US auto slump moves beyond the Big Three
With sales down 1.3 percent so far, the Japanese boost rebates. But a few US models shine.
from the June 5, 2007 edition
Page 3 of 3
Sales of Toyota's high-mileage Corolla sedans hit an all-time high in May, while its hybrid Prius accelerated onto the top 10 list of all cars and light trucks for the month. Sales of the Prius, rated at 46 miles per gallon, are up nearly 200 percent in a year.
GM says that its May sales surge was also propelled in part by consumers conscious of gas prices. Its smaller Chevy Aveo and Cobalt posted sales gains from a year ago.
But the ups and downs of the carmakers also hinge on frugal sticker prices and fresh designs.
Volkswagen, for example, isn't known for low mileage. But lower-cost South Korean brand Kia is chasing VW for the No. 9 slot in US car sales.
High labor and healthcare costs put the traditional Big Three at a sticker-price disadvantage. But from contractors to sportsmen, many drivers need powerful trucks, even when gas prices soar.
That segment of the market remains Detroit's bastion, despite Toyota's new Tundra pickup, with sales of a made-over Silverado up 15 percent from last May. But Ford's older F-Series has sagged 12 percent in that stretch.
The moral: Increasingly, car buyers are snapping up newer products, whether at the low or high end. That explains why it's such a tough year for Ford.
"They have a replacement for the F-Series that's in the pipeline," says Mr. Libby. But Ford "has to become profitable. You need money to invest in new products."
Ford accounts for four-fifths of the Big Three's loss of market share this year – a dip of 2.5 percent in all – to foreign brands. Toyota is Ford's mirror image: It alone accounts for most of the gain by foreign-based brands.
GM has many hurdles ahead. But it is benefiting from rollouts, epitomized by a Saturn brand where the entire lineup will soon be two years old or newer, says Rosten.
"GM's advantage ... comes from the fact that they were the first to act when it came time to launch a turnaround," he says. For Ford, now under a new chief executive, "I think it's gotten about as bad as it's going to get."
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