Loaded Small Cars Mean Bigger Price Tags , More Profit on Small Cars For Manufacturers -That's a Good Thing

Washington DC May 10, 2008; Teh AIADA newsletter reported that the accelerating shift away from pickup trucks and sport-utility vehicles powered by eight-cylinder engines is a painful one for U.S. auto makers, but a trend in consumer demand is helping them earn better pricing on the smaller vehicles they sell.

According to the Wall Street Journal, small-vehicle buyers aren't skimping when it comes to creature comforts such as leather seats, sunroofs, navigation systems, and other automotive technologies. As a result, purchase prices on small cars are actually rising by $2,000 to $3,000 as downsizing affluent customers and tech-savvy first-time buyers are pairing rich option packages with their smaller selections.

This shift mirrors what has happened in Europe, and it has helped the auto makers improve pricing within some vehicle classes. However, the trend doesn't come without challenges.

Auto makers accustomed to building eight-cylinder cars loaded with options while sparsely equipping four-cylinder vehicles have to adjust their production. None the less, it's a silver lining during this sluggish economy.