Toyota, Nissan Post Record Sales As Asian Autos Grab U.S. Market Share
Chicago Tribune
04/02/2005
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Apr. 2--March was a month for madness and a few milestones in the auto industry as Toyota and Nissan posted record sales.
Chrysler stayed strong, General Motors and Honda bounced back, but Ford had another setback.
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Nissan and its luxury Infiniti division topped the 100,000 unit mark in a month for the first time. That pushed its annual sales to more than 1 million in its fiscal year ended March 31.
Nissan's strong showing is all the more noteworthy because the automaker was in financial turmoil a few years ago. It lost nearly $6.5 billion in 1999, the year it restructured. But, under the ownership of Renault S.A., it brought in Carlos Ghosn and has made money since then. It posted a profit of $4.5 billion last year, more than any domestic-based manufacturer, and estimates it will earn $4.9 billion for the fiscal year just ended.
It built that growth on the strength of new products. Jed Connelly, senior vice president of Nissan North America, said the renaissance started in 1999 with the Xterra sport-utility vehicle as well as moving into segments it had never been in -- the full-size truck market and full-size SUVs, for example.
Since 1999, Nissan's sales have grown 31 percent, to 985,988 last year, including its Infiniti luxury division. Sales are up 11.5 percent this year.
"We'd rather sell on the strength of the product than on the deal of the month," Connelly said, acknowledging that Nissan does offer incentives. "Price has to be really compelling, really low to get someone to buy a vehicle they don't really want.
"It all comes back to the product. Most people buying new cars these days don't really need one. There has to be an emotional attachment to get them to sign for a car they're going to live with for four years."
Connelly points to Xterra, 350Z and Murano in saying: "If we have a disappointing month, now we have more patience and confidence that it could be because of other factors, not because we have the wrong products."
For Nissan's fiscal year that ended March 31, U.S. sales topped 1 million units for the first time, and the company is on target to go over 1 million for the calendar year.
Chrysler Group also continued its resurgence. March sales were up 8 percent -- its 12th straight month of gains. The year-old 300 sedan continued to be Chrysler's hottest ticket, selling a record 13,475 units.
New products like the 300 also have been key to the Chrysler turnaround, said Dieter Zetsche, president and chief executive.
"We knew if we continued with the same middle-of-the-road front-drive LH sedans that it wouldn't have been a gamble--failure would have been a given," he said.
"It's safe to say we'll be profitable for '05 and it's safe to say we'll sell more vehicles in '05 than we did in '04," said Zetsche, though refusing to discuss numbers. In 2004, however, the automaker posted a $1.9 billion profit after having reported a loss of $637 million as recently as 2003.
Zetsche went on to tell General Motors, which has found itself battling declining sales and dire predictions, that product is the key.
After disappointing sales in January and February, GM showed some life, as sales rose 2 percent, to 420,442 cars and light trucks in March. Last month it cut second-quarter production by 10 percent and said it expects to lose $850 million in the first quarter, largely because of sluggish sales of large those, profit-laden SUVs.
GM's full-size pickups sold briskly, offsetting double-digit declines in its large SUVs, which are due for replacement early next year. GM also said new models such Chevrolet Cobalt, Pontiac G6 and Buick LaCrosse picked up last month after a slow start.
Ford was the only dim light among the domestics with sales falling 2 percent to 305,172 units despite a strong showing by the new Mustang coupe with sales of 17,926 up 13.5 percent from 15,799. In addition to Nissan, the other two members of the Japanese Big Three--Toyota and Honda--put up some big numbers, again on the strength of product. Their collective sales rose more than 10 percent.
Toyota had its best month ever, selling 203,223 vehicles through its Toyota, Lexus and Scion brands. That's up 17 percent from a year earlier.
The Toyota Prius gas/electric car saw sales triple to a record 10,236 units. After reporting sales, Toyota said Prius prices will rise by $100 Monday.
Honda sales rose 11 percent, as its best-selling Accord perked up after sagging the last two months.
Such numbers leave Zetsche wary about the state of the domestic auto industry.
"The reality is the market share growth of Asian automakers in the United States since 1990 has indeed been substantial and if the stated sales and share goals of Asian manufacturers are realized, even if only in part, this trend will continue," he recently told the Economic Club of Detroit.
And, Zetsche added: "It's only a matter of a few years until we see Chinese automakers here. It took the Japanese more than 20 years to become serious competitors in this market, the Koreans took half that time and the Chinese may make it in as little as five years, a frightening prospect.
"Innovation and product are the cures to what ails us," he said, citing health care, legal and pension costs as well as the competition.
By Jim Mateja and Rick Popely
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