In Case You Missed It: Big Three Overtaken @ Home


The Vapours famously sang about "Turning Japanese" in the eighties. Apparently, the throwaway single was catchy enough that it more recently featured in the popular "Guitar Hero" video game series. In the 80s, Japanese industry was the big fear for American manufacturing just as Chinese industry is now, with similar complaints about state involvement, currency manipulation, and what else have you. Of course, the big controversy back then was over Japanese automobiles. While the abovementioned factors were at play to various extents, I still think that, overall, Detroit was simply outsmarted, outmanoeuvred, and outclassed by Japanese manufacturers. Even if there was a "more level playing field," Detroit was bound for a whupping somewhere down the road.

Nowadays, of course, we have "China-bashing" instead of "Japan-bashing" as the American protectionist's sport du jour. Fear and loathing of Japanese products was more literal (and visceral) back then as neo-Luddites took sledgehammers to perfectly good Datsuns and Toyotas. Unfortunately, the inability of the Chinese to come up with notable brand names has meant that today's China bashers do not have such symbolic scapegoats at hand. What's a 21st century Luddite to do? Dismember Barbie? Molest Bratz? While we wait for such vivid jingoist displays--and they will surely come, as night follows day--let us contemplate today's feature article.

It is odd that very few (including myself) seem to have noticed that last week, automobile sales by Detroit's Big Three--a misnomer for various reasons--were surpassed at home by the combined sales of various Asian makes from Japan and South Korea. The reasons for this turn of events is familiar to all: few except determined masochists want to drive SUVs and other Jurassic contraptions with gas Stateside averaging over $4 a gallon. It's like 1973 or 1979 all over again, although Detroit has never been so badly out of shape. Does anyone really doubt that the uncompetitiveness of the Big Three at home is more the result of a failure to design products Americans actually want to buy instead of Japanese connivance at "unfair" trade? All the "employee discounts" in the world won't sell vehicles people neither want nor need. Japan-bashing, China-bashing...maybe even Vietnam-bashing somewhere down the line. Oftentimes, there is no one to blame but ourselves. Detroit crumbles--not rumbles--on. From Bloomberg:

Asian automakers outsold Detroit's Big Three in the U.S. for the first time last month as buyers left General Motors Corp. and Ford Motor Co. trucks on dealer lots in favor of fuel-efficient Honda Civics and Toyota Corollas. Japanese and South Korean carmakers raised sales 3.7 percent in May to win a record 48.2 percent market share, led by Honda Motor Co.'s 16 percent gain. GM, Ford and Chrysler LLC fell a combined 23.5 percent because consumers shunned pickups and sport-utility vehicles as gasoline neared $4 a gallon.

Honda's Civic small car dethroned Ford's F-Series pickup to become the best-selling vehicle in the U.S. Three other Japanese cars also overtook Ford's perennial sales champion, underscoring a shift that prompted GM to announce the closing of four truck plants in North America yesterday. GM will expand production of cars in response to what it called a permanent change in consumer behavior.

``I've never known the market to change this much this quickly in my lifetime,'' said Jim Hossack, a market analyst for AutoPacific Inc. in Tustin, California, a 38-year industry veteran who previously developed vehicles for Ford, Chrysler, Mazda Motor Corp. and Hyundai Motor Co. ``It's fueled by gasoline prices, obviously, but there's more to it than that.''

Honda rose 8 percent to 3,770 yen, the highest level this year as of 12:54 p.m. on the Tokyo Stock Exchange. Toyota rose 2.4 percent to 5,530 yen and shares of Nissan Motor Co. gained 4.9 percent to 970 yen.

Overall U.S. sales fell 11 percent, their seventh-straight monthly decline, extending the industry's longest streak since 2000-2001. Vehicles sold at an annual rate of 14.3 million, the lowest in a decade. Car sales accounted for 57 percent of new purchases, up from 50 percent a year earlier.

Honda's Accord and Toyota Motor Corp.'s Camry and Corolla also beat the F-Series. The last time the pickup was topped by a car was in December 1992, according to Dearborn, Michigan-based Ford. Among large automakers, the two Japanese companies are rated the most fuel-efficient by the U.S. Environmental Protection Agency.

Honda's Civic travels 36 miles (57.9 kilometers) per gallon of gasoline in highway driving, compared with 17 mpg for Ford's F-150 pickup with a V-8 engine, according to the EPA. Toyota's conventionally powered Camry gets 31 mpg…

Honda outsold Chrysler to rank No. 4 in U.S. sales, behind GM, Toyota and Ford. Chrysler, the automaker most dependent on light trucks, tried to boost demand by guaranteeing buyers that they'd pay no more than $2.99 for a gallon of fuel. Its sales fell 25 percent, for their biggest drop this year.

GM's U.S. sales dropped 28 percent and Ford reported a 16 percent decline. The two companies rely on pickups and SUVS for more than 60 percent of their combined U.S. sales. By contrast, Honda offers no V-8 engine models or full-sized SUVS and pickups.

Today's big pickups and SUVs remind investor Jeffrey Scharf of ``the big land yachts'' of the 1970s. ``When the first oil crisis hit, you couldn't give those things away,'' said Scharf, president of Santa Cruz, California-based Scharf Investments, which manages about $660 million in equities, including Honda and Toyota shares.

Toyota's sales dropped 4.3 percent, hurt by weaker demand for Tundra full-size pickups. Bob Carter, a vice president and head of U.S. Toyota brand sales, said the Toyota City, Japan- based company might report a decline in 2008. Toyota, trailing only GM in U.S. sales, is scrambling to boost supplies of Prius hybrids, Yaris subcompacts and other fuel-efficient models in high demand, Carter said.

Sales of the Prius, rated the most fuel-efficient auto in the U.S., dropped 38 percent last month as the company failed to meet demand, Carter said. ``Prius inventory is now best measured in hours, not days,'' he said. Still, the company expects sales of the model to see a ``mild'' increase from the 2007 volume.

Nissan, the third-largest Japanese automaker, raised sales 8.4 percent. The gain came from a jump in sales of Altima mid- size cars and Sentra and Versa compacts, Al Castignetti, U.S. general manager of Nissan brand sales, said in an interview yesterday.

South Korea's Hyundai Motor Co. had a 5.8 percent sales increase, while Kia Motors Corp., an affiliate of Seoul-based Hyundai, said its sales rose 9 percent. Japan's Mazda, one-third owned by Ford, sold 4.2 percent more vehicles. Fuji Heavy Industries Ltd.'s Subaru brand reported a 13 percent sales gain, while Mitsubishi Motors Corp.'s sales fell 24 percent.

All told, Asia's 10 automakers sold 671,398 cars in the U.S. last month, 32,290 more than Detroit's Big Three. Market share for U.S.-based automakers fell to a low of 44.5 percent.

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