Re: Semi OT: Domestics take another hit in market share

Michael Johnson <cds@xxxxxxxxx> wrote in
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Joe wrote:
Michael Johnson <cds@xxxxxxxxx> wrote in
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NoOption5L@xxxxxxx wrote:
On Jul 4, 5:12 pm, Michael Johnson <c...@xxxxxxxxx> wrote:
NoOptio...@xxxxxxx wrote:
The Big 3's problem is they have forever lost an entire
generation of buyers -- the current 25-40 age group. (Most won't
even consider a domestic.) They saw their parents get taken after
buying inferior domestic models and were preached at/heard [from
their parents] for years 'I'll never buy another GM, Ford or
Chrysler product again'. On top of this, the Big 3 lost the
youth market by not investing in entry level cars & entry-level
performance cars. So instead of growing up worshiping Trans Am
pony cars this generation grew up craving Evo's, Skylines, turbo
DSMs and Supras. The result: the Big-3's market share will
continue to slide for years to come.
What I hear from people in the know at Toyota is the domestics
leveraged themselves too far when buying other automakers and
fringe businesses. They ignored their car lineup and now don't
have the capital or repeat customer base to stage a meaningful
come back. Toyota knows their customers and target markets then
delivers what they will buy. They don't get distracted by
unnecessary acquisitions.
That was only a piece of it. A large part was the huge concessions
to the union -- few paid as well as Ford, GM and Chrysler.
The UAW, GM and Ford are all circling the drain while they have each
other in a strangle hold. Chrysler will probably go down with them.
I think GM might be the only one to survive this whole mess.

They also don't
ignore their car line for years on end to push SUVs on their
customers.
While the domestics certainly went overboard relying on the
lucrative SUV/truck market, they certainly did not "push SUVs on
their customers". Customers were demanding those big rigs.
True. The just quit fighting for those customers that wanted to buy
cars.

The domestics handed the imports this part of the business for a
decade and now they are seeing the results of this. Now guess
what? The imports are going after the full sized SUV/truck market
with a vengeance to deliver the coups de grace to Ford and GM.
They're trying. The Titan didn't score as big as Nissan had hoped,
but maybe the Tundra could do better if it doesn't have any more
recall issues.
The thing with the Japanese automakers is they will keep trying
until they score a hit. Toyota is doing it with the Tundra. Mark
my words, in 3-5 years they will have a substantial portion of the
full size truck market.

The Tundra was the only truck that came away with a 'Good' rating in
the safety tests.

Toyota stumbled around with their full size truck in the beginning
thinking it was just an extension of the compact line. Then they
figured out what sells big trucks..... testosterone. They have a high
quality vehicle, a great marketing strategy and and a fantastic
reputation as an automaker. I tell you, Ford had better get ready for
one hell of a fight with them in this segment of the market. Toyota
has their cross hairs set dead on the F150 and they intend to put a
bullet right between its eyes. IMO, this is one fight Ford can't
afford to lose.

Not only Ford, but everyone else as well. Dodge and GM need to wise up
right along with Ford.

Lesson to be learned: Toyota did their homework, studied, and came away
with a straight "A" product. That being said, however, I think they
could improve the interior ergonomics a bit more.

To cut the length of the slide, the Big-3 need to:
1) Heavily invest, and keep investing in, very GOOD entry-level
cars. And then offer hotted-up perfromance models of these cars.
Letting the Focus age, discontinuing the Neon/SRT-4, and not
offering a competitive Cobalt is a huge mistake.
They don't have the capital for a broad based reinvention of their
entire lineup. IMO, they also don't have the marketing savvy for
pulling it off.
Agreed. And I must add it's sad they don't know the youth market.
Ford got a good start with the Focus and just gave up. I swear they
must be brain dead over at Ford's marketing department.

2) Make [more] desirable performance cars -- i.e. new Mustang and
Corvette.
It helps but it is bread and butter vehicles like the Camry,
Taurus, F150 that pays the bills and generates profits.
Yes they do, but they also have to offer "dream cars"/image cars --
cars that appeal to the youth market. Toyota realized that and
introduced Scion.
Toyota seems to do just fine though without a stable of dream cars.
I will tell you though that they are cleaning up with the Scion in
the youth market. They spend a lot all the way down to the dealer
level to keep kids interested in the brand. I was impressed with
what they offer for around $15k-$17k. Plus they have set prices for
each model and trim level. There is no haggling on price so the
dealers can't gouge the buyers. It builds loyalty and gives the
kids a very good car at a decent price. The dealer makes just a few
hundred dollars on a Scion sale. Plus, Toyota has one hell of an
after market parts catalog for those cars. All the way from bling
to serious blowers.

And _that's_ where the big dollars are. The Big 3 still don't
realize that aftermarket is big profit. That and service. If a
dealer's got a great service department, it feeds both sales and
service.

Ford started the same thing with the Focus. Remember the V-8
conversion for that car. It was killer. They had the SVT Focus that
got great reviews and ran like a scalded rabbit.

Good example, yes, but they still need to get back to basics. IMO OEMs
should do what the successful aftermarket companies are doing, but do it
better. The whole idea is for OEMs to make customers to think of going
to the dealer for aftermarket, not independents.

Most of these kids
can't afford to put a blower on their econobox but they do like to
know the option exists. Like I said, Ford's marketing department must
be brain dead and on a ventilator.

