're paying $60, $80 or more to fill up at the gas pump.

Jesse Toprak, director or industry analysis for Edmunds.com, says buying new fuel-efficient cars doesn't always save consumers money.

"You have to really look at the entire cost associated with the ownership of a new car and compare it, as best as you can, to the old car you have," he says. "And if you get a new car with a new monthly payment and higher insurance at the end your net result may end up being negative."

These days there's not a lot of positives, it seems, to cars. More consumers are finding the ones they have are painfully expensive to gas up. But -- so far -- many don't feel they can or should buy a new vehicle just because it gets better gas mileage.

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