Detroit Seizes Share in First Half With New Buyers
Nate Amoth has faithfully driven sporty little Japanese and German hatchbacks for years. Until yesterday, when the Baltimore salesman took the keys to a new Ford Focus ST.
“The way it drove didn’t remind me at all of other American cars that I’ve driven,” said Amoth, 27, who paid $26,100 for his black-on-black, fully loaded Focus. “It’s nice to see Detroit stepping up to the plate and making things truly worth buying.”
General Motors Co. (GM), Ford Motor Co. (F:US) and Chrysler Group LLC captured buyers at a rapid rate in the year’s first half as all three Detroit automakers gained U.S. market share for the first time in 20 years. Their above-average deliveries are driving industrywide sales to the highest rate since 2007, up 9.2 percent in June to an annual pace of almost 16 million.
Even that superlative doesn’t do justice to the job Detroit is doing, said John Wolkonowicz, an automotive historian based in Boston. Back in 1993, the last time the Detroit Three collectively gained share in the year’s first half, many buyers came from the Depression generation, which was more forgiving of flaws in models from Motown than Baby Boomers are, he said.
“These are probably some of the best products we’ve seen from American manufacturers since the early 1970s,” said Wolkonowicz, who believes a new generation is embracing Detroit. “Younger buyers are more prone to buy American and one reason is they want to be different than Mom and Dad, who fell in love with Japan Inc.”
U.S. carmakers have helped the industry pick up the pace throughout the year. Automakers may sell 15.4 million cars and light trucks in the U.S. this year, the most in six years, according to a survey of 18 industry analysts by Bloomberg News. Analysts have raised their projections from an average of 15.1 million in a survey at the beginning of the year.
Replacement demand and “historically low interest rates irrespective of the conversations surrounding the Fed” are fueling continued growth for the auto industry, Ken Czubay, Ford’s vice president of U.S. marketing, sales and service, said yesterday on a conference call.
“The tailwinds continue to be strong” and are “pretty forceful,” he said.
The new-generation buyers are choosing the kind of car from Detroit that their parents purchased from Toyota Motor Corp. (7203) and Honda Motor Co. Sales of Ford’s Fiesta small car more than doubled last month, leading the automaker to an overall gain of 13 percent, exceeding analysts’ forecasts. Chrysler’s Dodge Dart compact car had its best month ever, as the automaker majority-owned by Fiat SpA (F) reported a 39th straight monthly increase.
Sales of GM’s Chevrolet Cruze compact, which Automobile magazine praised in May for its “impressive build quality” and an interior that feels “as though it belongs in a more expensive vehicle,” jumped 73 percent last month. GM’s total June sales rose 6.5 percent, three times more than analyst forecasts.
“We live in a time where you can, with a straight face, say the best compact sedan that you can buy in the marketplace is a Chevrolet,” Ed Kim, an analyst with AutoPacific Inc. in Tustin, California, said of the Cruze. “When was the last time anyone could say that and not get laughed out of the room?”
Detroit’s deliverance from a time when its cars were a laughingstock came courtesy of its challenging 2009. Government-backed bankruptcies of GM and Chrysler and a self-financed restructuring at Ford transformed the business case on small cars from loss leaders to reputation rebuilders. With sedans no longer an afterthought, Detroit is offering stylish models such as the Ford Fusion and Cadillac ATS.
“The Big Three look like they can go toe-to-toe with Toyota, Honda,” Eric Noble, president of industry consultant Car Lab, said yesterday on Bloomberg Television. “On the hybrid side, Ford is actually cutting in on Toyota.”
Rising demand for Fusion and C-Max hybrids drove Ford to break its previous annual record for hybrid deliveries in the first five months of this year.
Ford, the second-largest U.S. automaker, increased its market share by 0.8 percentage points in the first half to 16.5 percent, according to Automotive News Data Center. Market share for Chrysler, the third-biggest domestic carmaker, grew by more than 0.1 point to 11.6 percent. GM, the top-selling automaker in the U.S. market, boosted its share by less than 0.1 point to almost 18.2 percent.
The Japanese are not standing still. Toyota (7203), offering interest-free loans and other incentives, boosted sales 9.8 percent last month, more than its 6 percent gain for the year’s first half. The Prius and other Toyota hybrids had their best June results. And after four down months, Toyota sold more than 35,000 Camry sedans, keeping it the top-selling car in America.
“Camry’s still the No. 1-selling car in the segment, but it’s been having chunks taken out of its share from a lot of these much more interesting competitors,” Kim said. “Having spent significant seat time in all of these vehicles, by far and away, the Camry comes off as the most underwhelming.”
Nissan notched record sales in June after cutting prices on seven models. Its Altima family car, which had a $580 price cut, jumped 23 percent to 26,904, as Nissan’s total sales rose 13 percent, including its Infiniti luxury brand.
“The Altima is a very strong value that offers attractive styling, very appealing price and very good fuel economy,” Kim said. “And the Fusion is a looker. I don’t think the Camry can afford to be the way it is for that much longer.”
Similar sentiments were once shared by critics of Detroit’s automotive offerings, even when all three companies were gaining market share while slipping in quality back in 1993.
“This is a completely different landscape than in ’93,” said Kevin Tynan, Bloomberg Industries auto analyst. “This is much better share with much better product and much better margins. The domestics, for the first time since well before 1993, are legitimately competing.”
The Focus ST is the first American car for Amoth since his very first car, a used 1988 Cadillac DeVille. “It was awful,” he recalled. “We didn’t change the oil so much as replenish it.”
Now Amoth said his Ford doesn’t seem like “a gamble.”
“In the past, all American cars had to offer in my segment was cheaper transportation,” Amoth said. “Now, I don’t feel like I’m sacrificing anything to drive an American car.”
To contact the reporters on this story: Keith Naughton in Southfield, Michigan at firstname.lastname@example.org; Craig Trudell in Southfield, Michigan at email@example.com
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