Small is Big, According to Auto Analysts

Some promising news for the auto manufacturers- With gas prices continuing to rise, it is not surprising to see fuel efficiency on the top of every driver’s priority list. As a result some of the big boys, namely Ford trucks, are taking a bit of a beating.

Remember, now is a great time to take a look at a new car. There are plenty of incentives, and dealers are clamoring to get their 2007 models off the lot to make room for 2008 vehicles.

May Sales Mostly Up
Ford a notable counter to upward trend.
by Joseph Szczesny (2007-06-02)
From Car Connection. Com

Toyota continued to tighten its grip on the U.S. market as its sales jumped 14 percent in May. The Japanese automaker continued to push ahead of both American and Asian rivals as rising gasoline prices continued to influence new car buyers across the U.S.
Even regional sales slumps in California and Florida, traditionally two of Toyota’s strongest markets, didn’t slow the Japanese auto giant’s continuing onslaught.
General Motors Corp. posted a healthy 9.6-percent increase in sales as well, while Chrysler reported a 4.3-percent sales increase. Both companies credited their gains to new, more fuel-efficient vehicles.

“We had a good month,” said Paul Ballew, GM’s general director of market analysis.
Darryl Jackson, Chrysler vice president of U.S. sales, said the company’s passenger car sales improved last month and Jeep had another strong month as the Wrangler and Patriot brought customers into the show room. Michael Keegan, Chrysler vice president of volume planning operations, disputed the assertions the Chrysler was using big incentives to prop up sales. Both Ford and GM have cut prices on several models, which has reduced the amount they spend on incentives, he noted.

Honda and Nissan, two other charter members of the new “Big Six,” also reported sales increases during May. Overall, Asian automakers lifted their share of the market by 1.2 points, to 41.4 percent as Subaru, Mitsubishi, and Suzuki reported sales rising.Audi, BMW, and Mercedes Benz also reported sales increases.”Small is big right now,” Dick Colliver, executive vice president of American Honda, said in a statement. “Smaller vehicles have become more attractive … and we expect this trend to continue for the time being.” Overall Honda sales were up more than two percent.Nissan North America also got a lift from strong sales of the Sentra and Altima as its overall sales climbed 3.2 percent. However, Nissan’s trucks sales sank nearly 19 percent.Meanwhile, Ford sales declined as it continued to trim sales to rental fleet sales and as once-powerful nameplates such as Explorer continued to fade. Explorer sales dropped more than 17 percent and F-Series pickup truck sales dropped 12 percent.George Pipas, Ford’s sales analyst, said the drop was relatively small and Ford officials said the company’s numbers showed signs of improvement. Sales of new products such as the Ford’s new crossovers, the Ford Edge and Lincoln MKX, were particularly strong, climbing 39 percent.”These new crossovers are the right products at the right time,” said Mark Fields, Ford’s President of the Americas. “Consumer demand for the Ford Edge and Lincoln MKX has exceeded our original expectations, so we’re raising the bar. We now expect Ford Edge sales to reach 120,000 this year – 20 percent higher than our original forecast.”

Weakening demand

The automakers, however, continue to face a market starting to show signs of weakening.
Overall, the U.S. industry posted a five-percent sales increase to a 2007 high of 1.56 million cars and light trucks in May, according to estimates. But the seasonally adjusted running rate is now under the initial forecasts automakers set out last January. Ballew, in fact, said GM had reduced its forecast for the balance of the year to between 16.7 million or 16.8 million units. Like other carmakers, GM had predicted sales would reach 17 million units this year. “It looks like we’ll track below 17 million units,” he said.George Pipas also said Ford would build only 640,000 cars in the third quarter, which was down slightly from the 642,000 units the company built in the third quarter of 2006 when it slashed production dramatically in the face of falling market share.The small cut comes despite shortages of some F-150 models and a huge drop in inventories of unsold vehicles, Pipas said.Buyers did respond to higher gas prices. The overall car-truck split in retail sales was close to 50/50, noted Ballew. Also, for the first time in years, Ford’s cars and car-based crossovers during May outsold the company’s trucks and sport-utility vehicles, Pipas said. The split in May was 52-48 in favor of cars and crossovers, he said. Ballew also said there are some signs across the industry of weakness in luxury sales and there also seems to be some downshifting in vehicle content and in powertrains, particularly in the mid-size car segment.

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