Ford Motor Co. 2011 Fiestas.Jim R. Bounds/Bloomberg
It looks like $1.30 a litre is the tipping point that drives Canadians to buy smaller cars.
Subcompact and compact cars flew off dealers' lots in April as the price of gas soared to an average of $1.31 across the country.
"With gas prices spiralling out of control in April, consumers came back to the smaller car and light-truck market in hordes," industry analyst Dennis DesRosiers said Thursday. "If you don't think gas prices affect what vehicles consumers are buying, then think again."
Sales of subcompact cars soared 17 per cent last month from year-earlier levels, the first time they rose this year. Compact car sales jumped 11 per cent, also better than the performance in that segment during the first three months of 2011.
The vehicle sales figures are another example of the impact on the economy of higher gasoline prices, which are yanking cash out of consumers' wallets.
The overall vehicle market jumped a healthy 7 per cent last month, but those two segments and compact sport utility vehicles all outperformed the market. On the flip side, commercial van sales soared 28 per cent, but sales of those vehicles are immune to day-to-day fuel price swings, Mr. DesRosiers said.
Sales of pickup trucks slumped 5 per cent, compared with a 19.5-per-cent jump in March.
The average price of gas across the country in April rose 7 per cent from the March level of $1.231 a litre. It was 25-per-cent higher than the $1.041 level of April, 2010, according to energy consulting firm MJ Ervin and Associates.
One central Canadian dealer who owns multiple franchises representing Asian-based manufacturers said supplies of small cars are about half of normal levels, but are beginning to build up as Japan-based companies recover more quickly from the earthquake and tsunami crisis than originally anticipated.
One such company is Honda Motor Co. Ltd., which said Thursday that by August, production volumes at its North American assembly plants will be back to 100 per cent of the pre-earthquake plan - with the crucial exception of the Honda Civic.
"Production of the all-new 2012 Civic lineup will continue at a reduced rate of approximately 50 per cent due to the limited supply of key components," Honda Canada Inc. said in a statement Thursday. Full production is not expected to resume until the fall.
Honda assembles the Civic in Alliston, Ont., 90 kilometres northwest of Toronto, and at another plant in Greensburg, Ind.
Civic is Honda Canada's best-selling car and the best-selling passenger car in Canada.
It's also rising up the charts in the U.S. market, where it stood fifth among all vehicles last month and sixth in the first four months of 2011.
Sales of the car in Canada fell 1.5 per cent last month and rose a fraction in the first four months of the year.
But it's under pressure from the Elantra sold by Hyundai Auto Canada, which has posted a 40-per-cent sales gain as of the end of April.
"The Hyundai Elantra is seriously outperforming most other [compact]cars in the market so is catching up fast," Mr. DesRosiers wrote in a note to clients. "This is a battle to watch throughout the year."