Cutting through the automakers’ sales results sales pitch

While the rest of the country is busy crunching numbers to predict who will be the next President, at the Four Wheel Drift, we’re up to our eyes in auto manufacturers’ reports for 2007 deliveries and sales.  If we could predict in politics the way we forecasted sales for this year, we’d be making much more money working in D.C.

 The fact of the matter is that we don’t always believe the spin handed to us with the results, so we like to see what really mattered in the companies’ 2007 reports…and which allows us to predict what will happen in 2008 and beyond. 

Like we expected, it was a brutal year in the car business for the usual suspects.  And to no surprise, the savvy European and Asian brands not only weathered 2007, but outright excelled.  

Ford
First let’s look at the Blue Oval boys’ 2007:
 

  • Ford’s 2007 sales totaled 2.57 million, which was down 12 percent from 2006. 
    • Retail sales were down 10 percent and fleet sales were down 18 percent (including a 32 percent reduction in daily rental sales). 
    • More than two thirds of Ford’s sales decline reflected discontinued products.

FoMoCo Brand Sales              
   Ford         2,101,244 2,433,086 -13.6
   Mercury         168,422 180,848 -6.9
   Lincoln         131,487 120,476  9.1
   Jaguar         15,683 20,683 -24.2
   Volvo         106,213 115,807 -8.3
   Land Rover         49,550 47,774 3.7
      Total Ford Motor Company         2,572,599 2,918,674 -11.9
  Mustang          134,626 166,530 -19.2
F-Series         690,589 796,039 -13.2
               

               

               

               

  

Since Ford put all of its eggs in the truck basket, it shouldn’t come as a shock that a 13.2 percent decline in F-Series trucks didn’t help overall brand performance.  And once again, those who predicted that the retro look would reinvigorate the Mustang (as well as told us we didn’t know you-know-what from Shinola when we emphatically disagreed with selling-out the brand for any short-term image gain with Baby Boomers) were proved totally wrong.  Mustang deliveries in 2007 fell 19.2 percent from 166,530 to 134,626 – and many of those are still sitting on dealer lots despite low APR financing. 

Selling Jaguar and Land Rover to Tata was obviously a great move.  If Ford can’t do something quickly to revive Volvo’s tired product line, it will be looking to send away its favorite Swedes, as well.    

Volvo’s reputation for electrical gremlins, expensive maintenance (not to mention often inept dealer service centers), and not so amazing fuel economy might be credited with steep declines in S60 (down 28.1 percent to 18,511 cars), V70 (down 32.7 percent to 3769), XC70 (down 3.8 percent to 12,628), and XC90 (down 5.6 percent to 31,336).   

General MotorsThere are two bright spots at GM. 

First is GMC, which actually saw 5.1 percent growth in the face of a market shunning domestic trucks.  Credit for GMC’s performance goes directly to the Arcadia, which sold 72, 765 units in its first full year of production. 

The second star at GM is Saturn with 6 percent growth.  Unfortunately, the percentage growth isn’t nearly as great as it should be.  Even with all its accolades, the Aura fell just short of 60,000 units – not even good enough to crack into the leaders in the midsize segment.  The true Saturn surprise looks to be the Sky, which while not outselling its Pontiac Solstice sister, did manage to see a 30 percent increase against the Solstice’s 15 percent decline. 

Buick’s performance reflects the company’s decision to focus on well-built soft, boring crossover Utes, instead of soft, boring, and poorly-executed sedans during a time when people are slow to buy either. 

As for Hummer, all we can say is that the only people more shortsighted than Hummer consumers are the yutzes who felt that investing in free-standing Hummer dealerships was a good business decision. 

Speaking of bad business decisions, the Chevy brand is busting at the seams with them.  When the lone bright spots in the Bowtie group are the long-term declining Suburban (which pulled-off a stunning 8.4-percent increase to 83,673) and the Aveo (up 15.1 percent to 67,028 units), an also-ran in the growing sub-compact segment, there’s not much about which to be happy.  Okay, we’ll throw-in the Corvette, because every year the car gets better and units always sell, but niche products aren’t enough to save GM.  Like at Buick, Cadillac, Pontiac, (and Ford, for that matter), Chevy needs top-quality products in the core segments: large sedan, midsize sedan, small sedan, and sub-compact fuel sipper.  Until then GM fans should get comfortable with results like these: 

Buick 185,791 240,657 -22.8
Cadillac 214,726 227,014 -5.4
Chevrolet 2,265,641 2,415,428 -6.2
GMC 505,746 481,222 5.1
HUMMER 55,986 71,524 -21.7
Pontiac 358,022 410,229 -12.7
Saab 32,711 36,349 -10.0
Saturn 240,091 226,375 6.

  

Chrysler

The board room at Daimler-Benz has to be breathing much easier this year with Chrysler as someone else’s nightmare.  

