DETROIT — The big shift to small cars this year threatens the revenue and profitability prospects of the Detroit 3.
The change in buying patterns accelerated in March, while overall sales tanked. The problem for the domestic automakers: They are still way underrepresented in the vehicle segments that are growing.
All three say they aim to bolster their small-car portfolio.
"We are working on a couple of programs that are small and premium," said John Smith, General Motors group vice president of global product planning, last week.
Total U.S. light-vehicle sales in March dropped by 12.0 percent; sales for the first quarter fell 8.0 percent. But sales of small cars — from the Honda Fit to the Ford Focus — rose 3.6 percent during the first quarter, according to Ford Motor Co. The segment's share jumped by 2.1 percentage points to 17.8 percent of the total industry.
The downsizing trend can be seen elsewhere, too. Crossover sales are now almost double those of truck-based SUVs, Ford says. And sales of four-cylinder engines are spiking: Nearly 40 percent of vehicles purchased in March contained four cylinders, overtaking six cylinders and showing the highest monthly share since at least 2002, according to J.D. Power and Associates.
It's all evidence of what Ford executives are calling a "seismic" shift in consumer preferences.
That begs a question for Ford, GM and Chrysler LLC: How do they compensate for revenue and margin loss as buyers continue to leave the truck segments dominated by the domestic brands in favor of car segments dominated by import brands?
"While overall demand is weak, mix is even weaker," Credit Suisse analyst Christopher Ceraso said in a research note last week. "The profit hit from mix deterioration will be profound."
Consumers are packing pricier content into those smaller vehicles, but that will only partially offset the hit, Ceraso said.