Green Cars Mean Great Business 

Nearly every automaker told the same tale when reporting March sales results on Tuesday: Buyers are worried about fuel economy.

That's no surprise, of course. With gas prices approaching -- and in some cases, exceeding -- $4 per gallon around the country, buyers of new cars and trucks are making fuel efficiency a top priority on their shopping list.

Not so long ago, a spike in gas prices tended to be a boon for the Japanese automakers and their top-notch small cars -- and a problem for Detroit.

But this time around, things are different.

Going green is great business for Detroit
General Motors
(NYSE: GM  ) and Ford (NYSE: F  ) still make plenty of pickups and SUVs -- in fact, Ford's big F-series pickup line is still America's best-selling vehicle, just as it has been for decades.

But even the pickups have gotten the green bug. While Ford still offers brawny V8s in its pickups, it brags that its fuel-efficient V6 options now account for more than half of F-series sales – and V6-powered F-series account for more than three-quarters of V6 pickups sold in the U.S., according to Ford sales analyst Erich Merkle.

That's a significant market-leadership position for Ford: As Merkle points out, many commercial buyers -- who drive a big portion of pickup sales -- have made fuel efficiency a high priority as they seek to control costs.

It's paying off for Ford, which is enjoying strong commercial-fleet sales at the moment. But Ford hasn't neglected smaller cars, either.

While buyers have long tended to head for Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) dealers in search of good fuel-efficient cars, nowadays Ford is persuading more and more of them to buy American. The company's midsize Fusion sedan enjoyed its best sales month ever in March, and the well-regarded Focus compact also did extremely well.

GM is also seeing success with its much-improved fuel-efficient options. Its new Sonic subcompact is off to a strong sales start, and its Cruze compact has been a surprisingly strong seller around the world since its debut just over a year ago. Even the much-maligned Chevy Volt is showing signs of sales life, posting its best month ever in March with more than 2,200 sold.

Clearly, Detroit has finally gotten the message: Green vehicles are good business.

Meanwhile, the imports aren't hurting either
But that's not to say that Toyota is suffering. After the Japanese giant lost significant production (and market share) in the wake of last year's tsunami, Toyota's U.S. sales are rebounding nicely. While the company's overall sales were up just over 11% in March, sales of its cars were up nearly 20% -- and as you'd expect, fuel-efficient models led the way.

Toyota's Prius, which is now a 3-model lineup, broke all its previous sales records thanks to the strength of the new small Prius C. The Prius C is turning into a big hit for the company, with its impressive specs -- a starting price around $19,000, 53 miles per gallon -- pulling lots of buyers into showrooms. And sales of the recently redesigned midsized Camry continue to be strong.

Clearly, rising gas prices represent a challenge for American households and businesses. But just as clearly, Detroit and the imports alike have risen to the challenge – and both are thriving as the economy continues to gain strength.

At the time of publication, Motley Fool contributor John Rosevear owned shares of Ford and General Motors. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford.


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