Monday, February 21, 2005

Freshened U.S. lineups still trail pace of rollouts by Toyota, Honda and Nissan.

By Eric Mayne / The Detroit News

To hear the Big Three tell it, their market share losses will be halted by "unprecedented product blitzes" and pipelines full of future hot sellers.

The reality, though, is troubling for Detroit's automakers.

Japan's own Big Three -- Toyota Motor Co.p., Honda Motor Co. and Nissan Motor Co. -- will roll out more new cars and trucks in America over the next few years.



According to new research from Prudential Equity Group LLC, Toyota will replace 93 percent of its North American sales volume with all-new or redesigned vehicles by 2007; Honda will replace 108 percent and Nissan 134 percent.

By contrast, new products will represent 73 percent of Ford sales; Chrysler will replace 79 percent of its volume and GM 86 percent.

With less new product, it will be difficult if not impossible for Detroit automakers to stop the market share slide that left them with 59 percent of the U.S. car and truck market in 2004, down from 69 percent in 1999. Each point of U.S. market share equals about 170,000 vehicles.

"This is a zero-tolerance game -- you either break through or you fall back. There's not enough room for everybody to grow," said Jim Sanfilippo, a market analyst with AMCI Inc. in Detroit. "The Japanese are faster to market. They are setting the pace. In some cases, the domestic are closing the gap, and in some cases they are still behind. You have to keep up."

Prudential says the only way Ford Motor Co., General Motors Corp. and DaimlerChrysler AG's Chrysler Group can reverse the share decline is if each introduces, on average, enough new products every year to account for more than 20 percent of their annual sales volumes.

By the end of 2007, GM is the only Detroit automaker expected to eclipse that mark, replacing about 21.5 percent of its volume each year, the report says.

Chrysler is expected to replace 19.7 percent, while Ford trails with 18.2 percent.

Detroit automakers bristle at any suggestion they are comparatively slow to bring vehicles to market and dispute Prudential's future product assumptions.

"Their intelligence isn't always completely accurate," said Ron Pniewski, GM's vice president of North American planning and program management. "There are several new introductions that they're missing." He declined to provide details.

Prudential examined the pace at which it believes automakers plan to redesign or expand their product lineups from 2004 through 2007, taking into account estimated production volumes and sales forecasts.

By the end of 2007, Toyota's product plan will help lift its North American market share to 13.6 percent from 12.2 percent in 2004, according to Prudential. Honda's share should approach 10 percent, up from 8.2 percent last year. The report did not project future market share for Nissan.

The report, citing products such as Honda's Ridgeline pickup, which debuts this year, says Japan's gains will come at the expense of Detroit automakers facing competition in segments where they've never before been challenged.

Prudential predicts GM's market share will fall to 26.6 percent in 2007, from 27.3 percent last year, while Ford slips to 16.9 percent from 18.3 percent and Chrysler dips to 12.7 percent from 13 percent in 2004.

A similar report last year from Merrill Lynch also forecast continuing market share losses for Detroit automakers but found they are quicker to market with new models than the Prudential report suggests, if not as fast as their Japanese rivals.

A huge X-factor in any analysis of how fast automakers plan to refresh their lineups is how well individual models sell. Early numbers suggest new models like the Buick LaCrosse, Pontiac G6 and Ford Five Hundred are off to so-so starts.

The Chevrolet Colorado and GMC Canyon, which debuted last year, could not unseat the best-selling Ford Ranger in the compact pickup segment, even though the Ranger has remained virtually the same since 2001.

Still, Prudential singles out Chrysler to illustrate the link between an ever-evolving product line and market share gains.

With the introduction of the Chrysler 300 sedan and Dodge Magnum wagon, along with major redesigns of the Dodge Dakota pickup and Jeep Grand Cherokee sport utility vehicle, Chrysler replaced 22 percent of its sales volume with new models in 2004.

As a result, Chrysler's market share jumped to 13 percent from 12.8 percent in 2003, making the Auburn Hills automaker the only one of Detroit's Big Three to gain share last year.

For competitive reasons, automakers jealously guard details about future products. But in recent years -- particularly as they have lost share to Japanese rivals -- Chrysler, Ford and GM have turned their new model plans into rallying cries.

Every year, it seems, Detroit auto executives promise the future will be brighter when customers get a look at their new entries.

GM has promised 15 new products a year -- or one every 24 days. Chrysler said last year it would roll out 25 new products within three years. And Ford promised in 2002 to introduce 65 new models over five years, including new or redesigned vehicles from European premium brands Land Rover, Jaguar, Volvo and Aston Martin.

But by Prudential's count, GM will average fewer than 14 introductions through 2007, and Chrysler will have rolled out just 15 new products through 2006.

Ford will have introduced 26 models between 2003 and 2008, the report says. That does not include European entries, but Prudential's count still cast doubt on Ford's ability to hit its 65-model target.

The automakers stand by their forecasts.

"Seldom does anyone know the entire product plan of any company," said Earl Hesterberg, Ford's group vice president of marketing sales and service.

This year, Ford will launch three midsize sedans -- the Ford Fusion, Lincoln Zephyr and Mercury Milan -- built on the same underpinnings as the Mazda6 sport sedan. Ford owns controlling interest in Mazda Motor Corp.

Can Toyota maintain the pace of its product rollouts? Dan Danzer, group vice president of corporate planning, said engineering resources are stretched to their limits.

"We don't look for big huge jumps in market share," he said, "but we try to make each product better."

Even new products don't sell themselves, however, said Rebecca Lindland, senior automotive analyst with Global Insight Inc.

"You just can't underestimate the importance of the marketing dollar when it comes to getting people's attention," she said.

Dan Amell, sales manager of Troy Honda in Troy, sees the benefit of strong product and good marketing every day. Honda is rolling out so many new products that dealers are being forced to expand.

"Of course," Amell said, "we seem to think -- being in the business -- that they don't do it often enough."

source : detnews