Competitive Connection

March 19, 2007

A look at the competition
Toyota’s growth in the U.S.
Toyota is mindful that its gains at the expense of U.S. automakers could have political ramifications, but the company's top North American executive says that won't change its business plan.

"The way the issue is played out doesn't affect the business," Jim Press, Toyota's North American president said. "The business is you take care of customers. You make investments. Our philanthropy is up. We're doing more for the community," he said.

He also conceded that last year, nearly half of the cars Toyota sold in North America were produced overseas. The automaker has undergone an image campaign to emphasize its U.S. manufacturing plants, and Toyota is in the process of adding the capacity to build 600,000 more units in North America, or a total of 2.15 million vehicles, by 2010, Press said.

On health care, he said Toyota provides health insurance to its U.S. workers in a way that it maintains benefits and maintains fiscal responsibility. –Source: Associated Press, March 13, 2007
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Then and Now
Car Shopping Online
About seven in 10 consumers use the Internet to shop for cars today, and many car dealers acknowledge that the days of an uninformed consumer walking into a showroom are long over.

North American showrooms boasted more than 300 different models at the end of last year, according to the Power Information Network, up from 218 a decade earlier. The result: 73% of respondents in an Autobytel.com survey say there are too many new vehicle choices. In another batch of responses at the online car-shopping site, 69% said buying a car is more confusing today than five years ago. --Source: The Wall Street Journal, March 13, 2007
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What Others are Saying . . .
Chevy’s growth around the world
Since 2001, Chevy sales have increased 158 percent outside North America, making it one of the fastest growing brands in the world. Chevrolet sold 4.3 million vehicles worldwide in 2006, 2.8 million, or 65 percent in the United States.

Last year, Chevy sold 65 percent of its volume in North America, down from 84 percent in 2001. Asian sales are now 5.2 percent and European sales are 7.9 percent of GM's Chevy volume, from less than half a percentage point in 2001.–Source: Detroit Free Press, March 9, 2007
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What Others are Saying . . .
Perception of quality is key
"When you look at the actual quality, you might find the Malibu doing better than you'd expect against its Japanese competition," said Jack Nerad, industry analyst at Kelley Blue Book, a car-pricing specialist. "But it's the perception of quality that's key here. That's a mountain for the domestics to climb, to overcome the perception that they're not as well-built as the Japanese vehicles."

Honda's cars have a good reputation for quality, so the automaker doesn't need big discounts to sell them. As a result, Honda earns more money and its customers have cars that are satisfying to drive and hold their value.

Kelley Blue Book estimates a 2007 Honda Accord with a six-cylinder engine will be worth 45 percent of the sticker price five years from now, while a 2007 Malibu with a V-6 engine will hold 29 percent of its value. –Source: Detroit News, March 9, 2007
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A look at the competition
Dealer trends
Domestic dealers outnumber competitors selling foreign cars by 5 to 1.  In 2006, Chevrolet dealerships on average sold 583 vehicles, Ford sold 638 per dealer and Dodge sold 374, according to Automotive News. By comparison, Toyota dealers on average sold 1,829 vehicles, while Honda dealers sold 1,293. Automotive News reports that 120 dealers carry multiple U.S. brands. By contrast, 903 foreign-car dealers sell multiple brands.–Source: St. Louis Post Dispatch, March 9, 2007
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A look at the competition
Toyota adds incentives to sell Tundras
A month after launching the new Tundra, Toyota Motor Corp. is using incentives to help win customers in the full-size truck segment. The new Tundra, Toyota's first true full-size truck, is being closely followed because it moves Toyota into a market where about 90% of all sales go to Ford Motor Co., General Motors Corp. or the Chrysler Group's Dodge brand.

Incentives on the Tundra averaged $1,647 per vehicle in February, according to data compiled by Edmunds.com. Only the Chevy Silverado, last month's best-selling vehicle in the United States, was lower, with an average incentive of $1,529. The Dodge Ram had the highest average incentive at $5,655. –Source: Detroit Free Press, March 10, 2007