4649What is holding back American car companies?
- Aug 2, 2006Interesting article today, that Toyota is now the #2 automaker. I
feel there is an underlying reason car dealers are willing to keep
losing money and marketshare to keep promoting gas gusseling vehicles,
while Honda and Toyota and kicking their butt with hybrids and fuel
economy. Don't they see this?? I feel the oil companies, government
and car makers are all in this together, but while oil companies are
making record profits, car dealers are losing lots of money and may
not recover. I want to know what other think and if they have some
reasons why this is happening. I personally have driven fords most of
my life, but I will NOT by a Ford again or an American car. I really
want to a prius or what I will probably do is build an electric car or
biodiesel. Just wanted to put this out there and see what you guys think.
Toyota becomes No. 2 automaker
U.S. sales for Ford, Chrysler and GM drop steeply in July, while
Japanese company boasts a 16.2 percent increase.
August 2 2006: 9:19 AM EDT
DETROIT (Reuters) -- U.S. auto sales slid 17 percent in July as
Americans shunned trucks and opted for more fuel-efficient cars,
catapulting Japan's Toyota Motor Corp. past Ford Motor Co. into the
No. 2 spot for the first time.
Detroit-based automakers suffered double-digit declines in sales from
the peak of last summer's incentive-driven boom, with DaimlerChrysler
AG's (Charts) Chrysler Group and Ford hardest-hit in a market hurt by
high interest rates and gas prices.
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Background on the story
Ford reportedly plans more job cuts
Automaker's acceleration of cost savings could mean loss of additional
posts, elimination of more benefits, newspaper says. (more)
Plug-in hybrids: Not ready for primetime
Making an affordable hybrid car that can be charged from an outlet
isn't as easy as just adding cord. (more)
SUVs are out. So what's hot now? SUVs.
Crossovers like the Toyota Highlander and Lexus RX330 are replacing
traditional truck-based SUVs in customers' hearts. (more)
Chrysler Group lost 37 percent and Ford (Charts) 34 percent, but
Toyota (Charts) jumped an industry-leading 16 percent, driven by a 25
percent surge for passenger cars such as the Corolla.
Sales for Japan's Honda Motor Co. (Charts) gained 10 percent and South
Korea's Hyundai Motor Co. added 6 percent, putting all three Asian
automakers on track for a larger share of a softening U.S. market for
General Motors Corp. (Charts), the No. 1 automaker worldwide, posted a
19.5 percent drop in U.S. sales, in line with expectations, given the
tough year-earlier comparison.
Autodata Corp. reported that overall sales of U.S. light vehicles came
in at a seasonally adjusted annualized rate of 17.24 million units in
July, down from a near-record high of 20.72 million a year earlier
when the traditional Big Three offered employee discounts to all buyers.
Chrysler Group, which has been working to sell off inventory ahead of
the launch of key new models, was the only automaker to bring back
employee pricing this July, a sequel that fizzled with U.S. consumers.
DaimlerChrysler's sales dropped 34 percent in July, a
steeper-than-expected drop that analysts said underscored Chrysler's
reliance on rolling out new hit products rather than competing on price.
Chrysler responded to its weak July sales numbers by extending its
package of discounts, including employee-level pricing and
zero-percent financing, until the end of August.
Ford's sales were weighed down by a 44 percent slide in its profitable
truck lineup, an area of the market the automaker has long dominated.
"Ford and Chrysler were just simply disappointing," said Jesse Toprak,
an analyst at Edmunds.com who had forecast higher sales. "It's a quite
Said George Magliano, analyst at Global Insight: "I think for Chrysler
it's very short-term and shows how product sensitive they are. I'm
more worried about Ford. Ford is more structural, I think."
GM, which set off last summer's price-war, has steered clear of a
repeat of the same kind of sweeping rebates this year.
"I would view our results as very solid," said GM sales analyst Paul
Ballew. "In fact, better than what we expected at the beginning of the
month, and better than we thought even at midmonth."
Hangover from the boom
Last year's summer price war boosted the number of cars sold but
sacrificed profitability for both the U.S. automakers and their
dealers. The incentives also made monthly shifts in auto sales highly
"What we aren't going to have in (2006) was this roller-coaster that
we were on in (2005)," Ford sales analyst George Pipas said. "We're
aren't going to see the peaks and hopefully we won't see the valley."
For the year to date, SUV sales are down 19 percent, while pickup
truck sales have dropped 16 percent, said Paul Taylor, chief economist
with the National Automobile Dealers Association.
That puts pressure on the traditional Big Three in coming months to
increase incentives and rely more heavily on lower-margin sales to
commercial fleet operators, which include car rental companies, he said.
Reflecting their fall from favor with consumers, large trucks and SUVs
carried higher-than-average discounts of more than $5,200 on average
in July, according to Edmunds.com.
Despite the drop in July sales, GM, Ford and Chrysler all reported
progress in reducing vehicle inventories, in part because of
GM had 930,000 vehicles at the end of July, down 21 percent from the
previous month, while Ford reduced its inventory by nearly 15 percent
to 677,000 vehicles. Chrysler's inventory declined 14 percent to
The defection from SUVs also hurt some luxury car manufacturers in
July. Porsche AG suffered a 23 percent drop in demand for its Cayenne
model, even as its overall sales rose 12 percent on the back of strong
demand for the Cayman coupe.
By contrast, new compact and sub-compact models have proved popular.
Nissan Motor Co. said it sold 2,856 of the new Versa compacts in July,
double the company's internal forecast.
Nissan, which is considering a tie-up that would extend its current
alliance with Renault SA to include GM, posted a drop in overall sales
of 16 percent, outperforming the market by a slight margin.
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