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News and Commentary: Auto News, Analysis and EditorialIn the U.S. in April 2005, Quality Four Sales Soar, GM and Ford Continue Free Fall
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News and Commentary: Auto News, Analysis and EditorialIn the U.S. in April 2005, Quality Four Sales Soar, GM and Ford Continue Free Fall
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Auto on Info May 2005 In the U.S. in April 2005, Quality Four Sales Soar, GM and Ford Continue Free Fall By James B. Bleeker Toyota Motor Corporation, with a 1996-2000 Reliability Percentrank average of .90, saw its U.S. auto sales rise by 21% in April 2005, over those of April 2004. Its U.S. car sales rose 36% and its U.S. truck - SUV, minivan, and pickup - sales rose 5%. The following table provides detailed information regarding Toyota Motor Corporation's U.S. sales in the month of April 2005, together with 1996-2000 model, line, and manufacturer Reliability Percentrank averages. Those models that were among July 2004's Hottest Ten, per WSJ's lot-stay time, for all manufacturers, are in bold blue. That model that received CAA's most recent Pyramid Award for ownership satisfaction is italicized.
The Toyota Motor Corporation models showing the largest sales gains in April 2005 over April 2004 were the Lexus GS 300 sedan, up 513.6% to 2,657, the Lexus GS 430 sedan, up 396.2% to 541, the Toyota Prius gas-electric hatchback, up 196.5% to 11,345, the Toyota Avalon large sedan, up 165.8% to 9,229, the Scion xB wagon, up 51.1% to 6,002, the Scion xA hatchback, up 35.7% to 2,671, the Toyota Tundra pickup truck, up 21.4% to 10,932, the Toyota Corolla small sedan, up 19.6% to 34,336, the Lexus RX 330 sport utility vehicle, up 19.1% to 10,172, the Toyota Camry family sedan, up 13.0% to 40,435, the Toyota Highlander sport utility vehicle, up 12.4% to12,896, the Toyota Tacoma pickup truck, up 10.2% to 15,147, and the Toyota RAV4 small sport utility vehicle (1996-2000 RPA of .93 and with a CR 2005 predicted short-term reliability in the highest category, also a CR 2005 reliability Quick Pick and a CR 2005 overall Quick Pick), up 8.8% to 6,971.
Toyota's Scion line, up 166.0% for the month, is a new line. It is intended to meet the tastes and needs of young adults; however, it has, as well, proven popular with Baby Boomers - older folks who are generally young at heart. The Toyota Prius, up 196.5% for the month, is Toyota's gas-electric hybrid. The extraordinary popularity of the 2005 edition is likely a consequence of a combination of factors. First, the 2005 Prius is a midsize sedan. Second, it employs new gas-electric power-train technology that delivers more power and performs greater work per unit of energy source. This gives it an acceleration comparable to that of the Camry midsize sedan and increases its estimated EPA rating for in-city driving from 55 miles per gallon to 60 miles per gallon.1 In short, the 2005 edition of the Prius is a bigger car with better gas mileage than its pre-2004 editions. Third, it is a Consumer Reports 2004 Quick Pick, a CR 2004 Top Pick, a CR 2005 reliability Quick Pick, a CR 2005 owner satisfaction Quick Pick, a CR 2005 fuel efficiency Quick Pick, and a CR 2005 Top Pick. The Toyota Corolla, up 19.6% for the month, is an internationally renowned 38-year legend of reliability, durability, and pleasing performance and appearance. As a buyer from Africa at Dubai's mid-eastern auto mart Ducamz put it: Everyone wants one. Indeed, life may not be complete without having owned a Corolla, and life may be appreciably less interesting without having owned the same one for at least 20 years and 400,000 miles. U.S. sales of the Lexus LX 470 through April 2005 exceeded those of the Toyota Land Cruiser, a more Spartan cousin, by 49.8%. Honda Motor Company, with a 1996-2000 RPA of .86, saw its April 2005 U.S. auto sales rise 14%. Honda Motor Company's models showing the largest sales gains in April 