Not only Ford's, but other American makers' as well. IMO they're all
ignoring a huge profit segment in factory aftermarket.

3) Make very competitive top-tier cars.
Cadillac is doing it, but where is Lincoln and Chrysler?
This helps too but it doesn't pay the bills and increase overall
market share, IMO.
They help like Lexus does.
The thing is though Lexus buyers were likely previous Toyota owners
and not vice versa. Ford never gets the customer initially to move
them up to a Lincoln. Someone that can only afford a Taurus or a
Fusion probably doesn't care how good the Lincoln or Mercury brand
might be. IMO, they are two different markets but Ford sucks in both
of them.

4) And, of course, make excellent "American" sedans. Chrysler's
LX sedans pointed the way, but the Big-3 also need a RWD Impala
and Ford sedan -- some good red, white and blue alternatives to
the Japanese offerings. I suggest they read the Harley Davidson
play book.
Bingo! Ford needs to concentrate of bringing a new Taurus to
market that redefines the segment like the first one they offered.
Then they need something like the old Escort. It wasn't pretty
but they sold them by the truck load because it was what sold.
Personally, I think the Focus was the best entry level ever offered
by the Big 3. But Ford made the mistake of letting it age without
significant upgrades/redesign.
To be honest there is no reason the Fusion couldn't have been named
the "All New Focus". I still say that Ford killing off their bread
and butter brand names like the Taurus, Escort, Focus, Contour,
Probe etc. is one of the biggest marketing blunders of all time.
Especially the Taurus brand. That car had one hell of a customers
base that they just threw in the garbage. At least now they are
trying to correct the error. We have a 2003 Sable with the Duratech
engine and loaded with options and I can say without hesitation that
it is a great car. Especially, having paid less than $20k for it.
It isn't a Lexus or Acura but considering the price it has more than
given us our money's worth. There is no reason the 500 couldn't
have been the "All New Taurus".

it seems like the domestics
have given up the fight for market share. They think there is a
place for them as a niche builder and they are sadly mistaken,
IMO.
At this point, I can see at least one of them going under and the
parts being sold off.
If I had to make a prediction today I say that only GM will survive
as an independent business entity.

Patrick


It looks like the domestic automakers still can't stop the
bleeding. Maybe I am being too much of a pessimist but things
are looking worse for GM, Ford and, to a lesser extent,
Chrysler. One thing I noticed in this article is how Toyota's
Tundra sales are increasing and Chevy's full size truck sales
were down 25% compared to June 2006. IMO, Toyota is looking to
rip the heart out of the Big Three by putting substantial
resources behind their full size truck sales. Here's the
article: Japan car makers lift US market share By Bernard Simon
in Toronto Published: July 3 2007 20:07 | Last updated: July 3
2007 20:07 Japanese car makers took another sizable bite out of
the US market share of their Detroit-based rivals last month,
thanks to their strength in small and mid-sized cars and their
relatively low dependence on the car-hire industry.
Toyota, Honda and Nissan reported sales increases of 10.2 per
cent, 11.5 per cent and 22.7 per cent respectively compared with
June 2006. ADVERTISEMENT
By contrast, General Motors' light-vehicle sales tumbled by 21.3
per cent. "It was a pretty tough month for us", said Paul
Ballew, GM's normally upbeat sales analyst.
Ford reported an 8.1 per cent decline, and Chrysler a drop of
1.4 per cent. There was one more selling day last month than in
June 2006. Both GM and Ford ascribed their declines partly to
intentional cutbacks in low-margin sales to the car-rental
industry. The two companies reduced daily-rental sales by a
combined 181,000 units between January and June from a year
earlier. Mr Ballew described overall market conditions as
"challenging", owing to the spike in fuel prices and the housing
slump, especially in California and Florida. Mr Ballew estimated
that industry sales were about 6.5 per cent lower in the first
half of 2007 than a year earlier. Buyers are continuing to
migrate from big sport-utility vehicles and trucks to smaller
crossover vehicles and passenger cars. Crossovers look like SUVs
but are built on car platforms. Nissan's performance underlined
the sharp shift in buying patterns. While its car sales surged
by 55 per cent, SUVs and pick-up trucks contracted by more than
10 per cent. Ford's crossover sales were 83 per cent higher last
month than a year earlier. Another consolation for Ford is a
steady revival of its luxury Lincoln brand, with retail sales
rising for the ninth month in a row. Total Lincoln sales were
14.5 per cent higher in the first six months compared with
January-June 2006. Industry sales last month were buoyed by
discounts and other incentives. According to Edmunds.com, an
online car pricing service, the six biggest carmakers all lifted
incentives last month. While Toyota's average incentives of
$1,308 per vehicle are still far below those of its
Detroit-based rivals, they have jumped by more than a third in
the past year. Demand for the Tundra pick-up truck more than
doubled last month, helped by perks totaling as much as $3,500
per vehicle. Toyota has described the Tundra, which arrived in
dealerships last winter, as its most important vehicle launch in
half a century. Mr Ballew said that GM had been surprised by the
extent of its rivals' incentives for full-size trucks. Sales of
the Chevrolet Silverado, one of the Tundra's main rivals, slid
by more than a quarter last month."
http://www.ft.com/cms/s/f665075e-2996-11dc-a530-
000b5df10621.html



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