CHRYSLER BRAND 543,011 604,874 -10%
JEEP BRAND 475,237 460,052 3%
DODGE BRAND 1,058,402 1,077,579 -2%

 

Chrysler could only manage a 10 percent decline in sales, with brand image leaders 300 and PT Cruiser slipping 16 percent (to 120,636) and a whopping 28 percent (to 99,585) respectively.  We’re actually surprised that it took this long for the PT Cruiser to fall under 100,000 annual units, but evidently there are still many older Baby Boomers trying to look “cool” by driving a Neon-sized bucket of rattles…come to think of it, maybe the extended run can be attributed to these buyers replacing PT Cruisers every few years as they fall apart.

 One might call Jeep’s 3-percent increase a big win, but with all the new products in the brand’s lineup, it’s actually a big disappointment. 

Similarly, Dodge managed its 2-percent decrease in deliveries with a whole host of new products…most of which replaced poorly-built coupes and sedans with nicely-powered ugly crossovers that while built better, are aplomb with cheap materials.  

Furthermore, Chrysler has been running plenty of zero-down, zero-percent financing deals to move existing inventory.  And to top off the carnage, even the “lifetime” powertrain warranty doesn’t seem to be helping.  

Toyota

Best-ever year-end sales of 1,313,651 units, up 2.7 percent 

The fact that Toyota had record sales is proof that offering solid products in core segments is the winning strategy.  When Toyota sees a product not fairing well, it makes it better, as proven by the Tundra, which helped Toyota light trucks deliver best-ever sales of 977,997, an increase of 3.2 percent. 

Unlike the domestic companies, which always maintained an “in-the-now” product philosophy, Toyota is now reaping the benefits of developing fuel efficient small cars like the iconic Prius (up a huge 68.9 percent to 181,221 units) and underwhelming, but still fast-selling Yaris (up 20.2 percent to 84,799.) 

Lexus witnessed its cars jump 9.1 percent to 200,334 units, but light trucks (meaning SUVs) slipped 7.9 percent to 128,843.  Anyone who doubted the sanity of offering a hybrid powertrain in the flagship LS need only look at the near 80-percent jump to 35,226. 

Let’s not forget to mention Scion, which is actually considered a part of the Toyota brand for sales purposes.  In general, Scion stunk it up in ’07, with the xB dropping over 25 percent (to 45,834) and the tC falling just short of 20 percent to 63,852. 

Honda

Ford, Chrysler and GM can cry all they want about how horrible the market is and we still won’t shed a tear, because Honda saw record total vehicle sales of 1,371,438 (up 4.5 percent) in 2007.  Just for the record, this is the 11th consecutive yearly sales record and 14th consecutive year-over-year sales increase for the company.  As for the complaint about lagging SUV sales from the Domestics, Honda responds with record light-truck sales across Honda and Acura brands of 669,327 (up 0.3 percent), representing 43 percent of total vehicle sales. 

Acura

Honda’s entry-level luxury brand did falter by 10.8 percent to 180,104 vehicles.  But it wasn’t all bad, as Acura showed its SUVs are still very desirable by posting record year-end sales, eclipsing 2006 by 29.1 percent. 

Audi

Audi dealers sold 93,506 new vehicles during 2007, up 3.8% over 2006.  This is especially impressive, considering that this is actually sales to customers, as opposed to other manufacturers quoting deliveries to dealers, which still often need huge incentives to get customers to buy the cars off the lot. 

Subaru

187,208 total units for the year -7% 2007 

Nissan

Nissan saw sales of 76,900 units, a 2.2 percent decrease compared with last year’s 78,663 units sold.  If it weren’t for the great performance of the Altima (284,762 – an increase of 22.1 percent), though, things would have looked much worse.  Things look up for the manufacturer, too, since the GTR supercar gives a much needed halo image, while a new (and much more competitive) Maxima isn’t too far off on the horizon. 

Infiniti

On the other hand, Infiniti was an overall winner.   Its great G-series helped the company to increase car sales by 7.6 percent to 93,718. The 33,320 units of SUVs, however, were 3.3 less than 2006.   

The BMW

BMW and MINI combined for best-ever annual sales in America for both its brands of 335,840 vehicles, an increase of 7.1 percent over the 313,603 vehicles sold in 2006.    BMW seems to be the blueprint for success, with the 3-series showing an 18.6-percent increase to 142,490 (and the factory simply can’t keep up with 335 coupe and retractable-hardtop convertible orders!)  

And even though it ain’t the most fuel efficient thing on the planet, the X5’s quality and performance led it to a 31.4-percent increase to 35,202 units. 

Mazda

The forgotten Japanese automaker (at least the one not named Mitsubishi or Isuzu) had its best year since 1994.  Mazda sold 296,110 vehicles in America, an increase of 10.2 percent.   The vehicle leading the revolution at Mazda isn’t wielding a Wankel, nor is it a British-inspired roadster, rather the fun, comfortable, well-built 3 compact.  It increased its sales by 27.4 percent to 120,921. 

