GM sales jump 26% on small car sales gains

By Tom Krisher, Associated Press
Updated 7m ago |

DETROIT — General Motors' U.S. car and truck sales jumped 26% in April as the economy continued to improve and $4 a gallon gasoline pushed buyers into more fuel-efficient vehicles.

The largest U.S. car company sold 232,538 vehicles last month, led by a shift to small cars and crossover vehicles.

"Recently, rising fuel prices have led many to re-think their vehicle choice," said Don Johnson, GM's vice president of U.S. sales.

GM, the first major automaker to report sales Tuesday, is much better prepared for higher gas prices than in the past. It offers a wider selection of smaller vehicles. GM used to rely more on sales of pickups and large SUV for profits. But sales of those vehicles would fall when pump prices spiked because they used more gasoline.

STORY: Incentives hit a low as car prices rise
The company sold more than 25,000 Chevrolet Cruze compact cars in April, the best month for the car since its introduction in October. Most Cruze models get an estimated 24-26 miles per gallon in the city and 36 on the highway. One version with a manual transmission gets 42 mpg on the freeway.

Johnson said the Chevrolet Equinox and GMC Terrain crossovers also posted big sales increases in April as the shift toward smaller and more efficient vehicles accelerated from March. Crossovers look like sport-utility vehicles, but are more fuel efficient because they are built on car platforms.

Compact cars made up nearly 15% of U.S. sales a year ago, but that rose to about 17% in April, Johnson said.

He said GM hasn't seen its sales rise because of model shortages at Japan-based automakers. The company will increase production if needed.

Nissan Motor, Toyota Motor and Honda Motor have been forced to cut production. That's because they are running low on parts made by factories disrupted by the earthquake and tsunami in Japan.

Some auto dealers reported better sales in April because customers are expecting model shortages. Those car shoppers want to buy while the selection is good.

GM said the U.S. consumers spent more in April and feel better about the economy. The company thinks the auto industry recovery will continue.

GM's April gains came despite lower incentives such as rebates and cheaper financing. GM incentives fell $243 from March to April according to the automotive website Edmunds.com.

Total U.S. incentive spending by automakers fell $250 from the prior month.

"This is the clearest indication yet that automakers are gearing up for inventory shortages," Jessica Caldwell, director of industry analysis for Edmunds, said in a statement.

She said demand for new cars is growing as the economy recovers. However, buyers may decide to wait for deals to return, and that may not be until fall.

In April of last year, buyers eased up on purchases after Toyota dropped the record-high incentives it had offered the previous month.

Sales of GM's top-selling vehicle, the Chevrolet Silverado pickup , fell 4.6% in April.

Johnson said commercial truck purchases continued to increase. But sales of trucks for personal use dropped as people shifted to smaller vehicles due to higher gas prices.

The average price of a gallon of gas this week is $3.96, up $1.06 from last year. Gas is already over $4 per gallon in New England, the Midwest and on the West Coast, according to federal statistics.

Shares of GM rose above the initial public offering price of $33 on Tuesday for the first time since April 6, when it hit $33.28.

Analysts expect overall industry sales in the U.S. to increase 19% from April of last year.

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