A NEW BIG 3?

A NEW BIG 3? http://www.detnews.com/apps/pbcs.dll/article?AID=/20070202/AUTO01/702020385/1148
For the first time in recent memory, Ford Motor Co. fell to No. 4 in U.S.
auto sales behind General Motors Corp., Toyota Motor Corp., and DaimlerChrysler AG's Chrysler Group, demonstrating just how far the automaker has fallen as it battles to stop a decade-long decline in market share.
At the same time, the Detroit automakers' share of the American auto market fell to just 50.6 percent in January as they narrowly avoided selling fewer cars and trucks than foreign makers in a month for the first time ever.
In November, Ford came in at No. 4 behind GM, Toyota, and Chrysler parent DaimlerChrysler AG, but those results included the automakers' foreign brands.
Last month, Ford's domestic brands -- Ford, Lincoln and Mercury -- were outsold by Chrysler's U.S. brands -- Chrysler, Dodge and Jeep.
Ford's U.S. brand sales dropped 19.6 percent to 153,026 vehicles in January, while demand for Chrysler, Dodge and Jeep models rose slightly to 156,308 units.
Ford sales analyst George Pipas dismissed Ford's slide in the rankings as irrelevant. "Where we are in sales races is a distraction we're not going to be bothered with," he said.
While analysts said Chrysler could tumble back behind Ford this year, January's topsy-turvy numbers show how irrelevant the old realities that once defined Detroit have become.
Ford attributed most of its January decline to a planned reduction in sales to car rental companies, a strategy the automaker said will make it stronger in the long run.
"(We) are focused on restructuring our business to be profitable at lower volumes," said Mark Fields, president of Ford's Americas Group. "Our customers benefit from this plan because their vehicles' residual values will improve -- a trend we already are seeing with our newest products."
It was a theme echoed by rival GM, which also saw a big drop in sales that it blamed on a deliberate cut in sales to daily rental fleets. Overall, GM's sales were down 16.7 percent, with 242,252 vehicles sold compared to 290,935 a year ago.
Paul Ballew, GM's executive director for global market and industry analysis, said the company has been weaning itself off the daily rental business for the past couple of years and expects that to continue for several more months.
"There's more tough medicine coming on the rental side," he said, adding that GM hopes to cut its sales to rental agencies by about 200,000 units annually.
Fleet sales are an easy way to boost market share and move inventory, but they generally create little profit and cause a lot of damage to a brand by driving down resale values and filling the highways with stripped-down versions of an automaker's cars and trucks.
"It's a good sign that they're de-emphasizing fleet," said George Magliano, director of North American auto industry research for Global Insight in New York. "The business isn't very profitable."
Ford's sales to car rental companies were down 65 percent compared to January 2006.
Overall fleet sales -- including those to more profitable corporate and government fleets -- represented 28 percent of Ford sales for the month, compared to 39 percent last January.
GM's overall fleet business was down 30 percent year-over-year, with sales to daily rental fleets down about 40 percent.
While both Ford and GM said cutting back on sales to rental car companies is an important part of their North American turnaround strategies, both automakers also saw a decline last month in retail sales to consumers.
GM's retail sales were down 8 percent for the month and Ballew acknowledged the company had been hoping for better results.
"January was certainly not a stellar month," he said. "We were modestly down from where we expected to be."
Ford's retail sales were down about 5 percent year-over-year, proof that it is continuing to give ground to foreign rivals including Toyota and Honda Motor Co.
Toyota's U.S. sales totaled 175,850 units, a 9.5 percent increase that made last month the company's best January ever.
Honda posted a more modest 2.4 percent gain, selling 100,790 cars and trucks in January, while Nissan Motor Co. sold 82,644 vehicles -- up 8.9 percent.
Both Ford and GM suggested that Chrysler was picking up some of their unwanted fleet sales.
"DaimlerChrysler has jumped in a big way," Ballew said. "So has Hyundai/Kia."
But Chrysler suggested its competitors were trying to deflect attention from their own problems.
Steven Landry, Chrysler's vice president of sales and field operations, said his company's daily rental business was down 10 percent last month and will continue to fall throughout 2007.
"Our overall three-year plan is to continue to bring it down over time," Landry said, crediting new products for most of Chrysler's gains -- a claim supported by analyst Alex Rosten of the online auto research site Edmunds.com.
He said daily rental companies are scaling back purchases and keeping vehicles longer. "No one's picking up the slack because the slack isn't there," Rosten said.
Partly as a result of declining fleet sales, GM said Thursday that it will cut first-quarter production by another 40,000 vehicles to better match supply with demand.
January is always a tough month to read. Bad weather often keeps retail customers at home, and it is also the month in which automakers get the payback for year-end sales incentives.
-- "I have tried to live my life so that my family would love me and my friends respect me. The others can do whatever the hell they please."
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http://www.detnews.com/apps/pbcs.dll/article?AID=/20070202/AUTO01/702020385/1148
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Toyota already is the world's #2 automaker, soon to be #1.
The US is the world's largest market. However, the market has shrunk a little bit in the last two years (auto and truck sales where down 2.6% from 2005 to 2006). So that means more competition for each sale. The foreign auto makers are already selling more cars than the domestics (domestics still outsell in trucks).
The US automakers have legacy problems with pensions and healthcare costs. Foreign automakers don't. This is in part because the pensions and insurance are paid for by the people (some would say the government, but last I checked, the government was the people), and the US plants of foreign automakers supply the workers with defined contribution plans (401k's) rather than defined benefit plans, which eliminates liability for the automakers in future years, but provides workers with more risk. Foreign automakers also require workers to contribute towards their health care, something that US automakers don't do (at least in the US), because of the strange history of health insurance in the US.
Anyway, Ford is no longer fighting for #2. It is fighting for its life. I think it is going to stay alive. But, with the way foreign automakers are making their cars closer to their markets more and more (that means building more plants in the US), I am not sure that it is that important. And Ford, GM and DC are looking to build more cars overseas for developing markets like in countries with more than 999,999,999 people.
Jeff
Jeff
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Toyota will likley take over the number two spot this year, if the current trend continues. Seem a bit odd when you consider Ford current crop of vehicles are all rated as high or higher than those of Toyota. Toyota was also number one in recalls for 2006 and is number one so far this year, as well. ;)
mike

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That's a twist from you. When it is pointed out that GM outsells every import by millions in the US, you import lovers say something like hamburger sells better than steak, or some such irrelevant analogy.
It still seems that foreign car buyers come into domestic NGs to denigrate other brands in a vain effort to convince themselves that they didn't get screwed when they paid too much for their import LOL
mike

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