Consumers are buying new cars at record rates this year, even as gasoline prices creep upward and the economic recovery remains uncertain. Ford Motor (F), the No. 2 U.S. automaker, posted it strongest sales numbers for March in five years. The company sold a total of 223,418 cars last month, up 11 percent from February.
The success of the top-selling fuel-efficient Focus hybrid has proved a surprise for the car maker best known for its gas-guzzling trucks. Nearly 95,000 Focuses have been sold since January and Focus sales increased 78 percent in the first quarter alone. Ford continues to nip at the heels of Toyota (TM), maker of the popular Prius hybrid.
At this week's New York International Auto Show at the Javits Center, Ford's electric vehicles and fuel-efficient technologies dominate its showcase space, an obvious move by Ford brass to emphasize the company's intention to woo and seduce eco-friendly consumers. Visitors can touch, sit in and pretend to drive five hybrid and electric cars, including the Fusion plug-in hybrid and the 2013 C-Max hybrid.
Mark Fields, president of Ford Americas, says "fuel economy is top of mind for consumers" and Americans have been dumping their aging cars in favor of new vehicles that offer better fuel mileage. In an interview from the auto show, Fields points out that one-third of Ford vehicles get at least 40 miles per gallon and the Detroit automaker's strategy over the past few years has been to "be the best or among the best in fuel economy [in] every segment that we're in — from small cars all the way up to large trucks."
Climbing gas prices may compel some consumers to pull back on big-ticket spending, but Fields says the pain at the pump has actually helped the company deliver stronger-than-expected sales. Even demand for its F-Series truck, which according to Ford is America's top-selling truck for the past 35 years, has jumped 14 percent in the first quarter.
With the national price for a gallon of unleaded gasoline just a few cents shy of $4, hybrid cars could be expected to fly out of showroom floors. That may have been the case in 2008, when the price of oil hovered near $150 a barrel and record-high gas prices showed no signs of abating. Hybrid sales have surged 60 percent this year but their overall market share is relatively unchanged from a year ago.
Hybrids make up less than three percent of the total auto market and accounted for just 300,000 of the 1.4 million cars sold last month. Hybrids save consumers money at the pump, but those savings could take years to materialize as manufacturers charge a premium for the fuel-efficient technology. For example, hybrid Ford Fusion owners may not break even on their purchase for six and a half years at $5 gas, according to data from TrueCar. The number jumps to eight years at $4-a-gallon.
Fields says Ford offers a range of hybrids and electric cars to appeal to a broader base of consumers. "Different strokes for different folks," he quips.
"We're not using a dedicated technology for a dedicated plan," he says. "We'll be able to be flexible and follow the consumer."