It's a first: Detroit 3 market share dips below 50%
For U.S. automakers, July was the darkest month in the 102-year history
of the automobile business in the United States.
For the first time, foreign manufacturers controlled the market. The
import-badged cars and trucks captured 51.9 percent of the market,
leaving only 48.1 percent for the domestic brands of General Motors,
Ford Motor Co. and the Chrysler group. A year ago, the domestics had
52.0 percent of the July market.
In raw numbers, the score was: Imports, 679,523; Detroit 3, 629,569. The
domestic brands still hold the lead for the year to date. Seven-month
market shares were 51.4 percent for the Detroit 3 domestics and 48.6
percent for the import-badged brands.
Still, sales weren't great for the imports, either. Auto sales wilted
for just about everybody in July. For the month, total sales fell 12.4
Withered by high fuel prices and blistered by consumers strapped for
cash because of rising mortgage rates, five of the big six automakers
lost ground in July. Only Nissan eked out a small gain.
Not even Toyota Motor Sales U.S.A. Inc. and American Honda Motor Co.,
which seem to always prosper in good times and bad, could buck the July
drought. Both jacked up their incentive spending, but suffered sales
As usual, the news was the worst for the Detroit 3:
* General Motors: down 22.3 percent
Ford Motor Co.: down 19.2 percent
* the Chrysler group: down 8.4 percent
GM said it sold 315,870 vehicles in July, down from 406,298 in July
2006. Ford delivered 194,092 vehicles in July, compared with 240,104
last year. The Chrysler group sold 137,728 vehicles in July, down from
150,349 a year ago.
Toyota was off 3.5 percent from a year ago, while Honda's sales fell 3.2
percent. But the results might have been much worse had it not been for
incentives, which were way up for both automakers in July.
"We are seeing combined incentive spending for Japanese automakers reach
record highs," said Jesse Toprak, executive director for industry
analysis for Edmunds.com, an industry research firm.
In July, Toyota's average incentive spending per vehicle totaled $1,492,
up nearly 50 percent from July 2006. Honda, which typically shies away
from cash payouts, spent an average of $1,146 per vehicle on incentives,
up nearly 30 percent from a year ago. Nissan's July incentives of $2,290
per vehicle topped the Asian automakers but were down about 12 percent
from a year ago.
Still, the Detroit 3 led the league in givebacks in July by a wide
margin. The Chrysler group averaged $4,082 per vehicle, up from $2,623 a
year ago. Ford's average of $2,984, was down sharply from $3,888 in July
2006 and was best among the Detroit 3. GM, with an average of $3,130,
was down nearly 20 percent over a year ago.
Ford sales analyst George Pipas said declines in both daily rental fleet
and retail sales contributed to the big drop.
"Obviously, the magnitude of the decline in July is fairly substantial,"
He said softer industry sales are a concern, but Ford will stick with
its plans rather than unilaterally lowering prices to spike consumer
"Sometimes you just take your medicine and get on with it," Pipas said.
August doesn't look sunny
GM had almost no bright spots, and no indication that August will be any
better than July. With the exception of the Saturn Aura, Pontiac
Solstice and Cadillac DTS, sales of all of GM's car lines were down. For
GM's bread-and-butter pickups, the Chevrolet Silverado fell 26.5
percent, and the GMC Sierra was off 28 percent.
Only GM's new trio of mid-sized crossovers, the Saturn Outlook, GMC
Acadia and Buick Enclave, had any traction in July. Combined, the three
stylish crossovers sold 12,080. The sales are encouraging for GM because
the crossovers are moving off showroom floors despite low incentives,
and production is just now ramping up.
Paul Ballew, GM's executive director of market and industry analysis,
said, "We didn't have a terrific retail month for sure, but it's better
Rethinking 2007 forecast
Ford said it will reassess its forecast for industry-wide U.S. sales in
2007, given the sharp drop in July sales. Ford's current industry
forecast is at 16.8 million vehicles.
"We think something in this range is feasible in light of these consumer
fundamentals and the overall pace of the economy," said Ellen
Hughes-Cromwick, Ford's chief economist. "But we are certainly going to
reassess this once we get the final data for the July sales."
Ballew said he expects the industry to end 2007 with sales of 16.6
million to 16.7 million vehicles. He said a weak housing market and high
fuel prices would weigh on U.S. vehicle sales through the remainder of
2007 and into 2008.
"The twinfold headwinds of gas prices and housing are clearly having an
impact on the business," Ballew said on a conference call with analysts
Ballew said GM would be more aggressive on incentive spending over the
remainder of the year, in response to heavy discounting from
competitors, particularly on pickup trucks.
"We are not going to let the competition run that far down in front of
us as they did in June," Ballew said. "They've been extremely aggressive
... and we can't allow competition to discount to that extent without
evaluating some response," he said, referring to the pickup truck category.
As the incentive war heats up, Ballew said pickup sales would recover
slightly through the rest of the year.
"We believe full-size pickups will show some recovery given the amount
of emphasis from vehicle manufacturers," he said. Ballew also said he
expected the industry challenges to impact the truck-based SUV and
mid-size van segments the most.
Meanwhile, Toyota said consumer incentives on its new Tundra pickup
truck in the United States would be lower this month.
The Japanese automaker declined to specify the exact rebate on the
pickup truck, but said it was lower than reported.
Industry-tracking firm www.Edmunds.com estimates that the Tundra carries
incentives worth $6,861 on average, the highest of any full-size pickup
Sales of the revamped Tundra more than doubled in July from a year earlier.