It's a first: Detroit 3 market share dips below 50%
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 percent.
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 declines anyway.
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.
Record incentives
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," Pipas said.
He said softer industry sales are a concern, but Ford will stick with its plans rather than unilaterally lowering prices to spike consumer interest.
"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 than June."
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 and reporters.
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
Sales of the revamped Tundra more than doubled in July from a year earlier.