Auto profits ride on cuts as much as sales

Keys for brand new Chevrolet cars hang on a board at Santa Rosa Chevrolet. U.S. automakers see profits on modest sales because they've already slashed expenses.

Jeremy Hobson: After a house, the most expensive thing most Americans will buy is a car. And today, we're going to find out how many cars Americans bought last month in the face of rising gas prices.

Here's Marketplace's Jeff Tyler.


Jeff Tyler: Consumers may be buying more hybrids and smaller cars, but it’s probably not any kind of lasting trend.

Eric Noble: There’s no correlation mathematically between the sales of a vehicle in a segment and its fuel economy.

Eric Noble is an auto consultant with Car Lab.

Noble: If the widely reported shift to small cars had really happened, Fiat would be in great shape and they’d be sold out of Fiat 500s. They’re not.

He says consumers who bought hybrids were already planning to. Higher gas prices just provided that extra push.

More broadly, for the industry as a whole, sales are up. But David Cole with the Center for Automotive Research says better car company profits have more to do with cutting costs.

David Cole: Now the industry is profitable because of the massive restructuring that has occurred.

U.S. automakers have slashed employees, factories and benefits. If sales rebound further, Cole says the industry is poised to be very profitable.

I’m Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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