BUSINESS WATCH:

As gas prices hover at about $4 in Orange County, some Newport-Mesa auto dealers are reporting a markedly high demand for cars with greater fuel efficiency, with consumers seeming to favor sub-compacts, standard mid-size cars, and cars outfitted with hybrid technology.

The changing demand has eluded some segments of the market, however, favoring lower-cost, economical car brands over those that cater to high-income consumers.

Paul Lunsford, general manager of South Coast Toyota in Costa Mesa, said the dealership’s fuel-efficient icon — the Prius, an electric hybrid — sold 66% more in April than the same month one year ago.

He attributes the increase to general consumer penny-pinching, along with the vehicle’s impressive fuel efficiency, which the Environmental Protection Agency rates as a combined 46 mpg.

“There’s a significant move from the bigger sport utilities down to the Prius and cars with hybrid technology,” he said. “It’s the primary motivation in this market, because ultimately, you have to consider the overall cost of ownership — your car payment, insurance, driving costs and maintenance. People are very focused on overall savings and getting value for their dollar.”

But, purveyors of higher-cost models like Matt Schaefer, general sales manager for Newport Lexus in Newport Beach, said they hadn’t seen any perceptible change in sales.

“[High gas prices] haven’t had a big effect,” he said. “Our hybrid vehicles have always been hot and we’ve had a couple more requests for those, but I’m not sure it’s based on gas prices … these cars are just good, solid sellers. I haven’t seen a dip or an increase.

“People buying Lexus’ today [are typically a higher-income demographic], especially in the Newport Beach area. We’re a little insulated by the demographics of the area.”

John Sackrison, executive director of the Orange County Automobile Dealers Assn., agreed, saying the trend mimics those his organization has studied across the county: Those eager to conserve spending opt for small or hybrid vehicles, while the spending habits of those with higher amounts of disposable income remain virtually unchanged.

“What you’re really seeing is consumers reacting to gas prices, and buying cars that are more fuel efficient,” he said. “It’s certainly something we’re going to see more of, and it’s kind of an opportune time to start thinking about it, as people do more and more driving over the summer.”

Notably, the numbers identify low-cost brands Toyota/Scion and Honda as holding about 35% of the county’s market share, he said.

Those numbers could be unnerving for the rest of the industry: The Orange County Auto Outlook projects a further sales drop of about 9.8% by the end of 2008, followed by a small pick-up of approximately 3.1% in 2009.

CHRIS CAESAR may be reached at (714) 966-4626 or at [email protected].