Posted on 11/14/2005 1:29:03 PM PST by BurbankKarl
DETROIT -- This may be hard to believe, but the Big 3's October sales collapse was even worse than it looked.
Retail sales -- normally the most profitable automotive sales category -- fell far more than the weak total sales figure that the automakers announced. Fleet sales to businesses, governments and daily car rental companies kept the Big 3 afloat.
"No one is happy with the retail numbers inside these (October) industry numbers," said Chrysler group sales boss Gary Dilts in a conference call. "It is severe. A double-digit (decline) on retail is something we have not had much of."
Overall, sales of the Big 3's domestic brands declined a cumulative 20.7 percent. But retail volume at General Motors, Ford Motor and the Chrysler group collapsed. GM's retail sales fell about 30 percent last month, while Ford Motor reported a 34 percent drop. Chrysler said only that retail sales fell by "a double-digit decline."
Steering clear of showrooms
Retail customers simply steered clear of Big 3 showrooms in October. "The traffic is off all the way around," says Glenn Hartzheim, owner of Hartzheim Dodge in San Jose, Calif.
Fleet sales include vehicles sold to businesses, government agencies and daily car rental companies. Automakers often lose money on sales to daily rental fleets, but other fleet sales can be profitable.
For each of the Big 3, fleet sales accounted for an unusually big chunk of total sales.
GM's fleet sales generated 33.5 percent of its total October volume, up from 25.8 percent for the period a year earlier. Ford Motor's fleets also accounted for 33 percent of October sales, up from 24 percent a year earlier.
The Associated Press reports that Chrysler's fleets shot up to 40 percent of its October sales. Chrysler doesn't report precise figures for monthly fleet unit sales. Dilts acknowledged that commercial sales -- excluding sales to daily rental fleets -- rose 119 percent in October. He did not indicate whether Chrysler increased sales to rental fleets.
Chrysler also notes that fleet sales for the third quarter totaled 17.2 percent of its U.S. sales, up from 13.8 percent in the third quarter of 2004.
For the industry as a whole, fleet sales represented more than 25 percent of the light-vehicle market in October, says Bob Schnorbus, chief economist for J.D. Power and Associates. In the first nine months of the year, fleets accounted for about 22 percent of industry sales, he says.
The Big 3 sell an estimated three out of every four fleet vehicles, Schnorbus says.
Toyota Motor Sales U.S.A. Inc.'s monthly fleet percentage typically remains in the single digits, the company says.
"Our fleet runs between 6 and 7 percent," says Xavier Dominicis, company spokesman. "October was typical."
The Big 3 traditionally have sold a higher percentage of vehicles to the fleets than the imports. And Chrysler's Dilts defends the practice, noting that commercial fleet sales are "good business."
Chrysler did well selling minivans, Jeep Grand Cherokees, Dodge Chargers and Chrysler 300s to commercial fleets last month, he says.
Poor residual values
But heavy fleet sales can hurt a vehicle's residual values. That's why Ford has tried to limit fleet sales of its new Five Hundred sedan.
General Motors also has tried to limit fleet sales. "We have increased our commercial fleet sales -- which are profitable sales and good sales for us to increase -- and we've decreased our daily rental," says GM spokeswoman Deborah Silverman.
Schnorbus says the "strength on the fleet side is partly due to some legitimate strength in the commercial side of the market. But I wouldn't rule out the possibility that they're pushing fleet to smooth out their production and soften any weakness on the retail side."
Art Spinella, president of CNW Marketing Research Inc. in Bandon, Ore., says autumn is a strong season for commercial fleet sales. And Spinella says heavy fleet sales are actually a sign of the economy's strength.
"The fact that fleets are back in the business is good, primarily because they have some confidence that the economy is back," Spinella says.
"In 2001 and 2002, fleets -- whether business or governmental -- were all pretty much out of the market," he says. "In bad times, they will hold on to vehicles for a long time trying to squeeze out every mile."
So how did the non-Detroit makers do, or is this because of Greenspan's battle against economic growth?
It is clear that Toyota and Honda are grinding them into dust. RIP
make a good, safe, economical car and sell it at a reasonable price and people will buy it.
make a good, safe, economical car and sell it at obscene prices, and you get what you deserve.
