Why USA government stopped the Cash for Clunkers program
Asian domination of US auto sales set to intensify
Posted: 07 September 2009 1443 hrs
A 'Cash for Clunkers' sign is displayed at a dealership in Indianapolis, USA.
CHICAGO: The Asian domination of US auto sales is set to intensify despite dramatic improvements and painful restructuring at the Detroit Three, analysts said.
Asian automakers captured 52.3 per cent of US sales in August - the first time they controlled more than half the market and the culmination of decades of steady growth at the expense of General Motors, Ford and Chrysler.
The five point jump from a year earlier was attributed largely to a government-funded "Cash for Clunkers" programme that spurred demand for their fuel-efficient vehicles, but analysts said the trend will continue.
"Longer-term, with certain brands being divested it's going to hurt the market share of the American brands so that would give another advantage to Asian automakers," said Efraim Levy, an analyst with Standard & Poor's Equity Research.
While "it won't be as easy" for Japan's Toyota and Honda to expand at the same pace because they have now entered most segments, they are "still well positioned to grow," Levy said.
Korean automakers Hyundai and Kia are also making major inroads as they expand their offerings and take advantage of their price advantage and some savvy marketing.
"The recession has been quite the opportunity for the Korean automakers," said Jessica Caldwell, a senior analyst at Edmunds.com.
Toyota and Honda first began making inroads during the oil crises and recessions of the 1970's when consumers switched from Detroit's muscle cars to their affordable, fuel efficient models.
The Detroit Three shot themselves in the foot in the 1980's with poorly designed vehicles and a reputation for shoddy quality which became entrenched in the minds of US consumers.
However the introduction of minivans and sport utility vehicles kept Detroit afloat until the late 1990's, when fuel prices started to rise and they failed to respond to Toyota and Honda's smaller and easier to handle SUVs.
After slowly drifting from 76.9 per cent market share in 1980 to 69.6 per cent in 1998, the Detroit Three saw their share plunge to 58.2 by 2005, when the latest round of plant closures and restructuring began.
They ended 2008 at 47.5 per cent - a nearly ten point drop in three years - and are currently at 43.9 per cent for the year to date.
Asian brands stand at 48.0 per cent for the year to date, while European brands account for 8.1 per cent, according to Autodata.
Yet there is an opportunity for the Detroit Three to turn their fortunes around, said analyst Rebecca Lindland of IHS Global Insight.
"With the new, more cost efficient structures that the Big Three have they should be able to start - especially at GM - to focus their engineering and marketing budgets on fewer, better brands," she said.
"All is not lost, but it is based on getting product in that excites consumers."
The problem is that it takes years to develop new vehicles and major brands are being dropped in the coming months, said Standard and Poor's Levy.
"They're not going to keep all those customers," he said in a telephone interview.
"While those potential benefits are there, it's not guaranteed and that investment will take time to be reaped."
Ford has some very promising product plans and GM also has some good offerings in the mix, Caldwell said.
"I don't see anything new or interesting at Chrysler," she added.
While GM continues to hold onto first place in sales in the United States after losing the title to Toyota globally last year, the upcoming elimination of brands like Pontiac and Saturn is certain to undermine its market share, which is at 19.4 per cent so far this year.
Ford - the only one of the Detroit Three to escape bankruptcy - has a strong product portfolio which helped it post gains in July and August for the first time since November 2007 and boost its share to 15.2 per cent for the year to date.
But it has been unable to regain second place from Toyota, which is at 16.6 per cent for the year to date.
Chrysler - which has slid to 9.2 per cent so far this year - is currently competing with Nissan (7.4 per cent) for sixth place after being surpassed by Honda (11.4 per cent) for fifth.
Meanwhile, Korea's Hyundai is breaking records as it climbs to a 4.4 per cent share and Kia is up 0.9 points at 3.1 per cent for the year to date.
Asian domination of US auto sales set to intensify
Posted: 07 September 2009 1443 hrs
A 'Cash for Clunkers' sign is displayed at a dealership in Indianapolis, USA.
CHICAGO: The Asian domination of US auto sales is set to intensify despite dramatic improvements and painful restructuring at the Detroit Three, analysts said.
Asian automakers captured 52.3 per cent of US sales in August - the first time they controlled more than half the market and the culmination of decades of steady growth at the expense of General Motors, Ford and Chrysler.
The five point jump from a year earlier was attributed largely to a government-funded "Cash for Clunkers" programme that spurred demand for their fuel-efficient vehicles, but analysts said the trend will continue.
"Longer-term, with certain brands being divested it's going to hurt the market share of the American brands so that would give another advantage to Asian automakers," said Efraim Levy, an analyst with Standard & Poor's Equity Research.
While "it won't be as easy" for Japan's Toyota and Honda to expand at the same pace because they have now entered most segments, they are "still well positioned to grow," Levy said.
Korean automakers Hyundai and Kia are also making major inroads as they expand their offerings and take advantage of their price advantage and some savvy marketing.
"The recession has been quite the opportunity for the Korean automakers," said Jessica Caldwell, a senior analyst at Edmunds.com.
Toyota and Honda first began making inroads during the oil crises and recessions of the 1970's when consumers switched from Detroit's muscle cars to their affordable, fuel efficient models.
The Detroit Three shot themselves in the foot in the 1980's with poorly designed vehicles and a reputation for shoddy quality which became entrenched in the minds of US consumers.
However the introduction of minivans and sport utility vehicles kept Detroit afloat until the late 1990's, when fuel prices started to rise and they failed to respond to Toyota and Honda's smaller and easier to handle SUVs.
After slowly drifting from 76.9 per cent market share in 1980 to 69.6 per cent in 1998, the Detroit Three saw their share plunge to 58.2 by 2005, when the latest round of plant closures and restructuring began.
They ended 2008 at 47.5 per cent - a nearly ten point drop in three years - and are currently at 43.9 per cent for the year to date.
Asian brands stand at 48.0 per cent for the year to date, while European brands account for 8.1 per cent, according to Autodata.
Yet there is an opportunity for the Detroit Three to turn their fortunes around, said analyst Rebecca Lindland of IHS Global Insight.
"With the new, more cost efficient structures that the Big Three have they should be able to start - especially at GM - to focus their engineering and marketing budgets on fewer, better brands," she said.
"All is not lost, but it is based on getting product in that excites consumers."
The problem is that it takes years to develop new vehicles and major brands are being dropped in the coming months, said Standard and Poor's Levy.
"They're not going to keep all those customers," he said in a telephone interview.
"While those potential benefits are there, it's not guaranteed and that investment will take time to be reaped."
Ford has some very promising product plans and GM also has some good offerings in the mix, Caldwell said.
"I don't see anything new or interesting at Chrysler," she added.
While GM continues to hold onto first place in sales in the United States after losing the title to Toyota globally last year, the upcoming elimination of brands like Pontiac and Saturn is certain to undermine its market share, which is at 19.4 per cent so far this year.
Ford - the only one of the Detroit Three to escape bankruptcy - has a strong product portfolio which helped it post gains in July and August for the first time since November 2007 and boost its share to 15.2 per cent for the year to date.
But it has been unable to regain second place from Toyota, which is at 16.6 per cent for the year to date.
Chrysler - which has slid to 9.2 per cent so far this year - is currently competing with Nissan (7.4 per cent) for sixth place after being surpassed by Honda (11.4 per cent) for fifth.
Meanwhile, Korea's Hyundai is breaking records as it climbs to a 4.4 per cent share and Kia is up 0.9 points at 3.1 per cent for the year to date.
