Asian Vehicles Making Inroads in U.S. Market
General Motors Corp. sold Renzie Davis his first two cars and a truck. When the Chicago engineer decided to replace his 1999 Chevy Blazer this spring, though, he chose a black 2001 Highlander sport-utility vehicle from Toyota Motor Corp.
“After I had the Blazer a year, everything was rattling,” Davis said. “Now it’s like I have a luxury car after driving a beater.”
Davis was one of tens of thousands of Americans who switched to Japanese and South Korean auto brands this year. That trend has lifted their share of the world’s biggest new-vehicle market to 30.1% after the first 11 months of the year and positioned them to rack up their best mark ever when final 2001 sales are announced next week.
Toyota is poised to cross the double-digit share mark--a first for a foreign-based auto maker--after winning 10.1% of the U.S. market through Nov. 30.
The Asian manufacturers’ market share is up 2.2 percentage points from 2000, with analysts predicting more gains when the tide of no-interest loans and other incentives offered by U.S.-based rivals ebbs early next year.
“We see the Big Three giving up some room for Japan’s Big Three,” said Koji Endo, a senior analyst at Credit Suisse First Boston Japan, referring to Toyota, Honda Motor Co. and Nissan Motor Co. “The Japanese are successfully winning market share in the light-truck segment, and that’s where more growth can be expected.”
The inroads would have gone further if not for conservative investment plans that have left some makers short of truck-building capacity, said Rebecca Lindland, a senior analyst at forecaster DRI-WEFA.
“It’s a factor of Japanese risk management,” she said. “I don’t see them expanding exponentially, because that’s not part of their culture.”
Still, the U.S. recession could add more to the Asians’ allure as American motorists pay more heed to quality and price.
Toyota and Honda dominate U.S. surveys on performance of vehicles in the first 90 days of ownership. Asian models had the highest initial quality in five of seven truck categories and six of nine car segments, according to the latest J.D. Power & Associates survey.
On price, this year’s 13% drop of the yen against the dollar is sharpening the competitiveness of Japanese exporters.
The domestic share of GM, Ford Motor Co. and DaimlerChrysler’s Chrysler Group probably will shrink to 63.2% for all of 2001 from 71.4% in 1997, DRI-WEFA forecasts.
By 2010, domestic brands will fall to 57.9% and Asia’s share will rise to 32.7% from 30.3% this year, the forecast says.
“It’s still ugly--and in some cases it’s worse--because the South Koreans also are gaining in small cars,” Lindland of DRI-WEFA said, referring to Hyundai Motor Co. and its Kia Motors affiliate.
Much of the Asians’ gains are coming from light trucks--pickups, minivans and SUVs--with Toyota benefiting from strong sales of the Highlander SUV and Tundra pickup and Honda from demand for the Acura MDX luxury SUV.
“Japanese auto makers are now in a position to see a more mature product mix in North America,” said Steve Usher, a senior analyst at J.P. Morgan Securities Asia Ltd. in Tokyo.
For domestic brands to halt the trend, analysts said, they will have to win back consumers such as Highlander-owner Davis.
“Now I consider myself just being smarter about my money,” the 27-year-old said. “You may pay a few extra dollars for imports, but you get it back in the trade-in.”
