The Car and Truck Fleet and Leasing Management Magazine

Car Buyers Downsize, But Spend Big on Options

July 21, 2008

DETROIT – People of all income levels are buying small cars to pinch pennies at the gaspump, but they are not scrimping on creature comforts. Instead, they arespending hundreds or even thousands of dollars on options, like heated leatherseats and high-end entertainment systems, usually found in luxury cars, accordingto

Small-carbuyers often pay $600 for a sunroof, $500 for satellite radio, or $400 for ahands-free phone system. Some even spend $300 for colorful interior lights.

Among thegrowing ranks of small-car buyers are baby boomers who previously toted theirfamilies in well-equipped minivans and SUVs. Now, with gas above $4 a gallonand their children grown, they want nothing to do with such a large vehicle buthave grown accustomed to its luxuries, the report said.

The priceAmericans are paying for a subcompact car has increased an average $2,532 since2004, nearly double the $1,253 increase for all vehicles, according to thePower Information Network data. Transaction prices for compact cars haveincreased an average of $2,370 over the same period and $3,055 for the segment’stop seller, the Honda Civic.

Perhapsthe biggest success in the small car segment, in terms of persuading buyers toupgrade, is BMW’s Mini Cooper, which starts as low as$18,050 but typically sells for at least 40 percent more than that. BMW offersmyriad options on the Cooper that can take the price well above $40,000.

Manydealers, having realized that small-car shoppers are willing to buy higher trimlevels and optional features, are stocking their lots with more upgradedvehicles. That is particularly true for hot sellers that have waiting lists,such as the Toyota Prius hybrid and the Honda Civic.

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