Automotive winners and losers for 2007
October 12 2007: 12:59 PM EDT
NEW YORK (Fortune) -- With the 2008 model year now upon us, its a good
time to look back at the first nine months of calendar 2007 to see who
the champs and chumps are. The names may not surprise you but the amount
of movement might.
The auto industry as a whole has been disappointing, with sales in the
U.S. down 4.5% through September. The subprime mortgage collapse gets
most of the blame. If you are worried about seeing your house
foreclosed, you probably aren't going to be out shopping for a new car.
Others, who used their homes like ATMs, are finding refinancing
difficult to impossible. Auto sales have been particularly weak in
California and Florida, two of the hardest-hit housing markets.
Among the ten major manufacturers, only four have lost ground this year
-- the Detroit Three and Volkswagen. No surprises there. Ford is the big
loser as it undergoes a wrenching restructuring at the hands of a novice
CEO. Its sales are down 13.3% so far this year. New marketing boss Jim
Farley, recruited from Toyota (Charts) on Thursday, has a lot of work to do.
On the upside, the import brands were big winners, with BMW leading the
way, followed by Nissan (Charts). Shorn of Chrysler, Mercedes is showing
a little strength, too, with sales up 1.8%.
High-impact new models moved the needle significantly for a couple of
makes that had been languishing. Lincoln's sales have risen 14.5% this
year and it is closing the gap with its moderately-priced dealer mate
Mercury. Expect to see Mercury to go the way of Plymouth and Oldsmobile
in a few years. Saturn, which has been totally revamped by the injection
of Opel models to its lineup, is up 11.7%, though that is probably less
than the folks at General Motors (Charts, Fortune 500) would like.
A shortage of dealer traffic has plunged several other brands deep into
the loss column. Jaguar, still suffering from a series of disastrous
product and design errors, has seen its sales plummet 27.2% this year.
At Buick, meanwhile, even the arrival of the acclaimed Enclave crossover
vehicle hasn't been enough to keep sales of this one-time doctors
favorite from falling 24.7%.
Digging deeper into the data, truck sales continue to outpace car sales
despite the seeming permanence of $3 gasoline. Car sales are down 4.5%
versus a decline of only 1.4% for trucks. Much of that is due to the
soaring popularity of crossover vehicles, which are counted as trucks
even though they are engineered like cars. But Honda's CR-V, a
crossover, now outsells the Ford Explorer, a traditional truck-based SUV.
At the model level, the plight of the Detroit Three is vivid. In
September, as Automotive News points out, only nine of its 41 nameplates
saw sales go up in September. The good news is that two recently
redesigned models, the Cadillac CTS and the Chrysler Sebring are selling
Less encouraging has been the response to the old Ford 500 that was
renamed Taurus earlier this year. The move was supposed to boost buyer
recognition of the vehicle but Ford (Charts, Fortune 500) has sold about
half as many cars under the new name as it did under the old one.
What do the early returns from the 2008 model year portend? Nothing very
encouraging. With sales headed below 16 million units for the first time
in eight years in calendar 2007, there are predictions they could fall
even further next year.
Analysts at UBS see "a growing risk that U.S. volumes will tumble
further given the problems in housing and the difficulty faced by many
consumers in accessing credit." It is using a 10% cut to forecast U.S.
volumes for each manufacturer.
Still, several high-volume cars have been totally reengineered for 2008
and could create some showroom excitement. Reviewers have swooned over
the new Honda (Charts) Accord, which provides a remarkable combination
of comfort, agility, and fuel economy. The V-6 version is rated at 29
miles to the gallon on the highway.
Emerging in November will be the all-new Chevrolet Malibu, another
popular-priced sedan on which GM is placing its hopes for a turnaround
in consumer sentiment. Given the way preferences have been trending for
the past decade, though, GM will be fortunate just to arrest its decline
in market share, much less begin to reclaim any that it has lost to its