Bloomberg News

U.S. Automakers Seen Losing Market Share Amid 2012 Growth: Cars

February 08, 2012

Jan. 26 (Bloomberg) -- U.S. automakers led by General Motors Co. may lose share in their home market this year, a setback that might be assuaged by holding onto some of their gains against disaster-stricken Japanese rivals in 2011.

GM, Ford Motor Co. and Chrysler Group LLC, coming off a year in which all three added share for the first time since 1988, may drop a combined 1.3 percent of U.S. market share in 2012, according to a Bloomberg survey of five analysts. As Toyota Motor Corp. and Honda Motor Co. recover from Japan’s tsunami and Thailand’s floods, they may find stiffer competition limiting their combined slice of the market to where it was seven years ago.

The U.S. automakers may each increase sales by less than the total market’s growth this year, according to all five analysts surveyed. While falling unemployment, rising consumer confidence and the need to replace aging vehicles will drive demand, increased Japanese output and improved competition from Korean brands and Volkswagen AG will test Detroit’s discipline on protecting profit rather than simply selling products.

“Market-share loss is never positive, but the U.S. automakers are still going to grow,” Jesse Toprak, an analyst at the auto-pricing researcher TrueCar.com, said in a phone interview. “They can’t lose sight of their new emphasis, which has been improving their cost structures, making cars people want to buy and selling the product instead of the incentive.”

Sales may rise this year to 13.6 million vehicles, the average estimate of the five analysts, from 12.8 million in 2011, continuing the recovery from 2009’s 27-year low of 10.4 million cars and light trucks.

Lost Share

GM, which regained global sales leadership last year, may fall to 19 percent of the U.S. market, from 19.6 percent last year, analysts estimate. Ford may drop to 16.3 percent from 16.8 percent and Auburn Hills, Michigan-based Chrysler may decline to 10.5 percent from 10.7 percent. The three gained a combined 2 points of share last year, according to Autodata Corp.

Asia’s largest automaker, Toyota, may capture 13.8 percent of the U.S. market this year, from 12.9 percent last year, and Tokyo-based Honda may take 9.5 percent, from 9 percent, analysts estimate.

Aside from their tsunami- and flood-stricken performance last year, combined market share for Toyota City, Japan-based Toyota and Honda will be the lowest since 2005, according to the Bloomberg survey, which interviewed analysts from LMC Automotive, AutoPacific Inc., Edmunds.com, TrueCar.com and Kelley Blue Book.

The last time Ford, GM and Chrysler all lost share in their home market was 2008, a year before the latter two tumbled into government-backed bankruptcies. A decade ago, the three automakers controlled 63 percent of the U.S. market, excluding Mercedes-Benz sales by what was then called DaimlerChrysler AG.

2011 Profits

While U.S. automakers’ combined share was 47 percent last year, their position in the market has proven lucrative after years of restructuring. Through three quarters last year, GM earned $8.47 billion, and Ford made $6.6 billion. Chrysler forecast its first annual net income. The three promised to add 20,000 jobs for at least 34 factories in contracts negotiated with the United Auto Workers last year.

GM, Ford and Chrysler also are introducing new compact cars, midsize sedans and small sport-utility vehicles that will temper rebounds by Toyota and Honda, said Jessica Caldwell, an analyst for researcher Edmunds.com. Those entries include Detroit-based GM’s Chevrolet Malibu, Ford’s Fusion and Escape, and Chrysler’s Dodge Dart.

“Even though Toyota and Honda will inevitably do better -- it’s hard to go backwards after last year -- it’s going to be an extremely challenging marketplace, and more so than ever in the segments that they’ve dominated,” Caldwell, who is based in Santa Monica, California, said in a phone interview.

Hyundai-Kia’s Growth

Hyundai Motor Co. and Kia Motors Corp., which last year more than doubled the U.S. market share they held in 2005, may claim 9 percent of industry sales in 2012, according to the survey. The Seoul-based affiliates had 8.9 percent market share last year.

Hyundai and Kia’s growth will slow in 2012 after last year’s combined 1.1 percentage point share gain on sales increases of 20 percent or more for each company. John Krafcik, chief executive officer of Hyundai’s U.S. sales unit, said Jan. 5 that the automaker would emphasize vehicle quality and perception gains ahead of sales growth this year and hasn’t announced a target for deliveries.

Nissan’s Goal

Nissan Motor Co.’s market share may slip in 2012, after being surpassed by Hyundai-Kia in the U.S. for the first time last year, according to the Bloomberg survey. Analysts estimate the Yokohama, Japan-based automaker’s share will slide to 8 percent from 8.2 percent last year. The company gained 0.4 point of share in 2011.

Nissan was less affected than Toyota and Honda in 2011 by the March tsunami in Japan and floods beginning in October in Thailand because it began the year with higher inventories and had fewer factories affected by the disasters. Brian Carolin, Nissan’s U.S. sales chief, said Jan. 9 that the automaker is targeting a 2012 sales gain of at least 10 percent and has a short-term goal of outselling Honda in the country.

Last year, Honda deliveries topped Nissan’s by less than 105,000.

Nissan’s Altima sedan and Sentra compact are “core products at the end of their life cycle,” Ed Kim, an analyst at AutoPacific in Tustin, California, said in a phone interview. Nissan may recover and eventually exceed its 2011 market share in 2013 after it begins selling redesigned versions of those cars later this year, he said.

Volkswagen’s Challenges

Volkswagen, which plans to become the world’s biggest automaker by 2018, may capture 3.8 percent market share with combined deliveries of its Volkswagen and Audi brands, a gain of 0.3 percentage points from a year earlier. Three of the five analysts surveyed by Bloomberg estimated the automaker would fall short of its goal for 500,000 vehicle sales this year.

Buyers located away from the coasts are less familiar with Volkswagen, and its dealer network has a limited presence in the middle of the country, said Toprak, who is based in Santa Monica and estimates Volkswagen and Audi will deliver 496,100 vehicles.

“On the East Coast or in California, they’re fine,” Toprak said. “But go ask somebody in Nebraska what they think about VW. Hyundai had the same problem. They’re overcoming it, but it takes a while.”

--Editor: Jamie Butters, John Brecher.

To contact the reporters on this story: Craig Trudell in Southfield, Michigan, at ctrudell1@bloomberg.net;

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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