News Column

For Big Three Automakers, An Unlikely Time for a Turnaround

April 18, 2011

Bob Cox

assembly line

The times are a-changing for the Big Three U.S. automakers and, for a change, in a positive direction.

For the first time in years, decades even, much of the buzz in the auto industry is about new car models from Ford, General Motors and even Chrysler. More importantly, sales and market share at those manufacturers are rising.

That resurgence, along with the swift rise of the Korean Hyundai and Kia brands, has brought a halt to the long-term ascendance of Toyota and Honda.

And the shift comes at what historically has been the worst time for U.S. automakers -- a period of soaring gasoline prices that usually sends more buyers rushing to Toyota and Honda because of their small-car lineups. Now, even with gasoline headed for $4 a gallon or more, the U.S. brands are in a position to hold their own or gain market share with highly competitive fuel-efficient vehicles.

"The domestics now have legitimately good products and the fuel efficiency to go head to head against the Japanese automakers," said Jesse Toprak, market analyst with

New car and truck sales in the U.S. were up 20 percent in the first quarter of this year, with all of the major brands posting gains. But Ford and Chevy, the two largest-selling brands, each gained market share, as did the combined Hyundai-Kia (separate brands that share ownership), along with Nissan.

Honda's market share for the quarter was flat, according to data compiled by Automotive News. And Toyota actually lost market share.

The reason for the changing fortunes of the auto industry is stiff competition, as manufacturers continually raise the quality bar.

"It tells you that product is king," Toprak said. "The old stigma the domestics suffered from hasn't gone away, but they've got a lot more competitive products."

Last month's earthquake and tsunami in Japan could open the window for further sales and market share gains for the U.S. and Korean brands. Toyota, Honda and Nissan are all, to one degree or another, facing parts shortages and production slowdowns. And the Japanese yen only recently reversed its appreciation versus the U.S. dollar, a trend that makes imported goods more expensive to American consumers.

Those developments in turn will likely mean fewer cars available to sell at higher prices in the coming months, a time when everyone expects new car buyers to look for models with better fuel economy ratings.

It's a small world

With their focus on trucks and large cars, American manufacturers have historically fared poorly when gas prices rise. That may not be the case this time around.

Ford, with small cars like the Fiesta and 2012 Focus, which is just beginning to arrive at dealers' lots, is well-positioned to compete against such popular staples as the Honda Civic and Fit and the Toyota Corolla. Chevrolet introduced the Cruze compact last fall to good reviews and will bring a subcompact, the Sonic, to market this year.

"We're very impressed with the Fiesta and the Focus," said Kelley Blue Book market analyst Jack Nerad.

The Fiesta, introduced mid-2010, is gaining sales in Fort Worth, said Kelly McMullen, general manager at Texas Motors Ford. "We sold two yesterday," he said last week.

The Cruze is Chevy's best small car product ever "and is doing pretty well," said Don Allen, general manager of the Jerry Durant dealership group in Weatherford.

Chrysler-Dodge still has a glaring weakness in its product with its small cars, but Nerad said the soon-to-arrive Fiat 500 is getting lots of research attention by potential buyers at Kelley Blue Book's website,

Korea vs. Japan

Toyota's drop, analysts say, is explained in part by the deluge of bad publicity over its problems with unintended acceleration and other issues in the last 18 months. Most analysts expected Honda to gain at Toyota's expense, but that hasn't happened.

"As it turns out the biggest beneficiaries were Hyundai-Kia and Ford," Toprak said.

With high-mileage, modestly priced models like the Sonata and Elantra, "Hyundai is about the hottest thing going," said Allen, whose dealership group includes all of GM's brands plus Toyota and Hyundai.

Competitors have gained ground at the expense of Honda and Toyota because they have produced vehicles with eye-catching designs and newer and better features, while also going a long way toward erasing past quality issues. "The Japanese brands are coming back to the pack a little," Nerad said. "Honda is kind of wandering in the wilderness in terms of styling. As for Toyota, it's hard to maintain leadership year after year."

Early reviews for Honda's newest version of the Civic have been good, but the Accord and Toyota's flagship Camry and Corolla brands are all dated.

Consumers are the biggest beneficiaries of the renaissance of the U.S. automakers and rise of the Korean brands, which also had to overcome serious quality issues.

"There are cars that are better than others, but there are no really bad ones out there," Toprak said. "That's due to competition."

Source: Copyright (c) 2011, Fort Worth Star-Telegram, Texas

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