Fuel Prices Pump Up Imports
The U.S. auto market continued to be driven by prices at the pump, not just on dealer lots, as Detroit’s Big Three and their big trucks ceded more ground in May to Asian rivals and generally more fuel-efficient models.
Overall sales for the month fell to 1.49 million cars and trucks, a decline of 0.7% from a year earlier, Autodata Corp. reported Thursday.
Persistent high fuel prices have scared off many customers, said David Healy, a Burnham Securities analyst based in Sierra Vista, Ariz.
“Gasoline stations are the only retail business that post their prices in foot-high numbers,” he said. “People see them and get panicked, and that’s what happened in May.”
Pickups, sport utility vehicles and minivans have outsold passenger cars for almost six years. In May, the gap narrowed, with trucks accounting for 50.9% of the market, down from 54.1% a year earlier.
“There is genuine turnaway from big and mid-size SUVs industrywide,” said Healy, who has predicted that market leader General Motors Corp. could eventually abandon mid-size SUVs built on truck chassis. “They’d be stupid if they didn’t. Sales are collapsing. For two-thirds of the price you can get a car-based SUV that does the same things.”
Indeed, GM announced Thursday that it would invest $332 million in its factory in Warren, Mich., to boost production of fuel-saving six-speed automatic transmissions.
They will be employed on models such as the Saturn Outlook and other forthcoming crossover utility vehicles, which blend elements of cars and trucks.
For May, GM said, sales fell 12.4% from a year earlier. Ford Motor Co. and DaimlerChrysler’s Chrysler Group posted declines of 2.2% and 10.9%, respectively.
Toyota Motor Corp., the leading foreign-based manufacturer, posted another winning month, with total sales rising 17%. The company’s car sales increased 24.6% from a year earlier, with the Corolla compact and the new Yaris subcompact leading the way.
Toyota also did well on the truck side, with unit sales rising 6.6%. The company posted strong results with crossovers such as the RAV4 small SUV, whose sales more than doubled, and the new FJ Cruiser.
Honda Motor Co.’s May sales rose 16.1% overall, led by a 21% jump in car sales, as buyers grabbed the new Fit subcompact and the Civic compact. Nissan Motor Co.’s sales were off 7.3%.
Hyundai Motor Co. of South Korea reported an increase of 5.2%, with strong auto sales overcoming lower truck sales.
The U.S.-based automakers have seen their market share decline to 54.6% this year from 57.4% in the first five months of 2004.
Asian-based automakers rose to a 38.6% share from 36.5%. European manufacturers accounted for 6.7% of sales through May, up from 6.1% a year earlier.
The effects of fuel worries could be seen in sizable percentage declines in sales of many larger vehicles, analysts noted. Among them were Ford’s Expedition, down 45%, and GM’s GMC Envoy, down 40%.
Still, analysts said, many big SUVs such as the Chevy Tahoe and luxury models such as the Cadillac Escalade continued to sell well, along with large trucks that can be used for farming and construction.
Sales trends favoring cars over trucks will probably continue through the summer, said analyst Jesse Toprak of auto information service Edmunds.com in Santa Monica.
“Smaller vehicles are grabbing the limelight and becoming cool,” he said. “Large SUVs are sort of out of fashion.”
Summer may also bring more incentives intended to move out 2006 models, such as the nointerest loans and fuel cost subsidies that Ford announced Wednesday, Toprak said.
He predicted an increase in auto leasing as rising interest rates push up the total monthly costs of auto purchases.
One lessor is Stacy Hoffberg, director of special events at the Petersen Automotive Museum in Los Angeles, who picked up a fully loaded Audi A4 last month.
“It’s the first time I don’t have a BMW,” she said. “Their prices were too high.”
An SUV won’t fit in her garage, she added, and gasoline-electric hybrids don’t yet have the performance she seeks.
Attorney Bob Wolfe, however, is pleased with the Honda Civic hybrid he acquired in February to replace his Infiniti G35. It serves him well on his 90-mile round-trip commute between Manhattan Beach and Orange County, where he is a state appellate court mediator.
“I get about 550 miles between fill-ups” of less than 12 gallons, or more than 45 miles per gallon, he said. “So I don’t have to look at gas prices.”
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Closing the gap
Asian automakers continue to chip away at U.S. makers’ share of the U.S. market.
*--* May sales % change Year-to-date (In thousands of units) from May ’05 market share General Motors 335.4 -12.4% 23.5% Ford 260.7 -2.2 17.4 Toyota 235.7 +17.0 14.6 Chrysler Group 191.3 -10.9 13.7 Honda 141.8 +16.1 8.9 Nissan 86.7 -7.3 6.4 Hyundai 42.5 +5.2 2.8 Mazda 27.3 +2.5 1.7 Kia 26.5 +3.9 1.7 BMW 24.7 +7.1 1.6
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Source: Autodata
