Big Three's share of U.S. market drops
USA Today
Detroit's Big Three car companies sold just 59.8 percent of all new cars and trucks purchased last month in the United States, slipping below a symbolically significant 60 percent and raising the specter that foreign brands could one day dominate the U.S. market.
Detroit's share was well off 63.6 percent a year earlier and much worse than its historic 70 percent-plus share.
"It's been about a 10-point loss in a relatively short period," acknowledges Paul Ballew, head of market and industry analysis at General Motors. But he says it's better to sell fewer high-profit models — such as sport utility vehicles — than to dump cars into rental fleets for little or no profit.
How much they hurt:
• DaimlerChrysler's Chrysler Group fell the most — 11.3 percent of August sales vs. 14 percent a year ago — as sales of its minivans and SUVs collapsed.
• Ford Motor slipped to 21.2 percent from 21.7 percent as car sales slumped, while trucks held steady. Even so, Ford is cutting 300 jobs at a truck-transmission factory because of slowing sales.
• GM backslid to 27.3 percent from 27.8 percent as car sales fell but more profitable truck sales rose.
Detroit has been hit by "the perfect storm," says Elias Farhat, auto specialist at consultant Bain & Co. "It's a combination of the overall economy softening, everyone adding SUVs to their lineups" and growing foreign-brand factory capacity pumping out a glut of trucks, a market Detroit used to owned.
Analysts said Detroit's diminished share is permanent and will mean lower profits and fewer jobs.
The Big Three will "need to take a minimum 1 million units out (of production). That's four plants, maybe more," independent analyst Joseph Phillippi said. Closing four auto plants would cut 10,000 to 15,000 assembly line jobs.
"I've tried to concoct scenarios that could turn that around — new products, different circumstances — but I have great difficulty coming up with any," Phillippi said.
"First time it has ever dropped below the 60 percent threshold," said Nicholas Lobaccaro, auto analyst at Lehman Bros., in a report to clients, adding: "Unfortunately, we do not view this month's result as an aberration but a continuing trend.
Detroit's shrinking share would matter less if sales were rising overall. But a smaller share of today's declining new-vehicle market is a double whammy. Merrill Lynch auto analyst John Casesa said it "will put further pressure on pricing and production schedules."
Warned Ford sales analyst George Pipas: "Any domestic manufacturer whose business plan assumes higher market shares tomorrow than today better rethink the plan."
