Ford analyst sees small car segment growing

Small car sales will continue to grow in the U.S. and likely will become the largest segment of the market by 2013, according to Ford Motor Co.'s top sales analyst.

George Pipas told the Automotive Press Association in Detroit Friday that downsizing baby boomers and millenials entering the market, looking for compacts and subcompacts, will drive increased sales.

He also said early sales results show that November U.S. car sales are looking much like October, which was a decent month for the U.S. industry. October sales were flat compared with the same month last year after months of sales declines. U.S. sales are down 25 percent so far this year.

Pipas said small cars such as the Honda Fit and Ford Focus made up 21 percent of U.S. Sales in 2003 but will rise to 36 percent in 2013. Volatility in gasoline prices, he said, and memories of $4 per gallon gasoline also will fuel small car sales.

Pipas includes small crossover vehicles in the small-car segment, which he said will see sales higher or equal to the midsize segment by 2013. That group includes vehicles like the Toyota Camry, Ford Fusion and Honda Accord, by 2013.

Ford has bet a large part of its future on the U.S. market shifting to small cars, although some analysts question whether U.S. buyers will continue down that road if gasoline prices stay in the current range of $2 to $2.50 a gallon. Many think Americans will still buy the biggest cars they can if gas prices remain relatively low.

But Pipas said even if gas prices stay relatively low, demographic changes - including baby boomers who have less wealth than they once had - will push small car sales up.

"There is much, much more in play than gas prices," he said.

Ford plans to put its Fiesta subcompact on the market in the first half of next year, and a new European-designed Focus compact will hit showrooms later in the year. The company also plans to build up to 10 different models off its Focus-sized frame by 2012, he said.

Pipas said that sales data from the first week of November suggest that industry momentum gained in October will continue this month and through the fourth quarter.

"It suggests to me that we're not going to take another step backward into September," he said. Sales hit near-record low levels that month.

Ford predicts U.S. sales of around 12.5 million next year, but that depends on the state of the economy by the end of this year, Pipas said.

So far in 2009, sales are running around a 10 million annual rate.