Fewer than 50% buy U.S. vehicles

What is a "US" vehicle these days?

Fewer than 50% buy U.S. vehicles

formatting link
Despite a good start to the year by General Motors Corp., fewer than half of American consumers -- 48.9% -- bought new cars and trucks in the first quarter this year from Detroit automakers, according to retail sales data provided exclusively to the Free Press by the Power Information Network. Retail sales are purchases 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.

The new low point in Detroit's share of the retail market is the result of a long-term consumer move away from their brands that seems to have picked up speed since September, fueled by a housing market slowdown, high oil prices and shaken consumer confidence.

While GM had the strongest quarter among metro Detroit automakers, Ford Motor Co. and DaimlerChrysler AG lost important retail market share to foreign competitors -- led by Toyota Motor Corp., which managed to drop its incentives to below $1,000 per vehicle on average and still snap up a substantial number of new customers.

To be sure, this is not the first time that Detroit automakers have dipped below the 50% mark in retail sales. But if the trend continues, this might be the first full year that non-U.S. automakers take the majority of the U.S. auto market.

"I think, in the near term, both Chrysler and Ford will continue to lose share, and that aggregate loss will more than offset any possible gain by GM," said Tom Libby, senior director of industry analysis at PIN, a subsidiary of J.D. Power and Associates.

"I don't expect the domestics' share to move back up above 50% this year."

Still, the performance of GM shows arguable improvement. The world's largest automaker is stabilizing its retail performance, despite slashing its cash-back rebates and other discounts by an average of $500 per vehicle.

Automakers don't typically provide detailed information to the public on their retail sales, so PIN compiles estimates with sales information collected from more than 7,000 dealerships, which represent one-fourth of all retail sales.

Mark LaNeve, vice president of sales, service and marketing for GM North America, said GM's performance is better than the PIN estimate suggests. LaNeve said retail sales at GM were up half a percentage point in the first quarter. That performance, he said, likely will translate to a nearly flat retail market share because industry-wide retail sales are up an estimated

0.7%.

"We know our numbers for a fact," LaNeve said. "It was the first quarterly increase we've had in probably 18 months or so, and we think we held our own in a pretty tough market."

Although the numbers at Ford and Chrysler weren't nearly as encouraging, they're not giving up.

"It's still very early in the calendar year," Steven Landry, vice president of sales and field operations for the Auburn Hills-based Chrysler Group, said in an interview Thursday. "I think it's presumptuous to think that, as a group, we may finish below 50%."

Downward trend

Although Detroit could make a comeback, the domestic retail sales performance has been consistently on the decline for some time.

In 2005, Detroit's automakers had 54.5% of the retail market. By the end of last year, that had edged down to 50.1%.

Now, Detroit is down to 48.9%. That's a 1.2-percentage-point decline from the fourth quarter of 2006, and it's an even larger 2.1-percentage-point decline from the first quarter of last year.

These declines, measured to the tenths of a percentage point, might not seem like much. But each point of retail share keeps about one half of an assembly plant running.

Libby said even a half of a percentage point is considered an admirable gain in today's marketplace and a full percentage point is like "a huge mountain."

And Detroit, despite its best efforts, continues to lose mountains.

Behind the power shift

Ultimately, sales trends at just two automakers -- Toyota and Ford -- explain most of the power shift this year.

While most of the major automakers gained or lost a half percentage point of market share or less, Ford lost a full 1.1 percentage points and Toyota gained 1 percentage point.

Those numbers reveal just how tough the situation has become at Ford.

That's because the Dearborn-based automaker simultaneously increased its incentives, such as cash-back rebates and other discounts, by 44.6% or $1,342 per vehicle, during the period, to an average of $4,350 per vehicle, according to Autodata Corp. of Woodcliff Lake, N.J. Usually, big discounts such as those encourage consumers to shop and buy more. George Pipas, Ford's top sales analyst, said that Ford's declines, if they continue, could have implications for the company's turnaround plans, which already have called for shuttering 16 plants and eliminating 44,000 jobs.

"We know that one of the key assumptions in the Way Forward plan is to stabilize our retail market share," he said. "If we don't, then we maybe haven't gone far enough on our cost reduction."