2005 over April 2004 were the Acura RL sedan (1996-2000 RPA of .90 and with a CR 2005 predicted short-term reliability in the second highest category), up 153.2% to 1,304, the Acura TSX sedan (too recent to have a 1996-2000 RPA, but with a CR 2005 predicted short-term reliability in the second highest category and a CR 2005 overall Quick Pick), up 35.5% to 3,329, the Honda Pilot sport utility vehicle (too recent to have a 1996-2000 RPA, but with a CR 2005 predicted short-term reliability in the second highest category and a CR 2005 owner satisfaction Quick Pick and a CR 2004 and 2005 Top Pick, and with the Pilot EX-L edition a CR 2005 overall Quick Pick), up 21.7% to 10,587, the Honda Odyssey minivan (1996-2000 RPA of .87 and with a CR 2005 predicted short-term reliability in the second highest category, also a CR 2005 Top Pick and an IIHS 2005 Best Pick Frontal), up 17.6% to 16,637, the Honda Civic (excluding hybrid, 1996-2000 RPA of .95 and a CR 2005 reliability Quick Pick, with the Civic EX edition a CR 2005 fuel economy Quick Pick and a CR 2005 overall Quick Pick and with the Civic Si edition a fuel econmoy Quick Pick), up 10.7% to 28,091, the Honda Civic Hybrid (a CR 2005 reliability Quick Pick, a CR 2005 owner satisfaction Quick Pick, and a CR 2005 overall Quick Pick), up 9.8% to 3,466, the Honda CR-V sport utility vehicle (1996-2000 RPA of .99 and a CR 2005 reliability Quick Pick), up 8.6% to 13,149, and the Honda Accord family sedan (1996-2000 RPA of .89 and with a CR 2005 predicted short-term reliability in the second highest category, also a CR 2005 Top Pick and an IIHS 2005 Best Pick Frontal, with the Accord EX V6 and EX 4-cylinder editions CR 2005 owner satisfaction Quick Picks and CR 2005 overall Quick Picks and with the Accord Hybrid edition a CR 2005 safety Quick Pick, a CR 2005 fuel economy Quick Pick, a CR 2005 owner satisfaction Quick Pick, and a CR 2005 overall Quick Pick), up 8.5% to 35,235. Through April 2005, the Honda Odyssey minivan outsold the Toyota Sienna by 7,552 vehicles, or 15.8%, and the Honda CR-V sport utility vehicle outsold the Toyota RAV4 by 25,509 vehicles, or 112.7%.
Nissan Motor Company, with a 1996-2000 Reliability Percentrank average of .74, increased its U.S. auto sales by 27% in April 2005. Its U.S. car sales rose 30% and its U.S. truck sales rose 24%. Nissan Motor Company's models showing the largest gains in U.S. sales in April 2005 over April 2004 were the Infiniti M45 sedan (too recent for a 1996-2000 RPA or a CR 2005 predicted short-term reliability), up 1,211.5% to 2,288, the Nissan Pathfinder sport utility vehicle(1996-2000 RPA of .84), up 166.9% to 5,579, the Nissan Sentra sedan (1996-2000 RPA of .63 and with a CR 2005 predicted short-term reliability in the second lowest category), up 58.7% to 10,589, the Nissan Murano sport utility vehicle (too recent for a 1996-2000 RPA, but with a CR 2005 predicted short-term reliability in the second highest category and with the Murano SL edition a CR 2005 overall Quick Pick), up 42.1% to 6,142, the Nissan Altima sedan (1996-2000 RPA of .78 and with a CR 2005 predicted short-term reliability in the middle category, also with the 3.5 SE V6 edition a CR 2005 safety Quick Pick), up 41.2% to 22,869, the Nissan Titan pickup truck (too recent for a 1996-2000 RPA, but with a CR 2005 predicted short-term reliability in the middle category and a CR 2005 owner satisfaction Quick Pick), up 35.0% to 7,387, the Nissan Armada sport utility vehicle (too recent for a 1996-2000 RPA, but with a CR 2005 predicted short-term reliability in the lowest category), up 16.2% to 3,061, the Infiniti G35 sport sedan (no 1996-2000 RPA, but CR accords the G35 sport sedan and coupe a 2005 predicted short-term reliability in the second highest category), up 8.9% to 3,275, and the Nissan Xterra sport utility vehicle (1996-2000 RPA of .66), up 5.3% to 5,458. Nissan's reliability scourge, the Nissan Quest minivan (1996-2000 RPA of .39), had its U.S. sales fall 5.4% in April 2005.
