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Demand For Small, Fuel-Efficient Cars Growing

All three of the U.S.-based automakers posted double-digit sales declines for the month, mainly as a result of steep drops in sales of sport utility vehicles and light trucks.

NEW YORK (AP) -- While overall sales of new vehicles may still be on the decline, April's U.S. sales figures show that consumer demand for small, fuel-efficient cars is increasing.

All three of the U.S.-based automakers posted double-digit sales declines for the month, mainly as a result of steep drops in sales of sport utility vehicles and light trucks.

And analysts said that unless the U.S. companies can find a way to better align their product mix with consumer demand, they'll continue to lose market share to the better-positioned foreign automakers.

General Motors Corp. posted a 16 percent drop in April sales, while Ford Motor Co.'s were off 12 percent and Chrysler LLC's dropped 23 percent.

Despite the drop in overall sales, GM managed to post car sales that were flat compared with February 2007, but included a 40 percent jump in demand for its Malibu midsize vehicle. Ford's sales edged down 1 percent, helped by a 44 percent increase in demand for the Ford Focus small car.

Meanwhile, higher car sales propelled Toyota Motor Corp. to a 3 percent sales increase and Nissan to 7 percent growth. Honda Motor Co.'s U.S. exact sales figures were delayed, but the company projected an increase of at least 6 percent.

Deutsche Bank's Rod Lache estimated April's seasonally adjusted annual sales rate at 14.4 million units, down from 16.3 million in the year-ago month and 15.2 million in the first quarter of 2008.

The rate, known as the SAAR, indicates what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were about 17 million.

Lache said that the overall sales decline, combined with the increasing consumer shift away from gas-guzzling light trucks and SUVs, doesn't bode well for the Detroit-based automakers.

''Both of these developments have negative implications for market share and profitability for U.S. Big Three, and reinforced our cautious stance on the group,'' Lache wrote in a note to investors.

Lache said the combined market share of the three companies fell to 48.4 percent in April from 54.2 percent in the same month of 2007.

Joseph C. Amaturo of the Buckingham Research Group said he expects that GM will need to cut production of its GMT900 platform vehicles such as the Chevrolet Tahoe and Suburban and GMC Yukon, in order to lower inventories of full-sized pickup trucks.

Meanwhile, Ford will be faced with clearing its lots of old model F-150 pickups before launching their redesigned version of the vehicle in the second half of this year.

''We continue to expect the foreign original equipment manufacturers to continue to garner market share from the domestics collectively throughout 2008, as the consumer demand for smaller fuel-efficient vehicles increases in a high fuel price environment,'' Amaturo said.

In afternoon trading, GM shares fell 33 cents to $22.86; while Ford share fell 29 cents, or 3.4 percent, to $8.19.

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