Competitive Connection
January 14, 2008
A look at the competition
Fuel economy hits new record in 2007
Cars and light trucks sold in the United States hit a new mileage record for the 2007 model year, with average fuel economy improving almost 1 mile per gallon.
According to a report by the National Highway Traffic Safety Administration, fleet-wide fuel economy in the United States averaged 26.6 mpg, up 3.5 percent from the 2006 model year. Passenger cars averaged a new high of 31.2 mpg, while light trucks averaged a separate record of 23.1 mpg.
But not all automakers hit the targets. DaimlerChrysler – which ceased to exist in August – faces a hefty fine for the 2007 model year, on top of a record fine for the 2006 model year. NHTSA hit six manufacturers with fines totaling more than $40 million for missing 2006 mileage standards, including a record $30.3 million fine for Daimler AG's imported fleet handed down in October.
Estimated 2007 Model Year Results:
Manufacturer |
Domestic Cars |
Imported Vehicles |
Light Trucks |
GM |
29.9 mpg |
31.9 mpg |
22.6 mpg |
Ford |
29 mpg |
29.9 mpg |
22.2 mpg |
DC |
28.6 mpg |
24.7 mpg |
22.6 mpg |
Toyota |
31.6 mpg |
38.5 mpg** |
23.9 mpg |
Honda |
33.5 mpg |
39.6 mpg |
25 mpg |
Nissan |
25.6 mpg |
34 mpg |
22.9 mpg |
**Includes Prius hybrid
—Source: The Detroit News, January 3, 2008
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A look at the competition
Chrysler aims to trim rentals to 20% of sales
Already bracing for a slowing U.S. market, Chrysler wants to reduce sales of vehicles to government and commercial buyers, such as rental-car companies, by perhaps as many as 200,000 autos this year.
The newly private automaker is undergoing dramatic changes -- from slashing as many as 25,000 jobs to cutting nameplates -- and the change in its sales strategy is part of Chrysler's efforts to make it a retail-based company that relies on what Chrysler President Jim Press calls a "pull-driven system."
J.D. Power and Associates estimates that Chrysler's fleet sales last year were about 30%. The market-research company estimates the industry fleet average is about 21%. Edmunds, which also studies automaker's fleet sales, has numbers for the first half of 2007 that show nearly half of the Chrysler brand vehicles sold went to fleet customers.-- Source: Detroit Free Press, January 9, 2008
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What others are saying . . .
Ford says it could shrink more before it rebounds
Ford might not be done shrinking. A weakening U.S. economy, aggravated by aggressive expansion and price discounting by foreign-owned rivals, could mean further declines before Ford is able to stabilize sales and production levels and begin growing again, Ford Chief Executive Officer Alan Mulally said.
Emphasis on profits over chasing market share is music to the ears of Wall Street analysts and shareholders. But it still is worrisome to anyone watching to hear that Ford, which shed more than 40,000 people from its North American payrolls last year, may not be done downsizing.
Overall, Mulally was upbeat about Ford's progress on its turnaround plan. The firm has cut its losses substantially and posted better-than-expected earnings in each of the first three quarters of 2007. And while the automaker still is spending more cash than it is bringing in, the rate of cash burn is proving to be less severe than expected when the Way Forward restructuring plan was launched two years ago.—Source: Detroit Free Press, January 9, 2008
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Then and Now
GM's sees 75% of sales from outside U.S. within decade
GM will probably get 75 percent of car and truck sales from outside the U.S. within a decade, Chief Executive Officer Rick Wagoner said.
The automaker plans to push sales in the fastest-growing markets as demand in the U.S. stagnates, Wagoner said. In the third quarter of last year, 58 percent of GM's sales came from outside its home market. GM relied on the U.S. for most of its volume as recently as 2004.
Preliminary results indicate GM set 2007 sales records in Europe, Asia and other non-North American markets, Wagoner said, while U.S. volume fell for the eighth straight year.
GM is banking on redesigned models such as the Chevrolet Malibu and Cadillac CTS sedans to help end its U.S. sales decline, he said. GM's U.S. sales fell 6 percent last year, and its market share dropped to 23.7 percent, continuing a decline from its 1962 peak of 51 percent. --Source: Bloomberg, January 7, 2008
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Then and Now
What products are growing in the gas price driven market
During 2007, just three segments of the market grew, as defined by Autodata Corp.: Small cars, small sport utility vehicles and "crossovers," which are SUV's built on the underpinnings of cars. The old profit spinners – midsize and large SUVs and pickup trucks – all slumped, as did sales of minivans and large cars.
Crossovers are the big winners. They tend to be easier on gas than '90s-style pickup-based SUVs such as the Ford Explorer – although not always that much more efficient. But a lot of consumers have decided that lighter and a little more efficient is what they want in an all-wheel drive family wagon. Crossover sales surged 15.9 percent in 2007 to more than 2.4 million vehicles, according to Autodata figures. --Source: The Wall Street Journal, January 7, 2008
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A look at the competition
Transplants facing a challenge is U.S.
The auto industry's troubles, once centered on Detroit, are spreading to other manufacturers amid a slump in U.S. vehicle sales that is likely to turn 2008 into the weakest year in at least a decade.
Toyota, which averaged annual growth of about 10 percent from 2004 to 2006, expects U.S. vehicle sales growth of 1 percent to 2 percent in 2008. Toyota will also have to scramble to sell the Tundra full-size pickup trucks it is now producing at plants in Texas and Indiana. So far, Tundra sales have missed expectations, despite offers of zero-percent financing and other incentives.
Other foreign automakers are showing signs of even greater difficulties in the U.S. market. Nissan and Hyundai have boosted sales by selling more vehicles to rental-car companies, a low-margin business that the Big Three are trying to scale back. Hyundai has a new car plant in Alabama that is operating well below full capacity, which narrows profit margins on the cars it makes.--Source: Wall Street Journal, January 4, 2008
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What others are saying . . .
New Chevy Malibu in short supply
GM’s ad push for the 2008 Chevrolet Malibu says the highly touted vehicle is a car American consumers can't ignore. That may be true, but they also can't get them.
The company conceded this week that the Camry fighter is in short supply. While that may be great news for the No. 1 automaker's efforts to make a mainstream sedan that can sell at MSRP, it's a big problem for marketing.
Some analysts say the shortage of product in showrooms reflects the barrier between marketing and production: The launch came with a $150 million awareness-building ad push starting in the fall, but dealers must hope consumers hold out until spring.
According to Mark LaNeve, GM North America vice president of vehicle sales, service and marketing, the company won't be able to meet demand until then. GM is counting on the car, which went on sale Nov. 1, to conquer buyers of vehicles like Honda Accord and Toyota Camry.—Source: Marketing Daily, January 7, 2008
(Editor’s Note: GM recently announced it has linked Orion and Fairfax assembly to meet the building retail demand for the just-named North American International Auto Show Car of the Year, Chevy Malibu.)
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