Chrysler has the Challenger, Charger, 300. Gm is too little too late; as usual.
BTW, I built this car 5 years ago. People that see it want it - it's all curves. Detroit should build 'em.
Posted on 09/11/2006 9:22:16 PM PDT by stainlessbanner
DETROIT (Reuters) - U.S. auto sales have been slipping as domestic automakers have struggled to boost sales amid high gas prices this year -- a trend that will continue into next year, industry executives and analysts said.
Industry-wide sales are down more than 4 percent this year as U.S. automakers such as General Motors Corp. (NYSE:GM - news) and Ford Motor Co. (NYSE:F - news) struggle with high labor costs, loss of market share to foreign rivals, and weakening sales of trucks and sport utility vehicles - typically their largest profit generators.
Both GM and Ford are trying to stem billions of dollars in losses while losing market share to Asian rivals such as Toyota Motor Corp. (7203.T) and Honda Motor Co. Ltd. (7267.T).
Analysts and experts say a softening economy will likely lead to a further decline in vehicle sales in 2007.
"I do have some real concerns about 2007," billionaire investor Wilbur Ross told reporters at the Reuters Autos Summit in Detroit. "It seems to me that the negative dynamics that were present in 2006 will be present for the most part in 2007."
"Pickup trucks correlate historically pretty well to construction trends," Ross said. "So the problem that the home builders are having now very likely will have some impact on that area."
Slowing housing starts can mean slower pickup truck sales, since the vehicles are often driven by construction crews. The auto industry benefited in recent years from the boom in housing refinancing at lower interest rates, but U.S. sales of pickup trucks have fallen nearly 14 percent so far this year. Overall sales at U.S. automakers are down about 11 percent.
"We'll see some more softening in the second half of the year," Erich Merkle of research firm IRN Inc. told Reuters, adding he expects a further decline next year.
Merkle estimates U.S. light vehicle market sales on a seasonally adjusted, annualized basis of about 16.3 million vehicles in 2007, down from an estimated 16.6 million units in 2006.
"To get the right context, I'm not just comparing this year's numbers to 2005, I'm also looking at 2004," Merkle said. "2005 was quite a mess because of volatility created by employee discounts," he said, referring to a massive incentive program spearheaded by GM last summer.
GM sales analyst Paul Ballew in earlier this month said he expected a "moderate falloff" in industry sales in 2006, after the world's largest automaker reported flat August sales compared with a year earlier.
Recent sales declines had been blamed on problems specific to the U.S. Big Three, who rely on trucks for almost 60 percent of their sales. But in August, analysts also cited economic factors like rising interest rates and a slowing housing market -- raising the specter of a deeper, industry-wide slump in the months ahead.
PRODUCTION CUTS
Ford in August slashed fourth-quarter production by 21 percent, while GM more recently cut output for the same quarter by 12 percent, in efforts to align production with demand.
"We don't expect any major uptick from current run rates," Keith Wandell, president and chief executive of auto parts supplier Johnson Controls (NYSE:JCI - news), said at the Reuters summit.
"Clearly as Ford and GM and others announce these production cutbacks, if there's some major inventory adjustments that take place, there may be some pipeline fill back up," Wandell said.
Earl Hesterberg, president and chief executive of dealership chain Group 1 Automotive Inc. (NYSE:GPI - news), said he expects a decline in sales this year, but there is a possibility they may flatten out in 2007.
"I have no reason to believe they will be any better or significantly worse," Hesterberg said at the summit. "We are settling into a range here. There is some hope that interest rates will stabilize or go down a little bit but no one expects them to drop significantly."
Argus Research analyst Kevin Tynan said he expects overall production in the industry to remain relatively stable, but added that U.S. automakers will likely sell less as Japanese and Korean makers cannibalize their sales.
"With high gas prices, people on the fringe will keep moving toward more car-type vehicles," Tynan said. "As that shift happens, the import brands are really there with a much more balanced portfolio of products."
The problem isn't a lack of product, it's that Ford and GM dumped most of their R&D money into large trucks and SUVs, and skimped on their cars. Now that the truck/SUV market is collapsing, they have to fall back on products that aren't as good (in general, there are exceptions like the Fusion) as the competition.
