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Car Sales Rise: Higher Gas Prices Haven’t Scared Consumers … Yet

Detroit may be shrinking but the Motor City's Big three automakers are still on a roll. General Motors estimates the industry is on pace to sell 13 million vehicles this year, less than the 13.4 million seasonally adjusted estimate in February but still a healthy number.

In March, Ford topped GM in sales for only the second time since 1998. Fewer GM incentives and higher gas prices helped drive sales to Ford. "With gas prices soaring, Ford's strength in smaller cars - cars like the Fiesta, the Focus, the Escape small SUV - did really well," says Jessica Cauldwell a senior analyst with edmunds.com.

Ford sales were up 19.2% on 212,000 sales and GM purchases rose 9.6% to 206,000 in March. Chrysler - the weakest of the Big Three - also had a big month, with 121,000 sales, an increase of 31.4%, thanks in part to some easy comparisons.

Despite gas prices rising nearly 20% since the beginning of the year, the consumer demonstrated resilience last month. "It started strong in the beginning of the month, February again had a lot of sales momentum, it wavered in the middle [when] there was growing concern over gas prices and the Middle East, the tsunami and Japan I think had a bit of an affect overall on consumer confidence," Cauldwell tells Aaron in this accompanying clip. "But it didn't quite fall off the ledge."

Even with a gallon of regular gasoline averaging $3.66 nationwide, don't expect all consumers to go for smaller cars. The consumer has learned some lessons from the summer of 2008, when oil prices spiked above $140 per barrel, notes Cauldwell. Many consumers, "made purchases solely on gas prices, not really on their lifestyle so we saw some buyer's remorse there."

Rocked by the earthquake and Tsunami, Toyota sales fell 5.7% in March. The company says nine of its 15 plants in Japan have resumed production of vehicles or parts. The rest remained closed indefinitely. Honda and Nissan are also dealing with production delays. Nissan estimates it lost production of 55,000 vehicles in March.

American car makers may also feel some shortages as Japanese auto suppliers attempt to get back on-line. The impact on pricing remains to be seen but with the job market seemingly on the upswing, demand for vehicles should remain strong.

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