Chris LW Jan 5th, 2006 Link
Great news, in stark contrast to the rest of the industry (save for Toyota). Mark LaNeve needs to get his head examined, re: his comment that GM’s cars are as good or better than Japanese counterparts. IMHO they’ve gotten better than 10 years ago but at not at that level.
GM and Ford Lose More Market Share
By GINA CHON Staff Reporter of THE WALL STREET JOURNAL January 5, 2006; Page A3
Detroit auto makers General Motors Corp. and Ford Motor Co. lost more market share in December, and industry executives are warning that a softening housing market, higher interest rates and continuing volatility in energy prices could put a damper on U.S. auto demand this year.
Mark Fields, Ford’s executive vice president and head of the Americas, said yesterday that he expects U.S. sales in 2006 “probably won’t outshine” 2005. Other industry executives said they expect sales in 2006 to be roughly flat compared with 2005. In December the pace of light-vehicle sales fell to a seasonally adjusted annual pace of 17.17 million vehicles from a 17.94 million-vehicle pace last December.
SOFTER SALES
See the complete December U.S. auto sales data1.Paul Ballew, GM’s executive director of market and industry analysis, said he expected 2006 to largely reflect the sales performance of 2005. He said although GM sales were down 10% in December, GM was happy with its results, considering GM had a record sales month in December 2004.
While domestic auto makers predicted a flat year for 2006, Toyota Motor Corp. predicted growth in the auto market. Jim Lentz, a group vice president at Toyota, said he expected the Japanese auto maker would increase sales by 5% in 2006, on top of a 10% increase for 2005. Toyota’s market share was 13.7% in December, compared with 12.2% last year. The Japanese auto maker is preparing to open more North American factories as it shoots for a 15% share of the U.S. market.
A slow- or no-growth year for U.S. auto demand promises to intensify the industry’s market-share wars, and increase pressure on GM and Ford to take stronger medicine to reverse losses in their high-cost North American operations. GM has outlined plans to shed 30,000 jobs, mostly through attrition, by 2008. Ford says it will detail its downsizing plans Jan. 23.
Even as Detroit’s auto makers face changes to their old-line businesses, tradition dies hard. GM yesterday trumpeted its Chevrolet brand’s dethroning of Ford as the No. 1 selling brand in the U.S., the first time Chevy has won the top spot since 1986. It was an echo of the old Detroit, where Ford and Chevy defined competition in the mass market.
GM’s U.S. market share declined in December to 25.9%, compared with 27.8% last year. Ford’s market share was 17.9%, compared with 19% last year. DaimlerChrysler AG’s Chrysler Group continued to outperform its crosstown rivals, reporting a 2.3% decline in sales that allowed it to hold 14.9% of the market in December, up from 14.6% a year ago.
Mr. Fields said the debate in the U.S. auto industry should no longer be about the Big Three. “It makes for great headlines…but it’s the wrong debate,” he said. “The real focus should be the up-for-grabs Big Six — the battle among six huge North American, European and Asian companies for growth and profits in the North American market.”
December’s sales results highlighted a significant and continuing shift in American consumers’ tastes that battered GM and Ford’s profits, and poses continued risks going forward. Sales of so-called traditional sport-utility vehicles, or SUVs, built on frames similar to pickup trucks, fell sharply in December, continuing a downward trend of the past three years. Rising in the place of truck-based SUVs are so called crossovers, which are derived from passenger-car chassis.
Car makers expect sales of crossovers to outpace sales of traditional SUVs for the first time in 2006. They predict that passenger cars will continue to do well in 2006, as demand for large SUVs remains flat or declines.
While GM, Ford and Chrysler have plans to field more crossovers, analysts say these models are unlikely to return the kind of profits that truck-based SUVs generated at their peak.
The shift away from large SUVs in 2005 presents an immediate challenge for GM, which is gearing up to launch officially next week a redesigned lineup of large truck-based SUVs. These SUVs, code-named GMT-900, are central to GM Chairman and Chief Executive Officer Rick Wagoner’s near-term strategy for reversing GM’s North American losses, which have totaled $4.8 billion through the first nine months of 2005.
GM could use the SUVs to launch a new pricing strategy, aimed at avoiding a repeat of last year’s summer-clearance sale, when GM offered vehicles at employee-discount prices. The offer created a sales surge followed by several months of depressed demand.
GM offered a new round of incentives.
Incentives for some 2006 models, such as full-size SUVs, offer as much as $5,500 cash back until Tuesday. For some 2005 models, rebates for as much as $8,000 are offered until Jan. 31.
Mark LaNeve, head of GM’s sales and marketing, says one of the ways it hopes to beat its competition is to undercut its competitors in sticker prices.
“Our argument to the American public is our cars are just as good if not better and you’re paying more for Japanese products,” Mr. LaNeve says.
Gordon Stewart, head of the Harper Woods, Mich., Stewart Management Group that has three Chevy dealerships, said the public has only recently become aware of GM’s coming SUVs so he hasn’t yet heard of a lot of demand for those vehicles. He is optimistic for 2006, predicting sales will increase about 5% because of the product launches.
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