Detroit, August 2:
The Big Three US automakers lost control of their home field as foreign automakers captured half of the US market for the first time.
General Motors, Ford and Chrysler, which have suffered from a steady loss of market share to Asian rivals, ended July with just 48.1 per cent of the market. Chrysler was surpassed by Honda for the first time in July and Ford continued to cede the number two spot to Toyota.
Asian carmakers captured 44.6 per cent â€” with Toyota Motor accounting for 17.1 per cent of the market â€” while European brands held 7.3 per cent, according to Autodata.
The decline in share came as American carmakers cut back sharply on low-margin sales to rental companies in the midst of an industry-wide slump.
All but one of the top six manufacturers reported a decline in sales during July as higher petrol prices and turmoil in the housing market helped trim overall sales by an estimated 12 per cent. But the Big Three were hit hardest at a time when they can ill afford it. Since the end of 2005, GM and Ford have cut their payrolls by more than one-third and invested more than $14 billion in massive restructuring programs aimed at making them more competitive.
Chrysler slashed another 6,000 jobs this year in its North American operations in effort to return to the profitability it enjoyed up until the second half of 2006.
However, the American carmakers are still heavily dependent on the sales of pickup trucks and sport utility vehicles designed for the relatively inexpensive gasoline prices that prevailed prior to the war in Iraq.
â€œSmall SUVs and small cars have shown the strongest sales growth in 2007,â€ noted Dick Colliver, executive vice president of American Honda.
Ford sales analyst George Pipas said he did not believe the companyâ€™s executives would pay much mind to the dip below 50 per cent. â€œItâ€™s been going on for 30 years,â€ Pipas said during a conference call with analysts. â€œThe reason is because there is relatively little fleet content in July, and obviously the Big Three do more fleet business than do the foreign manufacturers.â€
Pickup truck sales are linked closely to the housing market and the housing slump has been deeper
and taken a larger toll than expected, noted Ellen Hughes-Cromwick, Fordâ€™s corporate economist. â€œHome prices are still falling across the country,â€ she noted. â€œNew vehicle sales clearly remain challenging,â€ she said.
Ford reported a 19 per cent drop in sales, GM reported its sales were down by 18 per cent and Chryslerâ€™s fell by eight per cent.
Both Toyota and Honda, the two largest Japanese brands, reported about a three per cent drop in sales for July. â€œThe month of July proved to be a challenge for the whole industry,â€ said Bob Carter, Toyota Motor Sales vice-president in charge of Toyota Division.
European manufacturers reported mixed results. BMW enjoyed a good month, posting a 21 per cent increase, while Mercedes-Benz reported a 14 per cent decline. Volkswagen and Audi reported sales that were essentially even with last July.
The slowing sales tempo has led to an escalation in incentives for buyers, particularly by Japanese carmakers, analysts said. â€œWe are seeing combined incentive spending for Japanese automakers reach record highs this month,â€ stated Jesse Toprak, director of industry analysis for Edmunds.com. â€œEven Toyota was aggressive, with its highest ever month, to help fuel sluggish sales.