Asians Continue To Drive Auto Sales

April 20, 2007
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NORTHVILLE, Mich. — Dealers offering Asian products had a good first quarter and an even better March, while dealers who sell domestic vehicles are probably glad those three months are behind them.

First-quarter sales for Asian automakers rose from 6 percent to more than 17 percent compared to the same period last year. Mazda, Kia and Toyota recorded the largest first-quarter sales gains — 17.5 percent, 13.5 percent and 11.2 percent, respectively.

DaimlerChrysler had the best first quarter of the domestics, dropping only 3.3 percent during the first three months of the year compared to the same period last year. Sales at Ford fell by 13 percent and at GM by 5.5 percent over the same period. (See related chart.)

Much of the first-quarter gains registered by Asian automakers came in March. Mazda was up by 48 percent for the month, compared to last year. Sales for Mitsubishi grew by 22 percent. Toyota and Honda both had sales rise by more than 11 percent, while sales for Nissan and Hyundai rose by 8 percent and 6 percent, respectively, in March.

But it was a vastly different story for the Big Three last month. Ford’s sales toppled by 9 percent, while sales for DCX and GM fell by 4 percent. In March of last year, the trio had 55 percent of the market. Last month, though, their share dipped to 51 percent.

Toyota climbed last month to within 1 percent of the world’s second-largest automaker, Ford, in the year-to-date, market-share race. Asian companies continue to comprise six of the top-10-selling auto manufacturers.

It’s no secret that Asian models have outsold domestics for years and continue to do so. And it’s no secret why — it’s still the “Q” word.

“The Asian models have a strong reputation for quality; it’s kind of part of their brand image — Toyota, especially. When you think of that name, people associate it with quality, and that is a big factor driving its sales,” said David Terebessy, a market analyst with CSM Worldwide, based in the Detroit suburb of Northville.

“And Toyota has come out with some key models in growing segments that are helping to drive that growth.”

Top-selling models from the first quarter include the Toyota RAV4 and Camry, the Honda CRV and Accord, and the Nissan Ultima.

“Those have been strong products for the Japanese OEMs and generally get good quality ratings, particularly on the Accord and Camry, and consumers are happy with what they buy,” said Terebessy.

“These models tend to have some stronger residual values. So when a consumer goes to trade that product in, they’re going to get a better trade-in and better value,” he added.

Terebessy said the model that didn’t sell as well as industry observers thought it would was the new mid-sized Saturn Aura, named the 2007 North American Car of the Year.

“GM did a nice job with it. It’s been a little bit slower than anticipated to catch on. The lack of a four-cylinder engine could be hurting sales a little bit. But it is a very good car.”

Terebessy said Saturn sales picked up by 20 percent in March after a lackluster January and February. The Aura and the new Outlook crossover sold well last month.

“Saturn is in the midst of transforming itself into a more upscale, more premium type of a brand, and it is going to take a little bit of time for consumers to recognize that.”

Despite the gains Asian automakers made during the first quarter, overall car sales were down by 1.2 percent from the same period last year. Terebessy said higher gas prices and buyers’ indifference to constant purchase incentives contributed to a sales slowdown that began last year. But he said the biggest factor hurting sales is a subdued housing market.

“You’ve got some uncertainty as to what is going to happen in the housing market. Has it reached the bottom, or is it going to go further down? That certainly is a big factor affecting sales; the uncertainty surrounding that is having a negative impact on the sales environment right now. People are more reluctant to buy a big-ticket item like cars,” he said.

“There is some concern over rising fuel prices, but that creates more of a shift in the type of vehicles that someone would buy. There has been a ton of incentives in the industry for the last several years, and there really is a lack of pent-up demand in the market.”

Unfortunately for dealers, Terebessy said he didn’t see that demand growing over the remainder of the sales year, mostly due to uncertainty in the housing market and in the general economy.

“It’s going to be a tougher sales environment this year for all the automakers than what we’ve experienced over the past few,” he said. “Fuel prices will play a factor, but it’s generally more focused on the housing market, and there is some uncertainty over where the overall economy is going to go.”  

Asian Automakers Enjoy Big Sales Quarter

Mazda, Kia, Toyota, Honda and Nissan posted the largest year-to-date sales gains for the first quarter, while sales for GM, Ford and DaimlerChrysler fell for the first three months of this year compared to the same period last year.

The top dozen automakers sold more than 3.8 million vehicles during the first quarter, a figure slightly down from the number sold for the same period last year.

Here are the first-quarter sales and year-to-date, market-share figures for the top dozen.

Change Market
Automaker Unit Sales     from 2006     share
General Motors     898,443 -5.5% 23.1%
Ford 639,123 -13% 16.4%
Toyota 605,855 11.2% 15,6%
DaimlerChrysler 593,324 -3.3% 15.3%
Honda 354,208 6.1% 9.1%
Nissan 278,981 6.0% 7.2%
Hyundai 104,205 -1.7% 2.7%
Mazda 79,974 17.5% 2.0%
Kia 75,974 13.5% 1.9%
BMW 75,523 3.9% 1.9%
VW 72,445 0.6% 1.9%
Subaru 42,976 -5.0% 1.1%

Source: Autodata, April 2007

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