Tough end to a tough year
Thursday, January 04, 2007
Tough end to a tough year
Big Three U.S. market share dives as Toyota rises in '06
Christine Tierney / The Detroit News
Detroit's automakers finished 2006 with their lowest share of the U.S. auto market in history, as Toyota Motor Corp. breached the top ranks after outselling DaimlerChrysler AG for a full year.
General Motors Corp. and Ford Motor Co. reported sales declines for December and for the year after volatile gas prices and a sluggish economy cut demand for their big SUVs and pickup trucks.
In the jockeying among brands, Ford's blue oval brand recovered its No. 1 ranking in the U.S. market from GM's Chevrolet nameplate, which had overtaken Ford in 2005.
But the most significant milestone was Toyota's rise to third place among manufacturers after GM and Ford in the U.S. market for the first time.
"Everyone expects them to surpass Ford in 2007," said industry analyst Alex Rosten at Edmunds.com, an online auto research site. "We certainly expect Toyota to take the No. 2 spot in North America and hold it indefinitely."
GM led the market last year with sales of 4.1 million cars and trucks, down 8.7 percent from 2005 levels, followed by Ford, whose sales -- including its European luxury brands -- fell 8 percent to 2.9 million, according to Autodata Corp.
Toyota sold 2.5 million cars and trucks, a 12.5 percent rise over year-earlier levels and its 11th consecutive annual sales gain, while DaimlerChrysler's sales, including Mercedes-Benz vehicles, fell 5.5 percent to 2.4 million units.
Overall, the U.S. auto market shrank by 2.6 percent last year to 16.56 million vehicles -- the lowest total since 1998 and well below the industry's expectations. December sales were down 3.6 percent.
Last year's sales decline hit the domestic brands hardest, while Asian and European nameplates showed gains. The traditional American manufacturers -- excluding GM's and Ford's foreign nameplates and DaimlerChrysler's Mercedes -- took 53.7 percent of the market, a drop of 3.2 percentage points.
U.S. auto executives said some of the decline reflected strategic decisions to reduce their least profitable activities, such as sales to rental car companies, as part of their financial recovery efforts.
Ford's market analyst George Pipas said the sales drop was due partly to the discontinuation of the Taurus sedans which had been sold primarily to fleets and the Freestar minivan.
The Dearborn automaker also was hurt by falling demand for large SUVs, which fell out of favor during the gas price hikes, and big pickups. Pickup sales are weakening in tandem with the housing sector.
Detroit's automakers are likely to remain under pressure this year as demand for those large and traditionally lucrative vehicles is not expected to recover quickly.
In addition, competition is increasing in the large pickup segment, with GM now launching a new line of trucks and Toyota scheduled to introduce a full-size pickup in February.
"The full-size truck market is going to look very much like a sumo wrestling match," Pipas said. "There's going to be a lot of pushing and shoving."
Sales of Ford's F-Series pickup fell 21 percent in December, but it remained the best-selling truck in the market.
Ford benefited from buoyant sales of its Ford Fusion, Mercury Milan and Lincoln MKZ cars.
Overall, car sales edged up 1.5 percent, accounting for 47 percent of the market in 2006, while sales of light trucks -- minivans, pickups and SUVs -- declined 5.9 percent.
Of the U.S. automakers, GM posted the biggest annual sales decline despite launching large SUVs early in 2006 and new pickups late in the year.
But Paul Ballew, GM's executive director of market analysis, said the decline masked encouraging trends: higher selling prices, lower sales incentives and lower fleet sales.
"It was tough for us to accept a sales decline, but as we look back on the year, it was the right thing for us to do," Ballew said.
GM and Ford both reported 13 percent sales declines in December, while DaimlerChrysler's Chrysler Group recorded a 0.5 percent gain -- but Chrysler's incentives ballooned last month to $4,416 per vehicle, compared with $3,829 at Ford and $2,393 at GM, according to Edmunds.com.
In a recent interview, GM's North America sales chief Mark LaNeve said Chrysler was spending "astronomical amounts of money" to move the metal -- and that strategy was unfortunately having an impact on GM's sales.
By contrast, Toyota spent $1,363 in incentives per vehicle and Honda Motor Co.'s discounts averaged $472 in December.
"Pricing in the industry has been under pressure for a couple of years," said John Mendel, senior vice president at American Honda. "But we've tended not to play that game as much as the domestics have -- which reflects in our residuals."
Toyota executives said they expect to increase U.S. sales again this year by 6 percent, to 2.68 million cars and trucks.
You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.
© Copyright 2007 The Detroit News. All rights reserved.
