Car sales indicate broader troubles
Despite popular new vehicles such as the GMC Acadia and Ford Edge, General Motors Corp. and Ford Motor Co. continue losing their share of new car and truck buyers in dealer showrooms across America, according to the latest retail sales data provided exclusively to the Free Press by the Power Information Network.
In recent months, those Detroit automakers have largely blamed their falling market share on the decision to sell fewer vehicles to rental- car companies, but this analysis shows they are also losing plenty of regular consumers, too.
Chrysler Group, meanwhile, maintains its position, thanks to the strength of its fresh Jeep lineup and incentives nearing $4,000 a vehicle.
Overall, that mixed performance meant that fewer than half of American consumers bought a vehicle from Detroit's automakers in the last three months. This is the second straight quarter Detroit has fallen below the halfway-point in retail market share.
Last year, about 51% of the new cars and trucks purchased in America were from Detroit's automakers. From January to March, that fell to
48.8%. From April to June, the number was 47.8%.Foreign automakers are eagerly picking up the slack, but Toyota Motor Corp. is putting Detroit under the most heat.
The Japanese automaker is winning more retail market share than any other automaker. In addition to higher incentives -- particularly on the Tundra full-size pickup -- Toyota also sells more of the efficient cars and trucks consumers seem to want in these increasingly conscientious times, vehicles like the Corolla, Prius hybrid and Tacoma compact pickup.
Retail sales are those made directly by consumers in showrooms, and they exclude fleet sales to rental car companies, businesses and governments, which are typically sold in bulk at a discount.
Industry experts view retail sales, which represent about three- fourths of the industry's 17 million sales, as one of the best measures of market demand and the future financial performance of automakers, because they are generally more profitable sales.
During the last three months, GM lost 1.8 percentage points of retail market share -- more than any other automaker -- ending with just
20.7% of the market. That decline is the equivalent of about one year's production at an assembly plant.Tom Libby, senior director of industry analysis at PIN, a subsidiary of J.D. Power and Associates, called GM's performance "ominous."
"Two points in this industry is a lot," he said.
For the first half of the year, GM has now lost 1.1 percentage points of retail market share, for about 21.2% of the market.
GM spokesman John McDonald said the company is not pleased with its result but believes it is taking a disciplined, strategic approach that will reap long-term benefits.
A big part of that discipline has to do with incentives. GM has been pulling back on cash-back rebates, discounted financing and other deals in an effort to improve its brands' image and resale values.
So far this year, GM has spent about $2,715 on incentives per vehicle, according to Autodata Corp. of Woodcliff Lake, N.J. That is an 11.4% decline from last year and it's hundreds of dollars less than spending by Ford, at $4,229 per vehicle, or Chrysler, at $3,956 per vehicle.
In all, GM's incentive spending has not been this low since 2002, according to Dave Lucas, Autodata vice president. While GM's incentive strategy is believed to be a good one long-term, he added, it has a short-term bite on retail sales.
Ford's retail market share, meanwhile, dropped nearly a percentage point in the second quarter, to 14.4%, despite the fact that Ford leads the industry on incentive spending so far this year and has several popular, highly rated products in showrooms.
George Pipas, Ford's top sales analyst, said most of that decline came from the company's Premier Automotive Group, which includes Jaguar, Land Rover and Volvo.
He said the company's Ford, Mercury and Lincoln brands, at the heart of the company's crucial turnaround plan for North America, continue to show stability in showrooms, with about 13% market share for the last six months.
For the year so far, Ford's retail market share is down 0.9 percentage point, to 14.5%.
Chrysler seems to be doing what it can to maintain retail market share, which stands at 12.9% for the first half.
Some in Detroit say Toyota is throwing money at consumers.
Mark LaNeve, GM's vice president for North American sales, service and marketing, recently told the Web site AutoObserver.com that he was shocked by the bigger incentives from Toyota and Honda Motor Co.
For the first half of the year, Toyota's incentives rose 15.6% to $1,036 per vehicle.
"I don't think we're out there buying market share," spokesman John McCandless said.