The Car Geek: Foreign Carmakers Outsell Detroit’s Big 3

The Car Geek

Thursday, August 02, 2007

Foreign Carmakers Outsell Detroit’s Big 3

Auto industry’s bad fate comes like buses. You wait ages for one to come along and then two or more come along at the same time.

It seems like I’m getting used to receiving bad news from the industry. Come rising gasoline prices, slashing of jobs, closure of facilities, diminution of labor wages and benefits, declining sales – whew! – the list seems to be endless. The latest negative issue, so far, is the dropping of monthly market share under 50%. It is alarming! But could you think of non-alarming news involving the auto industry in the past few months? You might find it difficult to recollect.

Earlier, the Detroit News reported that foreign rivals outsold domestic automakers for the first time in history in July - a grim milestone that came as the entire U.S. auto industry was battered by its worst sales month in nearly two years.

In July, domestic automakers had a record low 48.1 percent of the market. The figure represents domestic automakers' shrinking presence in a market they once dominated. Across the country, rising gas prices, declining housing markets and other economic concerns pulled the sales and further hampered turnaround plans of Detroit automakers.

"This is certainly not the way we wanted to start the summer selling season," GM sales analyst Paul Ballew said last Wednesday in a DetNews interview. "We have been running below where we discussed we need to be in terms of the North American restructuring plan."

GM reported a 22.3 percent drop in sales. Ford dived by 19.1 percent and Chrysler fell 8.4 percent. Even Japanese automakers weren't impervious. Sales were down 7.3 percent at Toyota and 7.1 percent at Honda. Only Nissan managed to eke out a 1.7 percent raise.

Even so, Toyota outsold both Ford and Chrysler. Demand nationwide is at its weakest in more than a year and is falling short of the already underwhelming 16 million unit sales analysts predicted earlier this year, said DetNews. "It was a tough industry last month, no doubt about it," said Bob Carter, the group vice president and general manager of the Toyota division in North America.

"This is more than 30 years in the making," Ford sales analyst George Pipas said. He noted the company isn't worried about its ranking - instead, its focus is on returning Ford to profitability as a smaller automaker. Ford will not "get off on some sales race baloney," Pipas said.

According to experts the industry tends to suffer in a wobbly economy because consumers often can delay the purchase of a new vehicle. "All that home equity that people were building up as their homes appreciated has dried up because home prices have started to pull back," said Alex Rosten, the manager, pricing and market analysis at automotive research site

He added California, where sales have been especially slow, accounts for about 10 percent of U.S. vehicle sales. The domestics' slide wasn't expected until after this summer, he said, because big summer promotions typically bolster sales.