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Auto Sales Dip in '02; Importers Lead Gains

Overall, results are still robust. Foreign firms capture market share without costly offers.

January 04, 2003|John O'Dell | Times Staff Writer

Led by strong performances from importers, especially the Asian automakers that have made California their North American home base, total U.S. car and truck sales dipped slightly last year from 2001 but were still the fourth best tally on record.

Figures released Friday by the major automakers showed that they sold 16.8 million cars and light trucks, down from 17.1 million in 2001. Domestic sales were boosted by hefty incentives from the Big Three automakers.

Analysts say General Motors Corp. spent at least $2,700 per car in rebates and interest rate reductions, with Ford Motor Co. and DaimlerChrysler's Chrysler Group right behind. The givebacks made 2002 a great year for buyers, and most industry watchers figure that this year will bring more of the same.

But many analysts believe that the incentive programs are setting the industry up for a big slump should the economy weaken further.

For The Record
Los Angeles Times Sunday January 05, 2003 Home Edition Main News Part A Page 2 National Desk 2 inches; 107 words Type of Material: Correction
Auto sales -- Quotes and information attributed to David Cole in an article in the Business section Saturday on 2002 auto sales should have been attributed to Michael Flynn, director of the University of Michigan Office for the Study of Automotive Transportation. Cole, now director of the Center for Automotive Research in Michigan, was Flynn's predecessor at the university.

Last year's robust sales also mask the fact that pickup trucks and sport utility vehicles made up slightly more than half the market. These vehicles are particularly vulnerable should fuel prices soar -- a distinct possibility if there is a war in Iraq.

The plethora of incentives did not stop the steady erosion of the domestic auto industry's share of U.S. sales, either. Sales at the Big Three fell 4.5% last year. Their cumulative market share dipped to 61.7% from 63.3% in 2001.

At the same time, sales of Asian import brands rose 1.6%, boosting their share to 31.3% from 30.2%.

David Cole, director of the University of Michigan's Office for the Study of Automotive Transportation, said that although the domestic companies have invested heavily in truck production, the importers have been able to capture market share with a good selection of cars.

"And as long as people keep buying cars, the Big Three are forced to offer incentives on their SUVs and luxury trucks to keep their sales volumes up," Cole said. "We have a situation of people buying from the domestics for price, and from the imports because they have good products."

But GM Vice Chairman Bob Lutz bristled at suggestions that imports have the edge in quality.

"You have to look at individual brands and products," he said in an interview Friday at the Greater L.A. Auto Show.

GM's Cadillac unit, for example, posted a 16% sales increase in 2002; Saturn sales rose 7.5%; and Buick posted a 6.5% gain. Meanwhile, some foreign brands lost ground: Sales at Volkswagen of Germany fell 4.9% and Volvo, the Swedish brand owned by Ford, was off 12%.

Japanese manufacturers, by contrast, managed to gain sales and market share without having to match their domestic counterparts' incentives.

The Torrance-based U.S. unit of Toyota Motor Corp., which in 2001 became the first importer to capture a 10% share of the U.S. market, improved its position in 2002 with a 10.4% mark. Toyota's U.S. sales hit a record 1.75 million vehicles, but its incentives averaged less than $500 a vehicle through November, analyst David Healey of Burnham Securities Inc. pointed out.

The American unit of Honda Motor Co., also in Torrance, captured 7.4% of the U.S. market, with a record 1.25 million vehicles sold. Nissan Motor Co. boosted its share to 4.4% as sales increased 5.1%, and Mitsubishi Motors Corp. saw sales soar 7%, lifting its share to 2% of U.S. sales.

European brands, including those owned by General Motors and Ford Motor, also posted a collective gain in market share, to 6.9% from 6.5% in 2001, and a 4.5% jump in combined sales.

As recently as 1995, the Big Three -- GM, Ford and Chrysler, now part of Germany's DaimlerChrysler -- held a 73.2% market share in the U.S.

GM boosted its market share for a second straight year in 2002, to 28.4% from 28.1%, after more than a decade of steady decline. For the year, GM's sales fell 0.9%.

Ford, with few new products, saw sales slip 9.6% and market share dip to 20.2% from 21.9% a year earlier.

Chrysler Group held its own despite having few new products to offer; its 13.1% market share was essentially flat, while sales were off 3%.

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