A NEW BIG 3?
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
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
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
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
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
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
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
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
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."