Tough end to a tough year
Big Three U.S. market share dives as Toyota rises in '06
Christine Tierney / The Detroit News
Detroit's automakers finished 2006 with their lowest share of the U.S. auto market in history, as Toyota Motor Corp. breached the top ranks after outselling DaimlerChrysler AG for a full year.
General Motors Corp. and Ford Motor Co. reported sales declines for December and for the year after volatile gas prices and a sluggish economy cut demand for their big SUVs and pickup trucks.
In the jockeying among brands, Ford's blue oval brand recovered its No. 1 ranking in the U.S. market from GM's Chevrolet nameplate, which had overtaken Ford in 2005.
But the most significant milestone was Toyota's rise to third place among manufacturers after GM and Ford in the U.S. market for the first time.
"Everyone expects them to surpass Ford in 2007," said industry analyst Alex Rosten at Edmunds.com, an online auto research site. "We certainly expect Toyota to take the No. 2 spot in North America and hold it indefinitely."
GM led the market last year with sales of 4.1 million cars and trucks, down 8.7 percent from 2005 levels, followed by Ford, whose sales -- including its European luxury brands -- fell 8 percent to 2.9 million, according to Autodata Corp.
Toyota sold 2.5 million cars and trucks, a 12.5 percent rise over year-earlier levels and its 11th consecutive annual sales gain, while DaimlerChrysler's sales, including Mercedes-Benz vehicles, fell 5.5 percent to 2.4 million units.
Overall, the U.S. auto market shrank by 2.6 percent last year to 16.56 million vehicles -- the lowest total since 1998 and well below the industry's expectations. December sales were down 3.6 percent.
Last year's sales decline hit the domestic brands hardest, while Asian and European nameplates showed gains. The traditional American manufacturers -- excluding GM's and Ford's foreign nameplates and DaimlerChrysler's Mercedes -- took 53.7 percent of the market, a drop of 3.2 percentage points.
U.S. auto executives said some of the decline reflected strategic decisions to reduce their least profitable activities, such as sales to rental car companies, as part of their financial recovery efforts.
Ford's market analyst George Pipas said the sales drop was due partly to the discontinuation of the Taurus sedans which had been sold primarily to fleets and the Freestar minivan.
The Dearborn automaker also was hurt by falling demand for large SUVs, which fell out of favor during the gas price hikes, and big pickups. Pickup sales are weakening in tandem with the housing sector.
Detroit's automakers are likely to remain under pressure this year as demand for those large and traditionally lucrative vehicles is not expected to recover quickly.
In addition, competition is increasing in the large pickup segment, with GM now launching a new line of trucks and Toyota scheduled to introduce a full-size pickup in February.
"The full-size truck market is going to look very much like a sumo wrestling match," Pipas said. "There's going to be a lot of pushing and shoving."
Sales of Ford's F-Series pickup fell 21 percent in December, but it remained the best-selling truck in the market.
Ford benefited from buoyant sales of its Ford Fusion, Mercury Milan and Lincoln MKZ cars.
Overall, car sales edged up 1.5 percent, accounting for 47 percent of the market in 2006, while sales of light trucks -- minivans, pickups and SUVs -- declined 5.9 percent.
Of the U.S. automakers, GM posted the biggest annual sales decline despite launching large SUVs early in 2006 and new pickups late in the year.
But Paul Ballew, GM's executive director of market analysis, said the decline masked encouraging trends: higher selling prices, lower sales incentives and lower fleet sales.
"It was tough for us to accept a sales decline, but as we look back on the year, it was the right thing for us to do," Ballew said.
GM and Ford both reported 13 percent sales declines in December, while DaimlerChrysler's Chrysler Group recorded a 0.5 percent gain -- but Chrysler's incentives ballooned last month to $4,416 per vehicle, compared with $3,829 at Ford and $2,393 at GM, according to Edmunds.com.
In a recent interview, GM's North America sales chief Mark LaNeve said Chrysler was spending "astronomical amounts of money" to move the metal -- and that strategy was unfortunately having an impact on GM's sales.
By contrast, Toyota spent $1,363 in incentives per vehicle and Honda Motor Co.'s discounts averaged $472 in December.
"Pricing in the industry has been under pressure for a couple of years," said John Mendel, senior vice president at American Honda. "But we've tended not to play that game as much as the domestics have -- which reflects in our residuals."
Toyota executives said they expect to increase U.S. sales again this year by 6 percent, to 2.68 million cars and trucks.
You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.
© Copyright 2007 The Detroit News. All rights reserved.
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