Nope, they did it to themselfs. The Ford family is proof that the old man was a mental leap well apst any of his progeny. Chyrsler, er Diamler, is doing waht Germans do with inferiors. And GM 'Robert S. MacNamera'-ed themselfs by trying to tell crap as 'that car you knew we could build'.
This might explain why Ford has called us 2-3 times in the last month asking us to consider purchasing a new vehicle.
Not exactly. A good friend of mine is a Toyota salesman in Phoenix and he told me he is having a terrible month. Nothing with a V8 is moving and the only car that is selling is the Camry.
Ford is selling F150's and Mustangs and that's about it.
Crapboxes.
Nissan and Hyundai make better cars right in the US in MS and AL.
Theres no need to buy American.
And yes, the Sonata is much better quality than many GM and Ford vehicles.
There is no problem in the automobile industry that good product will not solve.
TOKYO -- As Toyota Motor Corp. cranks up its North American factories, it will reduce exports from Japan, right?
Wrong. Toyota is pushing its exports to new highs, and North America is the prime target.
In the current fiscal year ending March 31, 2006, Toyota expects to export 1.04 million vehicles to the United States, Canada and Mexico, up more than 20 percent from a year earlier. That's a record. Toyota's annual exports to North America have never topped 1 million units.
"Demand has been stronger than expected," says Takeshi Suzuki, Toyota's senior managing director in charge of the finance and accounting group. "It's not proper for us to keep customers waiting. So we have expanded capacity both at home and abroad."
I recently purchased a 2005 Hyundai Elantra and am very happy with my selection.
After months of "employeee pricing" the bottom feed next years customers. To make sales in the past few months they lowered their prices so low people who would have bougth in the next 6 months to a year bought then. Now they are suprised that they glutted the market and no one is coming around.
Well last I checked the foreign cars were just as expensive if not more so than domestic cars. Therefore the the reason people are choosing foreign cars (even those produced in America) over domestic cars (even those owned by foreign companies) must be that at least one of the criteria quality, safety, economy) you mentioned must be lacking in the domestic cars and not lacking in the foreign cars that people are buying.
Let's presume that safety and economy are relatively close between foreign and domestic cars. Then that only leaves quality that is lacking.
I don't know about you but I'm driving an 18 year old foreign car, while it is hard to find any domestic cars even half its age still on the road.
Value counts, when you are making the second most expensive purchase in the Average American's life. Even more so when it is the most expensive purchase.
Well, I bought a safe (5-star crash test rating), economical (32 mpg highway) Ford sedan almost 9 years ago for under $20k, about $3000 less than a comparably equipped Toyota or Honda would have cost. Still no mechanical problems (though I get a slight feeling the days on the mass airflow sensor ($45) are numbered). Since then, Honda's prices have jumped, Toyota has stayed steady, and the new Ford replacing mine has a lower sticker price than mine had 8 years ago.
the new Pontiac Solstice is sold out for 1.5 years, the factory is adding a third shift to keep up. that is one bright spot for GM.
Ford should stick to what they do best, trucks and Mustangs, and maybe improve the look of their small nimble foreign Focus. Dump Taurus for goodness sakes... and Crown Victorias only work for cops, I would scale back to a Camry size and convenient like competitor instead, maybe with a Tbird look. Big Sedans are a waste in an SUV world.
"I don't know about you but I'm driving an 18 year old foreign car, while it is hard to find any domestic cars even half its age still on the road."
I don't know about that... I see plenty of 20+ year old domestics on the road here next to Toyota's NA headquarters. Plenty of generation I Tauruses (20+ years old), too ...though I consider pre '97 Tauruses to be risky quality wise...
Most recent surveys, when properly analyzed from a statistical basis, show only very slight differences on average in quality... Some domestics do better than some imports and vice-versa. Its always worth looking at the actual data on a specific model, not going with preconceived notions.
After all, Hyundai has until recently built complete crap. :) Did their improved quality allow them to give 10 year warranties, or did the offer of a 10 year warranty result in higher perceived quality? Tough call, there...
Nissans are a great deal. Good car, reasonable price. Their latest big truck eats Fords, Toyotas and Dodge equivalent for lunch, despite uglier looks.
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