• by Karl Greenberg , May 3, 2013

The hunger for compact cars may be waning as the economy seems to be improving and gas prices have plateaued. Last month was a huge one for trucks and crossovers, while sales of compact cars were a bit lower. Does that mean that people are just willing to spend more and buy bigger vehicles merely because they are optimistic? 

Jack Nerad, editorial director and executive market analyst at Kelley Blue Book (KBB.com), tells Marketing Daily that the recovery is actually lackluster, and automakers are not making that much money despite more sales of bigger cars. "It's not what you'd expect from a typical downturn, where recovery means sales roar back," he says. "That's not happening; there's lots of incentivizing going. There are sweet deals from everyone." 

Per KBB data, transaction prices slipped just a bit from March numbers: $31,356 was the average new-vehicle price last month. That’s just a slight drop --  $170 -- from March, and up by the same amount from last April. "I think as the market continues to gain, it will be fragile," says Nerad. "Unemployment is still high, and the overall economic situation is just not all that positive, really."

And he says that it's not incentives that are lowering the transaction prices that people are paying for cars and trucks, but people buying more lower-priced vehicles. "There are not a lot of high-profit vehicles being sold, and there has been huge incentivizing in full-size pickups." 

In terms of what people were looking at last month, at least on KBB.com, Chrysler and Ford got the biggest increases in page views, with the former going from 6.1% of page views last year to 7.2% last month; Ford went from 10.6% of page views last April to 12.6% last month. But the site reported that Hyundai and Kia, while having a big sales month in April, saw big drops in the number of people looking at their vehicles on KBB.com, from 12.3% share in April 2012 to 7.5% last month. 

Nerad says one reason for that is their vehicle mix. "Their vehicles aren't as new as those of other automakers," he says. Hyundai did introduce three variants of the Elantra sedan and a new performance variant of its Veloster car. The company recently launched the new, bigger, three-row Santa Fe. But Hyundai and Kia's big year for car launches isn't 2013. 

And Chrysler had a big first-quarter hiccup: revenue dropped because the company had to retool for new the Ram heavy-duty pickup, the 2014 Jeep Grand Cherokee, and the totally new Cherokee launching this year. 

Meanwhile, KBB.com saw a drop in interest in fuel-efficient vehicles, with subcompact car page views down from 5.3% in April to 3.5% last month. Compact car page views also fell, nearly 2 percentage points. Same drill for Hybrids, which got 3.2% of all KBB.com page views in April 2013, from 3.7 percent in April 2012.

Nerad says that as gasoline prices moderate, sales of compact vehicles will likely continue to fall.