DETROIT – The lowest gasoline prices in almost four years are giving U.S. auto buyers extra cash in their pockets and encouraging them to move toward larger vehicles, hurting sales of fuel-sipping small cars.
"The price of gas per gallon is drastically low — I'm really celebrating and enjoying that at the moment," said Andrea Turner, a Tennessee mother who last week bought a 2014 Buick Encore sport-utility vehicle. The Encore has extra space to fit her 5-foot-11 frame and 10-year-old son's soccer gear.
Sales of subcompacts such as the Ford Fiesta and Honda Fit fell 2.5 percent this year through September, while small crossover utility vehicles such as the Honda CR-V and Jeep Cherokee rose 14 percent, according to Autodata Corp. Though industrywide demand remains buoyant, the Honda Civic, Ford Focus and Dodge Dart are among small cars losing ground as low fuel prices help change the behavior and decisions of consumers.
Turner, for instance, can sometimes find gasoline for just $2.50 a gallon near her home in Antioch.
"You just feel so much better when you look at the pump, and you're pleasantly surprised," said Jeff Schuster, an analyst for LMC Automotive in Troy, Mich., who sees a direct link between gasoline prices and small-car sales. "You say, 'Maybe I'll splurge on something and treat myself.' "
The U.S. average price of a gallon of regular fuel was $3.00 on Friday, the lowest since December 2010 and down 19 percent from a 2014 high of $3.70 in April, based on data from motoring club AAA. Prices were down 9.7 percent in October, poised for the steepest percentage decline since December 2008.
Also pulling buyers away from small cars: better alternatives as automakers improve mileage across their fleets.
Turner's new Encore, for example, has a highway fuel rating of 33 miles per gallon. That should help reduce her spending of $200 to $300 a month for gasoline.
The trend helps consumers rationalize paying thousands more for a roomy, high-riding SUV than they would for a little car, Schuster said. With automakers due to report October sales Monday, SUV sales growth has exceeded that of small cars in each month of this year.
"Right now, gas mileage is not that much of an issue for consumer choice," said Greg Williams, new-car sales manager at Holman Honda of Fort Lauderdale, Fla.
October sales results are projected to show a 5.6 percent rise to 1.28 million light vehicles, according to the average of eight estimates by analysts surveyed by Bloomberg. The selling rate, adjusted for seasonal trends, may rise to 16.4 million from 15.4 million a year earlier. August's selling rate surged to 17.5 million, the highest since January 2006.
Fiat Chrysler Automobiles, which began trading Oct. 13 on the New York Stock Exchange, is projected to lead the way with a 20 percent increase, trailed by Nissan at 11 percent, Honda at 7.7 percent and Toyota at 6.4 percent, the averages of analyst estimates. Ford deliveries may slip 4.2 percent, and General Motors may gain 2.9 percent, according to the survey.
While cheap gasoline isn't the only force motivating people to buy SUVs, it can help close a deal, said Kevin Tynan, senior automobiles analyst for Bloomberg Intelligence.
"Incentives play a larger part, and as a sweetener the salesman can say, 'This SUV gets 25 to 30 miles per gallon,' " he said in an interview.