On the Road Review Auto Trends: What Do the Sales Numbers Tell Us?



Since January 2008, the automotive market has been through the ringer. Thousands of dealerships have been closed nationally, two prominent domestic manufacturers have gone through government-sanctioned bankruptcy, and buyers have stayed home in droves despite hefty incentives and tax-supported rebate programs.

 

What used to be a sure thing is no longer true. What used to sell now languishes while power is rapidly shifting to new players in America’s auto industry. It is mid-September as this is written and the sales charts tell an interesting tale. Who’s hot, what’s not? What carmakers should be confident, who is still in trouble?

I’m going to venture out on a limb and make some forecasts. All of you armchair quarterbacks — keep your saw handy.

Three Surprises

Of the former Big Three Detroit automakers, only one company elected to forgo government support and its sales numbers are surprisingly optimistic. The Ford Motor Co. has had some success so far in 2009 with its car lines, as the midsize Fusion shows that it can be a real alternative to the top-selling Camry and Accord. Fusion sales, including an efficient new hybrid model, are up 13 percent so far — one of the few bright spots among domestic automakers. Despite the sales collapse of the brand new F-series pickup — all pickup sales have dropped this year — Ford is counting on a wave of new small cars, a new small van from Europe, an all-new Taurus sedan, plus a revised Super Duty truck series (with another diesel engine change) to help it regain its footing in the United States. I feel that Ford will at least maintain its market share in an industry that will struggle to get to 11 million units sold this year — a 35 percent decline from just three years ago.

2010 Subaru Outback
2010 Subaru Outback

More noticeable to New Englanders is the raging success of a maker that enjoys cult-like status here — Subaru. So far in 2009, Subaru is one of only two automakers enjoying greater sales than last year. With the new Forester compact SUV’s sales jumping a whopping 28 percent over the previous version, plus a new, larger Legacy/Outback series exceeding last year’s sales levels, Subaru is poised to post another growth year in a down economy. Even more notable, Subaru has no cars that are at the top of the EPA mileage charts, it sells no hybrid models, and the brand has few dealerships outside of the Snowbelt. Yet, sales for the entire brand are up 10 percent. Yankee value still has its place.

The “sleeper” automakers are the stealthy Korean brands. The consolidation of Hyundai and Kia has led to rapid transformation. Both brands have steadily added new models, totally revised older models and now have a thoroughly competitive lineup top to bottom. Combined sales are up a modest 1 percent, but consider this: huge Toyota has seen its sales plummet 30 percent this year in America. The Koreans have to be extremely pleased.

Makers to Watch

While auto sales are down worldwide, several manufacturers seem poised to make a larger impact in the months and years ahead. Here are three brands that bear watching.

BMW is poised to offer several high-performance, high-dollar models this fall, but lost in the jargon about this brand are two small cars coming our way next year. BMW wants to bring its new compact X1 sport utility to the States, plus the 1-series hatchback to go with the 1-series coupe/convertible already on sale here. Combined with two more Mini Cooper models (BMW owns Mini) slated to join that compact lineup — plus several more diesel-powered cars as well as several high-end hybrid models — and BMW seems to be well positioned to maintain sales at the premium end of the spectrum. Sales are currently down 26 percent — better than most luxury brands — yet the demonstrated pull rate on diesel BMW models has clearly exceeded expectations.

Volkswagen CC Sedan
Volkswagen CC Sedan

German rival Volkswagen is also preparing more new models for a changing marketplace, while also looking for more diesel-powered sales. Currently, VW is selling twice as many Jetta clean-diesel TDI Sportwagons than it planned, while TDI Jetta sedan sales are now over 30 percent of total Jetta sales. Total Jetta sales are up 7 percent over last year — the only compact car that can make that claim. That’s right; not Toyota Corolla (down 25 percent) not Honda Civic (down 27 percent) and not Toyota Prius (down 22 percent).

Volkswagen is enjoying good success with its sexy new CC sedan (pictured), plus several small car additions to the lineup in the coming months will make VW dealers a focal point once again.

Audi is also revamping much of its lineup with sleek new A5 models, another sport utility — the Q5 — plus some diesel models of its own. Audi is also in better shape than Lexus, Cadillac, and Mercedes, with overall sales down only 10 percent YTD.

Who’s in Trouble?

The financial difficulties confronting several automakers could take more players out of the market in the months ahead as sales appear to be stagnant. Recovery could be several months away — recovery meaning anything near the levels of new car sales that match the average over the past 10 years.

Ford’s Mercury Division has to be on a death watch, as sales have slipped to below an annualized rate of 100,000 units. Ford sells as many full-size E-series vans as the whole Mercury lineup! And Mercury loses two models in the coming months — never a good sign.

After making a relatively strong showing in 2007, Mitsubishi is once again in trouble. Sales are down to only 38,000 cars and trucks so far in 2009 — a decline of 47 percent. Many dealers can’t survive on these low volumes and contraction will further eliminate sales opportunities. I would expect Mitsubishi to join Oldsmobile, Pontiac, Plymouth and Isuzu on the memories list very soon.

Another longtime automotive icon is still in pretty rough shape after being propped up by both domestic and foreign tax contributions — Chrysler. Even with controlling partner Fiat bringing several small cars into Chrysler showrooms over the next few years, that might not be quick enough to rescue this beleaguered automaker.

Chrysler-badged car sales are abysmal, down 60 percent, while Dodge cars are little better at a 46 percent decline. Former product stalwarts such as the Jeep line (down 34 percent) the all-new Ram pickup series (down a surprising 26 percent) plus minivan sales still sliding to a fraction of their former levels, Chrysler is left with few high-margin products, no credible midsize cars and older compact offerings that are unpopular picks.

Chrysler has also lost a lot of its engineering and product planning talent, leaving the automaker more dependent on existing platforms as well as the upcoming Fiats — cars that may not be well received in a market that remembers the Fiats sold here 25 years ago. There is a reason that Fiat left America — it couldn’t compete with Honda, Toyota and Nissan.

Will this time be different for Fiat? Will the Chinese offer new cars that make an impact? Can GM right its ship? Will Nissan make another comeback?

Time certainly has a way of separating the wheat from the chaff.

Next week: Hyundai Genesis Coupe

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