Wednesday, January 5, 2005

Max Ortiz / The Detroit News George Johnson, 66, of Lapeer looks at the 2005 Toyota Tundra at the Troy Auto Mall. Toyota and its Scion and Lexus brands sold more than 2 million vehicles in the U.S. for the first time.

Big 3 market share dips to all-time low

December sales were a mixed bag for Detroit, while Asian carmakers powered up more models.

By Christine Tierney / The Detroit News

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Impressive double-digit sales gains by Japan's top automakers drove car and truck sales in the U.S. 8 percent higher in December, boosting industry sales to a three-year high of 16.9 million vehicles for 2004.

But while industry sales rebounded sharply in December, the year ended on a mixed note for Detroit's automakers. DaimlerChrysler AG's Chrysler Group posted a 9 percent sales rise in December and a 4 percent gain for the year, but General Motors Corp. and Ford Motor Co. lost more ground to Asian rivals.

Although U.S. automakers increased incentives for the fifth straight year, their combined market share ended at an all-time low.

"The Big Three Japanese are taking share from the Big Three U.S. automakers. It's been going on a long time, and it's a steady march," said auto analyst Robert Hinchliffe at UBS Securities in New York.

GM, despite some of the industry's most generous discounts, suffered a 3 percent decline in December -- and a 1 percent drop in 2004, reflecting a dearth of new cars and trucks.

Ford Motor Co.'s sales were flat in December and down nearly 5 percent for 2004. The automaker declared 2004 the year of the passenger car, but didn't see a boost from new products like the Mustang coupe until late in the year.

Led by Toyota Motor Co.p., Asian automakers -- excluding U.S.-owned brands -- captured 31 percent of the market last year, while the combined share of Detroit automakers sank to a new low of 58.7 percent, according to Autodata Corp.

Asian rivals are churning out new models at a faster clip than Detroit automakers, which are struggling with slower sales growth and lower profits, crimping their investment plans, Hinchliffe said.

Analysts expect 2005 to be another tough year for Detroit's automakers, as Japanese, Korean and European rivals ramp up North American production.

Investment firm Deutsche Bank predicted last month that GM and Ford will lose U.S. market share again in 2005.

While the industry ended 2004 on a high note -- December's selling rate translated to a robust 18.4 million in annualized sales -- Deutsche Bank expects a glut in cars and trucks, rising interest rates and high gas prices to slow sales growth.

The impact of last year's high fuel prices was not clear: the two best-sellers were both full-size pickups, Ford's F-Series and the Chevrolet Silverado. But sales trends showed customers gravitating toward small SUVs and sport-wagons and away from large SUVs. Sales of luxury SUVs, strong in recent years, also dipped.

According to CNW Marketing/Research, a consulting firm in Bandon, Ore., incentives rose in 2004 to an average of $3,942 per vehicle, with the Big Three offering the best deals.

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Despite incentives and production cuts, GM was still left with 1.24 million unsold vehicles at the end of December, or about 75 days' supply. GM said Tuesday it would offer a $1,500 loyalty bonus for current owners who buy a new GM vehicle, on top of existing incentives.

In 2004, GM's truck sales edged 1 percent higher to 4.6 million vehicles, but its performance was dampened by a 4 percent drop in car sales.

"This is disappointing for us," said Paul Ballew, GM's executive director for global market and industry analysis.

"Our product cadence was behind our competitors," he said, but added that GM was gaining sales with new models such as the Pontiac G6 mid-size car, the full-size Buick LaCrosse sedan, the Chevy Equinox sport utility vehicle and four new minivans.

GM's Chevrolet brand posted its best year since 1988, but did not unseat Ford as the best-selling brand by nearly 19,000 units. GM's Saturn brand sales fell 22 percent last year.

The star performer in GM's portfolio, Cadillac, recorded a 24 percent surge in sales in December, reflecting strong demand for the CTS sedan and SRX SUV. Its full-year sales rose 8 percent to 234,217 vehicles, Cadillac's best year since 1990.

Among luxury brands, Cadillac climbed to third place after Toyota's Lexus and Germany's BMW, which both reported record sales in 2004, fueled by premium SUV offerings. DaimlerChrysler's Mercedes-Benz sales rose 1 percent but the marque slipped to fourth, its lowest U.S. ranking in five years.

Korea's Hyundai Motor reported a 5 percent rise in full-year sales, and its Kia brand posted a 13 percent rise to 270,055 vehicles -- finishing ahead of all the European brands, including Volkswagen, BMW and Mercedes.

Among the Japanese, Toyota sales topped the 2 million mark for the first time. Including its Scion and Lexus brands, Toyota sales jumped 22.5 percent in December and 10 percent for the full year, to 2.06 million, a ninth consecutive annual sales record. Sales of its premium Lexus vehicles rose 10.5 percent in 2004, for a fifth consecutive record.

Honda's sales bounded 31 percent in December, reflecting strong sales of the Pilot and CR-V SUVs. Its full-year sales were up 1 percent, reflecting a lull in sales prior to a string of launches in the second half of the year.

Honda's premium Acura brand reported a 16 percent jump in full-year sales.

Nissan Motor sales bounded 38 percent higher in December and were up 24 percent for the year after the rollout of a slew of new vehicles, most of them assembled in the United States.

Meanwhile, Ford and GM both plan to trim their combined output by around 7 percent during the first quarter, following production cutbacks in the last quarter of 2004.

While Japanese automakers clawed market share from GM and Ford, Chrysler held its ground after rolling out nine vehicles in 2004, including the popular Chrysler 300.

"I don't know what we would have done without it," said Jesse Greathouse, owner of the Crossroads Chrysler Jeep dealership in Oklahoma City. "All of the other products paled in comparison to what that vehicle did for us."

Chrysler's strong performance in a difficult year serves as a strong indicator that the automaker is on the path to recovery after not only slashing costs, but also speeding up model rollouts.

"The company has increased sales in 14 of the past 15 months," said Gary Dilts, senior vice president of sales at Chrysler.

He said December's strong gains augured well for the new year, with Chrysler planning to add more models, such as the Dodge Charger sedan and Jeep Commander luxury SUV.

Although Chrysler has struggled to reduce its reliance on profit-eroding incentives, the automaker introduced the "Zero-Plus" plan Tuesday, allowing customers to get zero percent financing plus rebates available on cars and trucks.

In addition, Ford extended December rebates of as much as $2,000 on some 2005 models to mid-January.

Detroit News Staff Writers Ed Garsten and Brett Clanton contributed to this report. You can reach Christine Tierney at (313) 222-1463 or ctierney@detnews.com.