Speaking of Wankel rotary engines, the RX8 was off 38.3 percent to a “kill me now” 5,767 units. 

VW

Volkswagen sold 230,572 total units in 2007, a decrease of 1.9 percent.  We can simply attribute this to another 5000 or so people realizing that despite the great packaging, nice steering, available diesel engines, and wonderful seat heaters, the cars are statistically more likely to break down than anything short of a Land Rover. 

Hyundai

Hyundai increased total annual sales from 455,520 in 2006 to 467,009 in 2007.  The performance was its ninth consecutive gain, courtesy of consistently improved products.  

Kia

Kia’s bang-for-the-buck products were the key for a 14th consecutive year of record sales with 305,473 units sold, a 3.8-percent increase from 2006. Like Hyundai, Kia didn’t have a single silver bullet, rather just a good overall lineup representing most of the core product segments. 

Porsche

Porsche Cars North America delivered 34,693 units in the US, which exceeded 2006’s record-breaking sales of 34,227.  If you’re a naysayer who hates the Cayenne, and it is not enough that Porsche’s SUV helped the company to its fourth consecutive annual sales increase, then just put this statistic into your pipe and smoke it:  in 2007 Porsche sold 9,649 Boxsters and Caymans, 12,493 911s…and 12,547 Cayennes!

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2 Responses to Cutting through the automakers’ sales results sales pitch

  1. Sam — As always, insightful. While we can ook at numbers ’till we’re blue in the face, (and most days, that’s what I end up doing), let’s go down a level and see what’s happening below the topline. Let’s ask — Why are GM’s numbers down and what’s their plan?

    At GM, there are some other very interesting numbers that have a direct impact on these topline results. For example, we had the lowest inventory going into January that we’ve had in 13 years, down 147,000 vehicles compared with a year ago December; for the third year we’ve cut low/no-profit fleets sales to daily rental companies (-108,000 in 2007 alone) which have dramatically increased profitability of the rentals we do sell and increased residual values – this is the lowest level of daily rental sales in 9 years; we’ve stabilized our retail share at around 21 percent of the market; retail sales as a percentage of total sales increased a point to 74 percent in 2007; the ‘boring and soft’ Buick Enclave has a great turn rate and has helped (with OUTLOOK and Acadia) boost GM volume in mid-utility crossovers by more than 200 percent total and 333 percent retail in 2007. Average transaction pricing in that segment is up dramatically. And, let’s not forget, GM brands outsold the closest U.S. competitor in our country by more than 1.2 million vehicles in 2007.

    So, the topline numbers have suffered – no doubt. Much of that is by design — some of it because of factors we can’t control such as the overall industry decline, gas prices, and the housing market/sub prime impact on consumer confidence. But we are reducing top-line sales for a reason, and that’s to make our company more sustainable over the long haul. Now Chrysler and Ford are following our turnaround strategies in this very challenging market.

    Do we have more work to do? You bet. But consider this, too:

    We’re in a global market and we’ll see our 4th year of 9M+ sales in 2007 –most likely we’ll have our second-best global sales year in our 100-year history. We anticipate record sales in 3 of our 4 global regions (North America being the exception). And we are taking advantage of record growth in emerging markets such as Russia, India and China.

    For a company that is in it’s centennial year, we’re still a top player in the global marketplace and have been the annual global sales leader for 76 straight years. How many other global businesses do you know that can say that? We are very grateful for each and every GM customer worldwide and our global success over so many years is a reflection of that dedication to product excellence and customer service.

    And, we offer more models that achieve 30 mpg or better than any competitor in the U.S. Who would have thought?

    So, stay tuned for the next 100 years! There’s a lot more to come.

    Again, thanks for the year-end report. I hope my post helps your readers get a bit below the surface for a deeper understanding and appreciation for the results we’ve worked so hard to achieve.

    John M. McDonald
    Spokesman
    GM Vehicle Sales, Service and Marketing
    Detroit, MI
    john.m.mcdonald@gm.com

  2. John,
    Thank you for taking the time to report this information. It is extremely interesting!

    Four Wheel Drift readers should note that the article was about US sales, which in GM’s case definitely doesn’t tell the whole story. While Buick gets somewhat hammered in this piece, it should be mentioned that I’ve been very impressed with Buick’s performance in China. (Heck, I’m downright jealous of some of the products offered there under the Buick brand, being a guy who was brought home from the hospital in a Buick Special Convertible and had a ’77 Buick LeSabre as a first car!!!)

    John also brings up a huge point: “Stay tuned for the next 100 years.” This might be lip service, or it might be an indication that GM is really looking at how products will need to evolve. I’d guess that GM brass never wants to be put in the position again of not having the products necessary to compete when there is a paradigm shift.

    I enjoy hearing follow-ups from companies. I don’t even mind being called wrong, pigheaded, misleading…although I like “insightful” much better!!! (John must be rewarding me for wearing my Corvette shirt right now.)

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