Subaru, with a 1996-2000 RPA of .82, saw its April 2005 U.S. auto sales rise 18%. Its car sales rose 30% and its truck sales fell 2%. Fuji Heavy Industries' models showing the largest sales gains in April 2005 over April 2004 were the Subaru Legacy sedan and wagon (a 1996-2000 RPA of .81, a CR 2005 predicted short-term reliability in the second highest category, and an IIHS 2005 Best Pick Frontal), up 40% to 8,698, and the Subaru Impreza (1996-2000 RPA of .82 and a CR 2005 predicted short-term reliability in the second highest category and with the Impreza WRX edition a CR 2005 owner satisfaction Quick Pick and a CR 2005 overall Quick Pick and with the Impreza WRX STi edition a CR 2005 safety Quick Pick, a CR 2005 owner satisfaction Quick Pick, and a CR 2005 overall Quick Pick), up 24% to 2,841. Mazda, with a 1996-2000 RPA of .72, saw its April 2005 U.S. auto sales fall 1%. In summary, the April 2005 sales by the auto manufacturers of quality products were solid; sales by Toyota, Honda, Subaru, and Nissan rose 21%, 14%, 18%, and 27%, respectively. At the other end of the quality spectrum, April 2005 U.S. auto sales by General Motors, with a 1996-2000 RPA of .29, fell 8%. Sales fell in most of its lines - Oldsmobile (1996-2000 RPA of .26) down 95%, Saturn (1996-2000 RPA of .35) down 32%, Hummer (too recent to have a 1996-2000 RPA) down 28%, GMC (1996-2000 RPA of .27), down 12%, Chevrolet (1996-2000 RPA of .13) down 5%, Buick (1996-2000 RPA of .49) down 5%, and Pontiac (1996-2000 RPA of .23) down 2%. Year-to-date, only two lines have shown a sales increase - the Chevrolet line, up 1.2%, and and the Cadillac line, up 4%. Site Manager's Assessment on GM Prospects: General Motors Corporation has gotten itself into a short-term pickle. It cannot close factories, as laid off workers collect the bulk of their wages, per GM's contract with the United Auto Workers that runs to 2007. It must continue to design its vehicles so that its customers will want to get rid of them within 3 or 4 years time, lest sales of new vehicles drop deeper. It cannot improve durability and post-3rd-year reliability, lest 2nd hand purchasers retain their vehicles longer, resale values after 3 years fall deeper, and as a consequence new vehicle sales suffer. However, its long-term existence seems not threatened, as one strategic Chapter 11 bankruptcy should solve most of its problems. Nonetheless, investors may want to hold off on purchasing GM's long-term bonds until their price approximately equals interest payments over the next 3 to 4 years. Chrysler, with a 1996-2000 RPA of .33, saw its April 2005 U.S. auto sales rise 5%. The Chrysler group of DaimlerChrysler AG may be benefiting from several factors: (1) Big Three rotation by Big Three consumers in their steadfast search for a quality vehicle, (2) relative inaccessibility of Top Four - Toyota, Honda, Nissan, and Subaru - dealerships in some parts of the U.S., (3) clever application of the novelty-by-grotesqueness stratagem, (4)Dietr Zetsche's very solid management talents, and (5) limited decision-making talents and skills at the lower levels of a population cross section. Ford, with a 1996-2000 RPA of .50, saw its April 2005 U.S. auto sales fall 5%. Toyota's and Nissan's new U.S. market shares continue to hold; GM's dropped back one percentage point. The year-to-date and historical U.S. market shares, together with natural market share estimates, are given in the table below.
Site Manager's Assessment on General Motors' natural market share: General Motors Corporation will likely make, or has already made, some improvement in the very short-term 3-year reliability of its vehicles. Under static conditions, by this improvement, GM management might reasonably anticipate a natural market share larger than .04, say about .08. However, with Chinese imports likely entering the U.S. market soon, it seems that the .04 natural market share estimate is the better guide over the next decade and a half, or so. In the Hyundai vs. General Motors war, Hyundai, with a 1996-2000 RPA of .31, trounced GM in April with a 13% increase in U.S. auto sales. U.S. April 2005 auto sales by Saab, a European subsidiary of General Motors with a 1996-2000 RPA of .50, plummeted 12%, and sales by Volvo, a European subsidiary of Ford with a 1996-2000 RPA of .29, fell 4%. Benefit from yesteryear's renown may be waning. In the niche markets, Porsche April U.S. auto sales fell 11%, BMW sales fell 8%, and Mercedes-Benz sales fell 1%. Note: Big Three sales and market shares do not include sales of European lines - Mercedes-Benz, Saab, Volvo, Jaguar, and Land Rover. Percentage unit sales changes for April 2005 over April 2004 are daily selling rate percentage changes and consequently take account of the fact that there were 27 selling days in April 2005 and 26 in April 2004. Source for April 2005 auto manufacturer sales data: "April 2005 U.S. Auto Sales," the Associated Press, available at Yahoo! News. Source for detailed Toyota sales data: "Toyota Reports Best-Ever Month," May 3, 2005, at http://pressroom.toyota.com/photo_library/display_release.html?id=20050503 Source for Nissan sales data: "Nissan Announces Best April Sales Ever," May 3, 2005, accessible at http://www.nissannews.com/nissan/sales/index.shtml Source for Honda sales data: "American Honda Reports Best Ever April Sales," May 3, 2005, http://hondanews.com/CatID1000?mid=2005050357026&mime=asc Source for Subaru sales data: "Subaru Reports Best April Sales in Company History," May 3, 2005, accessible at www.media.subaru.com Source for General Motors sales data: "GM Reports 385,939 Deliveries in April," May 3, 2005, accessible at http://media.gm.com Source for Reliability Percentranks and Percentrank averages: Auto on Info's Table I-MVRP Source for July 2004's Hottest Ten: "Hot Off the Lot,&qu | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
