Why can’t automakers take advantage of GM’s struggles?
Public perceptions: LoserThe Asian advantage The revival of the U.S. auto industry is a popular topic, but the conversation tends to overlook some worrisome trends. After Ford and Chevy, the next five most popular brands during the month of June were Toyota, Honda, Nissan, Hyundai, and Kia. Together they sold 501,153 vehicles in June vs. 420,908 for Detroit's Big Two. When you look at passenger cars alone, the gap is even wider. Toyota sold more passenger cars than either Ford or Chevy in June, and combined, Asia owned 43.6% of the car market vs. 28.2% for America, including Dodge. With China now the world's largest single car market, the auto industry is tilting more and more to the East.
So far, customers haven’t turned on auto manufacturers following their myriad auto recalls this year. That could change in the coming quarters, according to Anil Valsan, lead auto analyst for Ernst & Young’s Global Automotive Center.
“It will certainly having an impact,” Valsan said. “It will come down hard on the automakers.”
Part of the reason the industry hasn’t seen too big of a problem from the recalls yet is that, frankly, it’s affecting most of the companies equally. Sure, General Motors (GM) has had a historically terrible year in the recall department, but Ford (F) and Toyota have been in the news for recalls as well. Valsan did say that there were some auto companies that may be able to come off well compared with the rest of the industry regarding recalls: luxury brands and a few of the German companies.
Moving forward, Valsan said consumers would likely consider the recalls in deciding what cars to buy in the future.
“This will be one of the big questions they ask,” he said. Customers will want to know exactly what a manufacturers plans are if a recall needs to be instituted.
As for car sales, Valsan said things are pretty much on track with 4.4 million cars sold in the second quarter. The industry remains on track to sell around 16.2 million cars for the entire year, the most since before the financial crisis. Valsan doesn’t expect that pace to change in the coming quarters.
“I think we will still see some good positive demand,” he said. He also said it would be a bad sign if companies start offering big incentives, which is a sign that the industry is feeling “desperate” to move product.
This isn’t likely, Valsan said, because the industry is much “leaner” today than it was a few years ago, with a more manageable inventory.