June 3, 2005

Bloomberg
SOUTHFIELD, Michigan –Volkswagen, BMW and DaimlerChrysler’s Mercedes led European brands to a fifth straight monthly decline in US sales in May as Asian automakers gained market share with newer models.
Sales of European brands in the US fell 14 percent to 91,720 cars and trucks, and the market share for European nameplates fell to 6.1 percent from 6.5 percent a year earlier, according to Autodata. Asian automakers increased their market share to 36.3 percent from 34.8 percent.
“The Europeans have been behind the Asians in terms of new models,” said David Healy, an analyst with Burnham Securities of New York.
European and US brands are losing ground in the US as Asian automakers such as Toyota Motor and Nissan Motor introduce more new cars and trucks and expand US manufacturing plants. Volkswagen has said it might not see a significant recovery in the US until next year as it replaces several cars. Bayerische Motoren Werke is in the process of switching to a new version of the 3-Series, its top-selling US model. Total US sales for the month fell 8 percent to 1.5 million vehicles.
Sales of Wolfsburg, Germany-based Volkswagen fell 34 percent to 23,088 last month. Volkswagen brand car and truck sales slid 42 percent, and Audi models declined 6.1 percent.
Volkswagen said Passat sales dropped by 66 percent to 2,449 in May, and demand for its Beetle fell 33 percent to 3,343. Jetta sales fell to 7,912 from 11,494 a year earlier. “All the high-volume product, other than Jetta, is quite old,” said Wes Brown, an auto analyst at consulting firm Iceology in Los Angeles. “They really don’t do aggressive incentive offers, and rather than match the competition, they are willing to lose sales. This is a strategic decision.”
Unless VW decides to offer higher incentives “it’s going to be an awfully bad summer”, he said.
BMW’s sales of BMW and Mini brand models fell 3.1 percent in May to 26,946 cars and trucks, according to Woodcliff Lake, New Jersey-based Autodata. BMW car sales dropped 6.5 percent, and its truck sales rose 5.1 percent. Mini brand sales rose 16 percent.
The Munich-based automaker’s slow introduction of the new 3-Series pushed sales lower, Brown said.
“It’s a supply thing,” he said. “Right now they’ve basically got more 330 sedans – the high-end model – coming through the pipeline first.”
Sales of the 3-Series should improve as replacements for the coupe and wagon and versions with smaller engines arrive, he said. BMW last year passed Volkswagen for the first time since 1993 as the top-selling European brand in the US Stuttgart, Germany-based Porsche’s sales rose 25 percent to 3,291 cars and trucks as new versions of its 911 and Boxster sports cars attracted more buyers to US showrooms.
Mercedes-Benz’s May US sales fell 1.7 percent to 17,826 cars and trucks, part of a 2.5 percent US decline for Stuttgart- based DaimlerChrysler, Autodata said.
A perception of falling quality has also been hurting sales of Volkswagen and Mercedes models, said Art Spinella, president of Bandon, Oregon-based CNW Marketing Research, who surveys potential buyers each month to determine trends in auto sales.
“Volkswagen waited too long to address quality issues, and we’re seeing them fall way down on list of vehicles people would recommend to their friends,” Spinella said. “Mercedes is in the same situation.”
BMW, Volkswagen, Audi, Porsche, Mercedes and other European brands all gained last month in the JD Power & Associates survey of initial quality for 2005 models.
Ford Motor’s Land Rover and Volvo brands and General Motors’s Saab were the only European brands to have more problems with 2005 models than 2004 vehicles.