‘Big 3’ not what they used to be

Filed under: News |

Salesman Sam Spaccamonti waits for customers at Liberty Toyota in Motor City. This year, Toyota surpassed General Motors in worldwide vehicle sales.

Many years ago, the cover of Fortune magazine bore a haunting photograph of a brilliantly lit, deserted automobile showroom, taken late at night.
On the showroom floor was a small, inventively styled foreign car that had quietly established a substantial presence in the American market. Beneath the photograph, deliberately styled after Edward Hopper’s painting of Depression-era New York City, “Nighthawks,” was the simple legend: “While Detroit Slept.”
The car wasn’t a Toyota. It was a Volkswagen Beetle, America’s best-selling foreign car, with 60 percent of the import market.
VW’s reign at the top was short lived. By 1975, Toyota was No. 1, and by 1978 Japanese manufacturers had 25 percent of the domestic car market.
During the 30 years since, Japanese companies have managed to increase their market share and remain profitable. Earlier this year, Toyota surpassed General Motors in worldwide vehicle sales, marking the end of one of the longest runs of dominance in all of global industry and another milestone in America’s decline from unchallenged industrial pre-eminence.

Changing of the guard

In El Paso County, Detroit-based manufacturers’ fall has been particularly pronounced during the last five years.
In 2001, Ford and Chevrolet led all other makes in local new car registrations with a combined total of 8, 763 vehicles — 3,763 more than the 5,017 registered by Honda, Nissan and Toyota.
But a scant five years later, Chevy and Ford saw their sales cut by nearly half, down 3,875 vehicles to 4,888 sales. Meanwhile, Japan’s “Big Three” increased sales by 1,414 units, led by Toyota, which, with 3,078 sales, took over the No. 1 spot from Ford.
Nationally, all light vehicle sales (which includes cars, SUV’s and pickups) fell from 17.1 million during 2001 to 16.5 million during 2006.
In El Paso County, new car registrations plunged from 27,318 during 2001 to 22,983 during 2006, a decline of 4,335. County statistics do not track all sales — only new car registrations. Sales to military personnel who choose to register their vehicles elsewhere, as many do, are not included.
Since Asian manufacturers managed to increase their sales even as the local market shrank, virtually all the decline in new car registrations in the county came from the slumping American makes.

Right in line

Paul Taylor, chief economist of the National Automobile Dealer’s Association, confirmed Colorado Springs mirrors national statistics.
“This is a much more dramatic decline,” he said. “Although (Asian makes) have been gaining nationally because of consumer concerns with gas price and fuel efficiency.”
But Taylor also said there are other factors that could impact local sales figures, which the raw data doesn’t reveal.
“Are your fleet buyers-governments, schools, military installations-cutting back?” he asked. “That will impact sales of domestic makes more than Asian brands. Also, do you have lots of retirees? That community is very sensitive to gas prices, and they may move to imports.”

Japan leads way

In Colorado Springs, Detroit’s share of the market for new cars and trucks through the first six months of 2007 was slightly more than 40 percent, according to statistics posted on El Paso County Clerk and Recorder’s Web site. Japan led the pack with 46.5 percent, followed by Korea with 7 percent, Germany with 4.5 percent, Sweden with 1 percent and England with 0.5 percent.
Nationally, according to statistics provided by NADA, American makes did significantly better. General Motors, Ford and Chrysler combined to capture 52 percent of the domestic light vehicle market, while Japanese makes were far behind at 38.8 percent.
In California, Toyota has 24 percent of the market, followed by Honda with 12 percent, Ford with 8.4 percent, Chevrolet with 8.1 percent and Nissan with 6.6 percent. Overall, Asian makes have more than half the California market.
Taylor said he doubted the Colorado Springs auto market will follow California’s lead.
“In the long run, I don’t think that your market will be too dramatically different from the national market,” he said. “There will be some factors driving changes — less commuting in pickups, G.M. trying to eliminate unprofitable fleet sales, but California trends do not usually extend to the interior states. People in Colorado need and like the big pickups, the SUV’s that can actually tow a horse trailer or go off-road.”

