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According to auto analyst Dennis DesRosiers, it looks like $1.30 a litre is the tipping point that drives Canadians to buy smaller cars.

When gas prices spiked in April, "subcompact and compact cars flew off dealers' lots," notes DesRosiers in a note to clients.

"With gas prices spiralling out of control in April, consumers came back to the smaller car and light-truck market in hordes," said DesRosiers. "If you don't think gas prices affect what vehicles consumers are buying, then think again."

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The average price of gas across the country in April rose 7 per cent from the March level of $1.231 a litre - and that was 25 per cent higher than the $1.041 level of April, 2010, said DesRosiers. And in April, small car sales began to take off and have been strong every since.

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About the Author
Senior writer, Globe Drive

In 25 years of covering the auto industry, Jeremy Cato has won more than two-dozen awards, including three times being named automotive journalist of the year. Jeremy was born in Montreal and grew up in the San Francisco Bay Area. More

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