Spring 2005 US automotive sector analysis
US automakers continue to struggle with eroding SUV sales and increased pressure from Asian automakers.
Last Tuesday, May 3, GM and Ford both reported lower April sales. Daimler-Chrysler, with a 5% year-on-year increase in sales, proved to be the only domestic bright spot. Meanwhile,
Japans Toyota and Nissan reported respective April year-on-year increases of 21% or 27%. South
Koreas Hyundai likewise announced double-digit increases.
American automakers may be ruing the day they put so much time and marketing muscle behind their flagship SUV lines. Sales of the gas-guzzling models dropped precipitously as potential customers continue to factor high fuel costs into their purchasing decisions.
In an apparent gesture of one thriving company throwing a drowning company the proverbial life preserver, Toyota today, May 9, expressed concern at the state of the US auto industry and offered to license GM its much coveted hybrid technology. Toyota is the king of the burgeoning hybrid market, accounting for 61% of all sales in 2004.
Meanwhile major tire makers are doing all they can to meet supply shortfalls and higher productions costs.
Rampant development in
China,
India, and other nations; US military demands in
Iraq and
Afghanistan have pushed tire makers to capacity; and the global strain on demand for steel, a major component in belted radials found on cars and trucks, are all blamed on the tire crunch.
Bridgestone has had to compensate for the rising cost of petrochemicals and steel cord while rival Cooper Tires has seen first quarter profits decrease $6 million year on year due in part to higher raw material costs.
Some help is forecast on the horizon. Steel costs are slowly expected to ease, which will give manufacturers a brief respite and an opportunity to rethink their market strategies. The lone wild card remains the cost of oil which, as anyone can testify, is prone to sudden fluctuations as oil-producing nations increase or decrease
production. Conventional wisdom dictates that if
production continues its upward trend, pump prices will gradually come down in the short-term but most likely increase again as the summer driving season begins.