Ready For The New BIG 3?

Anthony Fontanelle
February 5, 2007

The Ford Motor Co. dropped to fourth spot this January. The ailing automaker is now behind General Motors Corp., the Toyota Motor Corp., and DaimlerChrysler AG's Chrysler Group. The swift fall happened while the automaker struggles to put a halt to a decade-long decline in its auto market share.

The Detroit automakers' market share in America fell to 50.6 percent in January as they try to avoid selling fewer cars and trucks than foreign companies. Ford’s domestic brands - Ford, Lincoln and Mercury - were outsold by Chrysler’s American brands – Chrysler, Dodge and Jeep. Ford’s American brand sales fell by 19.6 percent which equals to 153,026 vehicles in January while the demand for Chrysler’s brands increased to 156,308 units.

George Pipas, Ford sales analyst, dismissed the fall of the automaker in the rankings as irrelevant. "Where we are in sales races is a distraction we're not going to be bothered with," he said. "(We) are focused on restructuring our business to be profitable at lower volumes," added Mark Fields, president of Ford's Americas Group. "Our customers benefit from this plan because their vehicles' residual values will improve -- a trend we already are seeing with our newest products."

Disarray sales in January include GM, which also suffered a decline in sales. The decline is attributed to the deliberate cut in sales to daily rental fleets. Compared to last year’s numbers, GM’s overall sales reduced by 16.7 percent with 242,252 vehicles. Paul Ballew, GM's executive director for global market and industry analysis, said the company has been weaning itself off the daily rental business for the past couple of years and expects that to continue for several more months. "There's more tough medicine coming on the rental side," he added.

Fleet sales are an easy strategy to improve the market share however they offer little profit. In addition, they also impair the brand by driving down resale values and filling the roads with stripped-down versions of the vehicles. "It's a good sign that they're de-emphasizing fleet," said George Magliano, the director of North American auto industry research for Global Insight in New York. "The business isn't very profitable."

Ford sales to car rental companies decreased by 65 percent than January last year. The overall fleet sales of Ford are only 28 percent, down by 11 percent from last year’s figures. GM’s overall fleet sales were decreased 30 percent year-over-year. Its sales to its daily rental fleets were reduced by about 40 percent. Both Ford and GM also experienced a decline in retail sales last month.

"January was certainly not a stellar month," Ballew said. "We were modestly down from where we expected to be." GM's retail sales were down 8 percent for the month and the automaker is hoping for improved results in the coming months. "DaimlerChrysler has jumped in a big way," Ballew added. "So has Hyundai/Kia."

But Chrysler suggested its rivals were trying to draw away attention from their own problems. Steven Landry, Chrysler's vice president of sales and field operations, said his company's daily rental business was down by 10 percent last month and will continue to fall throughout 2007. "Our overall three-year plan is to continue to bring it down over time," Landry said.

Economists and analysts alike revealed their optimistic predictions in favor of Toyota, the fast-rising Japanese automaker famed for its hybrid technology and efficiency. Its powerful lineup is composed of reliable, tested and quality parts that include EBC brake rotors, airbags, engines and other car engines. Jesse Toprak, chief economist for the Edmunds.com auto Web site, said Ford could pass Toyota again for a few more months — but not for long. “By summer, Toyota will be in the No. 2 position permanently,” he predicted.

Source: Amazines.com