Good time to buy

But on the frontlines, where dealerships compete furiously for customers, it appears to be a good time to be in the market for a new car.
According to Edmunds.com, the average manufacturer incentive last month was $2,483, up 3.85 percent compared to May. Domestic manufacturers offered an average $3,200 a vehicle, while Japanese auto makers offered $1,484 a vehicle.
Toyota, seeking to jump-start sales of its redesigned Tundra pickup, is offering either interest-free financing for 60 months or up to $5,000 in rebates.

Making the sale

On a recent warm, hazy day in Motor City, three salesmen stood watchfully as a car pulled into the Liberty Toyota lot. Sam Spaccamonti walked over, extended his hand and talked about the car business.
“At Toyota, it’s not so much selling as advising — making sure the customer has the right car, that the financing package works for her or him,” he said. “We’re fortunate here, because we know that we’re selling a quality product. One of our problems is that we can’t supply the demand for the most popular cars, especially the Prius.”
Liberty Toyota is allocated about 25 of the popular hybrids every month, but most are spoken for before they arrive, Spaccamonti said.
“We’re literally selling them when they’re still on the dock in Japan,” he said.
Nationally, however, it’s a different story. According to Taylor, Prius buyers in much of the country can expect to be offered incentives.
After years of indifferent success in the full-sized pickup market, Toyota introduced the re-designed Tundra last fall, aimed squarely at Ford’s long-dominant F-series.
Salesman Gary Butler said the trucks are selling well (aided by the generous incentives), but for the moment, Detroit dominates the local market for pickups.
Among GMC, Dodge, Jeep, Ford and Chevrolet, American manufacturers sold 1,254 pickups in Colorado Springs through May. Toyota and Nissan lagged far behind, with a combined 391 sales.
Mark Nelson, a sales consultant at Phil Long Ford, acknowledged the virtues of the Tundra.
“They’re getting there,” he said, “It looks like they set out to copy the F-series. But, you know, the F-150 has been the No. 1 truck in America for more than 25 years, and we know how to build trucks.”
Sales have been slower than usual, Nelson admitted. He cited the price of gasoline, speculating that fewer customers are buying trucks for daily transportation.

Sticker price plus

Just as Toyota has a local waiting list for its Prius, Ford’s new limited edition Shelby Cobra sells at a substantial premium. There was only one on the showroom floor earlier this month, theatrically roped off and spotlighted.
Listing at $45,000, and featuring a 500 horsepower V-8, it had already been sold — for $55,000.
“Ford only built 7,500 of them, so they’re very hard to get,” Nelson said.
That’s not true for most cars.
“We need to work hard, and find buyers,” Nelson said. “I don’t care where you work — here, Toyota, Honda. You have to know your business and work hard at it.”
At Phil Long, Monday is a “bell to bell” day. Works starts at 8 a.m. and doesn’t end until 8 p.m.
“We usually start with a sales meeting,” Nelson said. “Then I’ll spend hours making calls, making contacts. I’ll call someone who’s brought their vehicle in for a 60,000 mile checkup and let them know about new car opportunities. I’ll call former customers or folks who might have stopped in before. Then I’ll just be out in front, waiting to assist people who come by.”

Changing consumers

Customers today, according to Spaccamonti and Nelson, are far more knowledgeable than those of just a few years ago — thanks to the Internet.
“They’ll come in on Sunday, when we’re closed, and get the VIN (vehicle identification number) number of the car they want, and when they come in on Monday to talk to you, they know more than you do,” Nelson said. “It doesn’t make our job any easier.”
As the city cooled off after the suffocating heat of mid-day, customer traffic picked up, and Nelson, Spaccamonti and Butler were all successful.
Spaccamonti was the leader with two sales: a Tacoma pickup and a Forerunner sport utility vehicle. Butler sold a Highlander, a luxury SUV, and Nelson sold an F-250 work truck.
They were pleased.
“One a day — that’s all you need,” Butler said.
John.Hazlehurst@csbj.com