That said, Ford's retail market share numbers provided by PIN include all of the company's six major brands, such as Jaguar, Land Rover and Volvo, all of which have posted sales declines this year. But the company's Way Forward plan is based primarily on Ford's domestic Ford, Mercury and Lincoln brands.

Pipas said the number for those three brands has held steady at about 13% of U.S. sales. So that would support Ford Chief Executive Officer Alan Mulally's recent comments to reporters at the New York auto show last week that "we are stabilizing our market share."

-- The brave might not live forever but the timid do not live at all

Reply to
Jim Higgins
Loading thread data ...

I don't see an answer here to the first question. Our Chrysler 300M was built in Canada, as was the old Dodge Mirada we got from my wife's father, who insisted that he would never buy a foreign car. Our Dodge Stratus's power train (a significant component of the whole) was built in Japan; that of the Ford Contour we considered but did not buy was built in Mexico.

We saw Toyotas being built in Georgetown, Kentucky. What (if any) components came in from overseas I do not know.

Perce

formatting link

Reply to
Percival P. Cassidy

formatting link
>>

Good question. I don't know why the news writers even use the phrase.

Reply to
Robert Reynolds

A Ford, Chrysler, or GM product.

The majority is always stupid.

Reply to
Steve

Good point. Also is a GM car built in Korea a US vehicle?

They are smarter than you think, so are the "foreign" manufacturers.

Reply to
who

Or a Chrysler car that is built in Mexico and owned by tBenz?

Reply to
Steve B.

I agree with considering "Chevrolet" a US brand for statistical curiosity, but it does seem like the Aveo is going too far. Back when Chevrolet rebadged Isuzu's, nobody would have made the mistake of calling that domestic. Everybody knew the difference between domestic and imported. Not any more, obviously.

So considering something to be domestic based on the "Big 3" is still going on, just for tradition's sake. That'll fade.

Reply to
Joe

Or a Chrysler car (ie the 300) built in Canada.

Reply to
who

Joe:

I think it has faded considerably and contributes to the decline in 'domestic' retail sales. Plenty of 'red blooded Americans' in my family that twenty years ago would have walked before driving a Toyota or other Japanese car are no longer so brand loyal.

Reply to
Mac Cool

It's difficult buy an American car that is made with all Amercian parts. I look under the hood of my Dodge Stratus and I see "Bosch" on many components. The starter and alternator are made by Nipondenso, the speakers in the rear shelf have "Audio Latina" stamped on them, so I am guessing they come from Mexico. The seat cushions have "made in Canada" molded into the foam.

I believe that the 2.4L engine is American made, as is the tranmission, which is most likely from Kokomo, IN.

-KM

Reply to
kmatheson

The Big 3 (2.5) did it to themselves by relying too much on excessively large vehicles. In doing so they fell back in development of their reasonable sized mid and compact size vehicles.

Those who once bought those large vehicles have changed their desires there is big trouble for the Big 3. It is likely those buyers are going non Big 3 because that is where the better mid sized vehicles are.

The Big 3 and now are struggling to upgrade their more reasonable mid and compact sized vehicles to attract back their customers. Hopefully they succeed before they run out of money.

Reply to
Some O

Both parts and vehicles are now a world market. USA companies make many parts in other countries and parts companies from outside the USA make parts in the USA for vehicles inside and outside the USA. As for the final assembly it is usually within NAFTA, USA, Canada and Mexico. Some cars are totally imported by the 3 USA car companies, such as the bottom end GM models from Korea. I believe the new Chrysler Caliper plus variants have a high USA content.

My wife's Sebring was assembled in New York state, but the 2.7L engine is from Mexico. The blower resistor was from Mexico, but the replacement was from Europe. My '95 LH car and many Chrysler vans were assembled in Canada, using parts from several countries. My wife's Horizon from way back in 1980 had parts from Mexico and a VW engine plus transmission from Germany.

Mercedes, BMW, Toyota and other "foreign" companies manufacture parts and assemble vehicles in the USA and ship parts and vehicles around the world.

Magna who are looking into taking over Chrysler are a Canadian company. They have plants around the world, even a plant in Europe which assembles Chryslers for that market.

Reply to
Some O

MotorsForum website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.