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Imports Making Waves

Asian brands enjoy a Calif. sales boom, gaining on the Big Three

September 20, 2003|John O'Dell | Times Staff Writer

If California really does set most automotive trends, the outlook for America's domestic car companies is grim: Import brands are now easily outselling the Big Three in the nation's largest car market.

Nationwide, General Motors Corp., Ford Motor Co. and Chrysler Group, a unit of DaimlerChrysler, clung to a 60% share of the passenger-vehicle market through August, down from 75% two decades ago.

But things look different in California -- where the domestic Big Three automakers' share has slipped to 46.9%, down from 58.5% just five years ago. Japanese, European and Korean import brands held 53.1% of the statewide market through June, according to new-vehicle registrations compiled by R.L. Polk & Co.

GM and Ford still hold the state's top spots, at 20% and 18.1% respectively, although their lead keeps eroding. Toyota Motor Co. has taken over third place at 17.1%, followed by Honda Motor Co. at 10.7%, while Chrysler's registrations have plummeted 29% since 1998 and fallen to fifth place in market share.

All three major Japanese automakers are enjoying a California sales boom. Toyota's combined Toyota and Lexus registrations have jumped 40% in the last five years, Honda's are up 23% and Nissan Motor Co.'s have climbed 55%.

"I'd say that the domestics can say bye-bye to any thought of ever recovering supremacy in California," said Wes Brown, an industry analyst with Nextrend, a Los Angeles-based automotive market research firm.

One advantage is that buyers believe "that Toyotas and Hondas have bulletproof reliability the domestics can't match," Brown said.

Even though GM, Ford and Chrysler can mount a convincing argument that the quality gap is rapidly closing, he said, consumers don't buy it.

Analysts say the future is ominous unless domestic brands can reinvent themselves and quickly earn reputations for reliability, styling and customer service, reputations that Toyota and Honda took decades to build.

Indeed, dwindling market share is one reason analysts say that GM, Ford and Chrysler won concessions in their recent labor contracts with the United Auto Workers, including more flexibility to close manufacturing plants producing slow-selling models.

The state's tilt to imports, particularly the Asian brands, is even more exaggerated when fleet vehicles are stripped from the registration survey.

About 207,000 fleet vehicles were registered through June; these are the models sold wholesale to schools, businesses and government agencies that often are required to buy American. Because fleet sales are low-margin deals, Japanese automakers rarely even bid on those for which they can compete.

If fleet sales are excluded, Toyota is California's biggest automaker, with a 19.9% share through the first half of the year; GM drops to second with 17.5%; Ford is third at 15.3% with Honda's 13% nipping at its heels.

In California, Toyota already has eclipsed Chrysler's domestic brands, and Brown and other industry analysts say it is likely to do the same nationally within a few years.

Toyota's national sales in August surpassed Chrysler Group's, the first time an import brand has broken into the top three. (Mercedes-Benz and Chrysler are both owned by DaimlerChrysler, and the German luxury brand's sales figures were not included in Chrysler's figures.)

Toyota's strengths, according to experts, are a strong dealer network, a reputation for building high-quality, trouble-free vehicles and a determination to win and keep consumers' respect. The same can be said of other leading import brands such as Honda, Nissan, BMW and Mercedes-Benz.

The imports keep gaining share in California largely on the strength of their car sales: Toyota's Camry and Corolla sedans and Honda's Accord and Civic together account for almost 25% of the new passenger cars registered statewide through June.

Marc Spizzirri, who owns Board Ford in Whittier and Family Toyota in San Juan Capistrano, said there are big differences in running the dealerships.

At the Ford store, he said, his salespeople try to close deals by competing with the rebates that GM or Dodge might be offering. At the Toyota store, he said, "customers are there because they want a Toyota; they are not shopping deals. Our job is to sell the dealership experience instead of the rebate."

The domestics aren't giving up on California, though.

"We just don't agree that domestic won't be No. 1 again in California," said Mike Jackson, GM's Western region general manager in Thousand Oaks. GM will be launching 18 new or redesigned car models in the next few years, he said, many designed with the California market in mind.

So far the Big Three have relied on big SUVs and full-size pickups to keep going in California and nationally.

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