Detroit's Car Comeback Falters in Year of the Car

Strategic Insights -

The year 2005 was supposed to be a turning point for the American auto industry, with major manufacturers like General Motors, Ford, and Chrysler betting big on a new crop of sedans, coupes, and compacts to regain market share from Japanese rivals. However, the results so far are mixed, with some new models, like the Chrysler 300, showing promise, while others, such as the GM Pontiac G6 and Chevrolet Malibu, are struggling to gain traction.

Key Takeaways:

  • Chrysler's 300 sedan has been a genuine hit, lifting the company's car sales by 23% for the first three months of the year.
  • Other new U.S. cars, such as GM's Pontiac G6 and Chevrolet Malibu, are having trouble gaining ground on competing models from Toyota, Honda, and Nissan.
  • GM's sales of non-luxury cars are down 7% for the year, with the G6 and Malibu selling well enough to warrant only a single shift of production.
  • The high level of incentives on GM cars, averaging $3,635 on the G6 and $3,147 on the Malibu, suggests that demand is lackluster or the price is wrong.
  • Toyota's car sales are booming, up 23% so far this year, while Honda and Nissan's sales have declined 13% and 3.2% respectively.
  • GM's new cars have been in showrooms less than a year but are already being discounted, with the G6 and Malibu selling with rebates and incentives valued at 50% higher than the industry average.
  • The Japanese makes have built up large and loyal followings, with 60% of Toyota's sales going to current owners and 40-45% of Nissan's sales.
  • Resale values for Toyota and other Japanese makes are significantly higher than for American cars, with a 2003 Malibu selling for $9,999 and a 2003 Camry selling for $15,999.

Statistics:

  • GM's non-luxury car sales are down 7% for the year.
  • Chrysler's 300 sedan has lifted the company's car sales by 23% for the first three months of the year.
  • Toyota's car sales are up 23% so far this year.
  • Honda and Nissan's car sales have declined 13% and 3.2% respectively.
  • The average incentive package for the GM G6 is $3,635.
  • The average incentive package for the GM Malibu is $3,147.
  • The average incentive package for the Toyota Camry is $1,350.
  • The average incentive package for the Honda Accord is $743.

Sources:

  • Dow Jones Commodities News via Comtex (Apr 04, 2005)
  • Edmunds.com
  • General Motors Corp.
  • Ford Motor Co.
  • Chrysler Group
  • Toyota Motor Corp.
  • Honda Motor Co.
  • Nissan Motor Co.