DETROIT: The way that auto executives here have been talking, 2008 will be a terrible year to sell cars in the United States. Every time one company predicts how the industry will fare, another seems to come up with an even more dismal number. Most sales forecasts now come in at 15.5 to 15.9 million units, which would mark the worst year for sales since at least 1998. Yet several big foreign carmakers, including Toyota and Honda of Japan, are projecting their United States sales to increase in the coming year, in spite of a housing slump, high gas prices and lackluster consumer confidence. In other words, it is shaping up to be another year of declining market share for the ailing Detroit automakers and of profitable growth for their rivals. The soft market will test the Detroit companies' ability to stick with their newfound strategy of trying to make more money from fewer sales. The temptation to unfurl "sale" banners in desolate showrooms might be the greatest for General Motors, which has been in a tight race with Toyota in 2007 to retain its position as the world's largest automaker. GM fell behind in the first half of the year but led after nine months. Final sales figures will not be known until early January. In 2008, however, analysts expect Toyota to pull ahead by a wide margin. Toyota said this week that it anticipated that global sales would increase 5 percent to 9.85 million vehicles. GM has not released its full-year production target, but its rate of expansion worldwide has been slower and its U.S. sales continue to decline. "GM has hopefully learned some lessons from the domestic market," said Jesse Toprak, director of industry analysis at Edmunds.com, a Web site that gives car-buying advice. "Market share is not the bottom line goal; profitability is." Several years ago, falling sales led the Detroit companies to have huge "employee pricing" sales that quickly cleared dealer lots but significantly hurt profit and made vehicles less attractive to shoppers because resale values plummeted. The companies have insisted that they do not plan to reprise that strategy in 2008, no matter how bad the market becomes, but analysts are not so sure. "If things aren't improving by the second quarter we may see some more creative or aggressive incentive spending," Toprak said. The gloomy outlook for 2008 has caused investors, many of whom had begun to believe that the Detroit carmakers were progressing in their turnaround efforts, to shy away from those companies recently. Shares of GM, the best performing stock in the Dow Jones industrial average in 2006, have fallen 42 percent in the last two months and are down 17 percent for the year. Shares of Ford Motor are down 31 percent since July and 11 percent for the year. New products, like the Chevrolet Malibu and Cadillac CTS sedans and the Ford Edge crossover vehicle, have sold well, but they are not enough on their own to keep the companies from continuing to lose share. Ford plans to introduce several important vehicles in 2008 - a redesigned F-series pickup and the new Flex crossover - but they will not reach dealers until late in the year. Meanwhile, Honda has found itself with a hit in the recently revamped Accord sedan, and several new vehicles have helped Toyota overcome some unusual quality stumbles in the last year. The president of American Honda, Tetsuo Iwamura, said during a December visit to Detroit that he expected the company's U.S. sales to rise 2.5 percent in 2008. Toyota this week said U.S. sales would increase 1 percent. Meanwhile, GM, which had a five-month supply of unsold pickup trucks at the end of November, said it was cutting first-quarter production by 11 percent. Ford has announced a 7.4 percent cut in the same period. "I think we're going to have a great year," said Terry Baier, general manager of the Oakbrook Toyota dealership in Westmont, Illinois. Source: Herald Tribune |
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