Big Three Lose Ground in Home Market

by : Anthony Fontanelle

When the U.S. sales figures for June were released, three things were made apparent: the market is down; pickups need more incentives to sell; and domestic automakers are losing ground in their home market.

In June, Detroit's Big Three was deeply wounded again by declining sales while the Toyota Motor Corp., Honda Motor Co., and the Nissan Motor Co. saw double-digit increases. The General Motors Corp. sales fell 21.3 percent compared with June of 2006, while the Ford Motor Co.'s sales dived 8.1 percent and the Chrysler Group's dropped 1.4 percent. Meanwhile, Nissan posted an enormous 22.7 percent raise, Toyota saw a 10.2 percent gain, and Honda sales rose 11.5 percent.

According to Autodata Corp., Ford barely managed to hold off Toyota as the nation's second largest auto seller in June and for the first half of the year, but Toyota narrowed the gap from 319,208 vehicles in the first half of 2006 to only 39,558 in the first six months of 2007. The declines for GM and Ford came as they continued to wean themselves from rental car companies.

Paul Ballew, GM's executive director of global market and industry analysis, blamed the decline on the company's planned reduction in fleet sales and a tough comparison with June of 2006, when the company offered a big 72-hour sale.

GM also was surprised that Toyota offered zero-percent financing for 60 months, which cut into GM's pickup truck sales, Ballew said. The company may wind up altering its strategy of offering fewer incentives on pickups, he said. "If we have to make some changes in our incentive play, we will, because we are not going to cede ground in a category that we feel we're best in class in," he said.

GM's top-selling pickups, the Chevrolet Silverado and GMC Sierra, saw declines of more than 20 percent, while sales of the Toyota Tundra increased 146.3 percent. According to the automotive Web site, GM had about $3,600 worth of incentives on the Sierra and Silverado 1500 models, but Toyota bumped its Tundra incentives to an average of just over $5,000.

The largest American automaker said that a bright spot was its new large crossovers, the Saturn Outlook, GMC Acadia and the Buick Enclave, all of which are selling faster than the company can make them.

Then again, Ford said that sales of its F-Series pickup, the best-selling vehicle in the U.S., dropped 0.5 percent. But its Focus small car increased by 20 percent. Trusted , powerful engines, efficient radiator, and other auto parts pushed the car's sales upwards.

Ford's daily rental sales dropped 39 percent compared with a year ago as it continues toward its goal of sinking rental car sales, reducing such sales by 89,000 during the first half of the year and 22,000 in the month of June. "It more than accounts for the decline in Ford sales this month," said George Pipas, Ford's top sales analyst.

Additionally, the DaimlerChrysler AG said that Chrysler car sales were up 55 percent but truck sales nearly offset the gain. Jeep brand sales were up 19 percent, led by the new four-door Wrangler, the company said.

Jim Lentz, the executive vice president of Toyota's U.S. division, said that the automaker expects to reach its goal of selling 200,000 Tundras this year. It hopes to reduce incentives as awareness grows but also could respond if the competition makes changes. "It all depends on what they do with their incentives, what the segment is doing, and what the customer is demanding," Lentz said. The Japanese automaker had the best June ever for its car sales, which were up 8.9 percent over the same period in 2006.