Higher gasoline prices could ignite compact car sales, increase competition

I was pleased to be off work last week when gasoline prices tipped $3 a gallon in Detroit. Staying home meant spending less on fuel to drive to and from work.

But I'll bet when some automakers saw last week's average U.S. gasoline price hit $2.98 a gallon they grinned at the thought of 2011 compact car sales surging.

Let's face it: Next year will be the year of the compact car.

First, there's the redesigned 2012 Ford Focus and redesigned 2012 Honda Civic -- both on sale next spring. The new 2011 Chevrolet Cruze and the redesigned 2011 Hyundai Elantra are on sale now.

These entries are critical to automakers' new car sales – which have recorded a tepid gain of 6 percent through November this year in an overall market that has improved 11 percent.

Through the first 11 months, Honda sold 231,955 Civics, a 2 percent decline from the same period of 2009. Ford sold 159,679 Focus units, up 9 percent from 2009. Hyundai sold 119,150 Elantras, up 22 percent from 2009.

The small car segment remains a dogfight as each automaker promises peppy engines, the coolest technology and competitive sticker prices.

And most of these automakers aim to top highway fuel economy of 40 mpg.

So if gasoline prices hold steady or rise, the demand will be there for these products and the compact car battle will be on in earnest.

This should be fun to watch.