A very good point. And even in those truck markets the Japs have made tremendous improvements in the last few years. Things like the Toyota Sequia are pretty darn nice.
Deja vu of the 1980s. Detroit and Dearborn never learn.
Their quality is crap.
Not quite. This time they actually *have* smaller car options in their lineup and they're not hideously embarrassingly bad, but they're not as good as the competition. In the 80s, they didn't have anything small that wasn't a sick joke (Chevette) or a rebadged import.
The sad part is that they spent all their money on making bigger and better trucks and neglecting most of their other segments. For example, in a world where the Chrysler LX cars are mopping up the competition in the "full size" car segment, the appropriate response isn't going to be "put a V8 in our FWD product" or "promote the heck out of our boring FWD/AWD car that doesn't have a V8". The appropriate response is "bring out a badass V8 RWD car that people want to buy." And they're simply not doing that.
A great case in point is the Chevy HHR. Instead of either resigning the market segment or instituting a crash project after the clear success of the PT Cruiser, GM decided to hire the PT Cruiser designer away and wait four years, then come out with their distorted looking version.
Honda and Toyota inovate circles around the "Big Three" and have better quality product. It's a wonder the public has been as patient and loyal as they have.
Ford and GM have a much worse problem than that.
There's an entire generation and a half of people that have gotten out of the "habit" of buying domestic. For most of Ford and GM's product line, every year the average buyer's age increases by about a year. Think about it - the implications are *very* unpleasant for Ford and GM.
Chrysler has the Challenger, Charger, 300. Gm is too little too late; as usual.
BTW, I built this car 5 years ago. People that see it want it - it's all curves. Detroit should build 'em.
--- For most of Ford and GM's product line, every year the average buyer's age increases by about a year.---
Yes, and for a whole generation of kids Honda Civics have become the universal hotrod, not the Mustang or Camaro. Those are your daddy's car.
"A great case in point is the Chevy HHR. Instead of either resigning the market segment or instituting a crash project after the clear success of the PT Cruiser, GM decided to hire the PT Cruiser designer away and wait four years, then come out with their distorted looking version."
GM has zero vision. They follow late, and slow. The HHR being an example.
A criticism of the PT Cruiser initially was lack of power, so Chysler introduced a higher powered turbo motor option.
Rather than at least follow late and slow with a product which competed, GM introduced the HHR WITHOUT a higher powered motor option.
The HHR looks okay, but is not anything beyond the minimum to be expected, due to GM's ultra conservative approach to their business.
Bean counters rule at GM. They are turning out better vehicles, but they usually fall short of the competition.
I'll stick with mine, thanks.
And, by the way, most of the would-be Camaro owners (those that won't get a Mustang) will probably end up buying the Challenger, because it'll be out first, and it looks just like the old car. The new Camaro is too polarizing - too many people are turned off by it.
Exactly. They need to clean out the beancounters with a flamethrower, so as to cauterize the wound to prevent reinfection.
GM is making better vehicles, true - but they don't make anything inspiring, that makes you want to run in and buy one. There's no decent halo car, other than the getting-to-be-unaffordable Vette. Nissan's back in business partly due to the fact that the Z is back in the form of the 350Z, it's affordable, and it drags people in the showroom to look at it. Guy goes in to drool over the Z, drives out in an Altima or Maxima or Armada because he needs something for the family. The Corvette can't do that, it just costs too much; people come to drool, see the pricetag and run out of the showroom (if the dealer experience doesn't do it first).
Gas is going down in price. Also, GM has developed hybrid SUV's that get very good gas mileage. Look for them in 2008. Already,they also have SUV's which can run on ethanol. Also, GM is doing better. I am sick of people bashing the only American manufacturing which remains.
But they make it so easy....
You are another victim of the pro-Japanese automotive media.
All that is necessary is make a product the consumer is willing to buy at a reasonable price.
I bet a year's salary if Ford was selling new Fusions for $8,999 they couldn't make them fast enough.
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