Ford Making Inroads Despite Slump
Wednesday, June 3, 2009
Ford continued to pinch business from its struggling crosstown rivals last month, increasing its share of the U.S. auto market to its highest percentage in three years.
The automaker now controls 15.1 percent of the marketplace, and some analysts predict that Ford could leap past General Motors in sales by the end of the year.
Ford has been able to survive without government aid, as its competitors have buckled. In May, Chrysler entered bankruptcy protection. And GM was not far behind, culminating with a Chapter 11 filing on Monday.
Ford insists that its products, not its rivals' financial troubles, are driving sales. But regardless of the reason, it plans to capitalize. As GM and Chrysler close and idle plants this summer, Ford announced yesterday that it will be ramping up its North American production by 10,000 vehicles in the second quarter. In the third quarter, it plans to make 42,000 more vehicles than it did a year ago.
Across the industry, companies sold 1,397,033 cars and trucks in the United States, a 33.7 percent decline from May 2008, according to preliminary data released yesterday by research firm Autodata. But analysts noted that sales for many firms improved from a month earlier, a silver lining in an otherwise bleak economic downturn. Ford's May sales dropped 24.2 percent from a year ago. But sales have improved since April, making May the highest sales month since July.
GM also hit its best sales month of this year, despite sales falling 28.7 percent compared with a year ago. (The monthly figure for total car sales also translates into an annualized rate of 9.9 million cars, close to a level at which the automaker says a restructured GM can once again be profitable.)
Chrysler, whose market share totals 10.2 percent, said its sales dropped 46.9 percent after rental car firms and other fleet buyers passed up purchases. Individual sales were the best all year, as the automaker cut 789 dealers, who then offered deep discounts this month to move their inventories.
Foreign automakers also suffered last month. Toyota's sales fell 40.7 percent, and Honda's were down 41.5 percent. Nissan's tumbled 33.1 percent.
"The May results should be interpreted with some caution, given the current volatility in the marketplace," said Emily Kolinski Morris, Ford's senior U.S. economist.
Currently, GM controls 19.5 percent of the marketplace -- a dramatic decline from the days when it made half the cars on American roads.
As GM goes through the bankruptcy process, it expects to lose some market share. It is phasing out Pontiac and selling off Hummer, Saab and Saturn to focus on four core brands: Chevrolet, Buick, Cadillac and GMC. But the company doesn't expect it to fall below 16 percent, said Mark LaNeve, GM's vice president of North American sales and marketing.
For months, GM executives have warned that the drumbeat of bad news, especially bankruptcy speculation, was hurting auto sales.
Yet last month, GM gained small percentages of market share in Europe, Asia, South America and the United States. LaNeve said it showed that consumers have become "somewhat desensitized" to Chapter 11 filings.
"I think it's become clear to the consumer that we're going to emerge from this, and that we are going to be around to keep providing products to the marketplace," he said.
Ed Kim, an AutoPacific analyst, said it was too early to tell whether consumers have changed their minds.
"Now that GM is officially in bankruptcy, my hunch is that they're trying to publicly butter up the situation as much as they can," he said. "Before they were urging the media not to use the 'B word' because they were well aware of the consumer perceptions of it."
Following Chrysler's bankruptcy, 63 percent of consumers expressed concern about buying a Chrysler, according to an AutoPacific survey conducted in mid-May. As chatter grew that GM would follow Chrysler, 54 percent said they were worried about purchasing GM vehicles, and just 13 percent expressed concern about buying from Ford.
Now that Chrysler has emerged from bankruptcy, the automaker is expecting sales to pick up. It plans to reopen idled plants by the end of June, executive vice president Steven Landry said.