MAY SALES PREVIEW: The shockwave about to hit the US car market
The Camry and Corolla, along with the Accord and Civic have ruled the US new car market sales charts for over a decade. Armed with recent production numbers and sales trends, Glenn Brooks suspects not just GM and Ford but Nissan, Hyundai and Volkswagen too will push Toyota and Honda down the May sales charts.
It has been a long, long time since a US-brand car has been that country's best selling model but it might well have happened in May. There again, it might be a Nissan, or even a Volkswagen. Production of Toyota, Honda and Nissan's top models has fallen significantly in recent weeks, while build of certain GM, Ford and VW vehicles has been rising.
Top US brand candidates for the title of America's number one car in the May sales charts are the Chevrolet Cruze and Ford Focus, though bear in mind that in the case of the Focus, that means old- and new-shape models combined – the switchover took place recently but stocks of the 2011 model year cars are still being sold down.
Estimated production numbers for the 2012 model year Focus in May are up around the 22,000-unit mark, while Honda has been able to make only around 13,000 units of the new-shape 2012MY Civic sedan and coupe in the same period. For Toyota, it's even worse, with Corolla and Matrix production estimated to be at less than half the levels of its Honda rival.
By contrast, GM looks as though it might have made as many as 27,000+ units of the Cruze sedan at the Lordstown plant in Ohio. GM might even be scenting its chance to try to stay ahead of the Corolla and Civic: recently, it stated that it will soon be able to add Cruze build alongside that of the forthcoming and smaller Chevrolet Sonic at its newly revamped Orion Township facility in Michigan.
Prices might have fallen in the last fortnight but $3.80 a gallon for Regular gasoline (according to AAA’s Daily Fuel Gauge Report) is still a level of concern to US motorists, reliant as the majority of them are on their vehicles for commuting. Gasoline reaching and staying at four dollars a gallon is likely the level where many will begin to switch out of mid-sized models, larger SUVs and pick-ups and into crossovers and compact cars and light trucks.
In fact, a move away from the biggest, heaviest vehicles for retail buyers seems to be happening, with SUVs such as the now eleven-year-old Ford Escape selling in astonishingly large numbers. May might even see a record 27,000+ Escapes sold if estimated production numbers prove correct. The recovering small business market means that the full-sized E-Series delivery van and F-Series pick-ups will also have been made in large numbers in May – as many as 60,000 of the latter has even been suggested.
If gas does indeed hit four dollars or even rise a little from there to exceed its all-time high, several manufacturers that are presently doing very well indeed would be hugely impacted. Ford has been clever enough to make buyers believe that a two+ ton pick-up powered by a turbocharged 3.5-litre V6 is an economical vehicle, though to be fair, the F-150 with EcoBoost engine does have good average fuel economy numbers from the EPA, as does the 3.7-litre (non-turbo) F-150. The smallest engine available for GM's rival Chevrolet Silverado and GMC Sierra is by contrast a low-power (195hp) 4.3-litre V6, but Chrysler Group’s Ram 1500 might be OK with its base 3.7-litre V6.
Chrysler might fare less well with its Jeep Grand Cherokee, which lacks the four-cylinder engines of the new Ford Explorer or another hot-selling but smaller and cheaper SUV, the US-built Kia Sorento. In the year to the end of April, Jeep is the fifth best selling light truck brand in the USA, thanks mostly to the 35,917 sales of the Grand Cherokee, an 89% surge year-on-year. In April itself, 9,802 units of the big Jeep were sold in the home market. That sounds impressive, and is, but Kia managed to sell 12,001 units of the Sorento (standard 2.4-litre engine versus a 3.6-litre V6 base engine for the Jeep) in the same month and 39,829 for the year to date.
Production of the new Explorer SUV is still ramping up, so its 12,593 sales in April would seem to be a preview of a future segment leader in the second half of 2011. Just as it does with the V6 turbo in the F-150 EcoBoost, Ford also somehow manages to make US buyers pay extra for the Explorer EcoBoost. In this case, that means a turbocharged 2.0-litre four-cylinder unit. It is believed that as many as 50% of all recent F-150s sold in the US market might have the pricey EcoBoost engine.
Underlining just how interesting Ford's strategy is, the standard engine in the Explorer is a normally aspirated 3.5-litre 'Ti-VCT'-branded V6. Ford's genius is its realisation that Americans will always have an unquenchable thirst for catchy, invented terms such as EcoBoost: buyers see instantly what it means and what it offers them.
EcoBoost has other, more important benefits for the still hugely indebted Ford Motor Company. Third and fourth quarter profits from Ford's Americas division should be greatly helped by the continued roll-out of these direct injection turbo engines, which buyers seem almost thrilled to pay premium prices for. Why Chrysler and GM have yet to create competing marketing terms is quizzical. Perhaps once new cylinder heads are added to the Pentastar V6 later this year, Fiat SpA will bring its 'MultiAir' badging to Chrysler Group vehicles, while GM might expand the EcoTec branding which applies to a few of its existing engines.
Returning to cars, Chevrolet remains the US market's top nameplate with 297,216 sales in the first four months, ahead of Toyota's 281,164 and Ford, with 235,559, followed by Honda, on 231,376. Nissan is the only other brand to have broken through the 200,000-unit mark (203,920). Toyota is in no danger of losing its number two position to Ford just yet but if the new Focus can keep gathering steam, by the third quarter, the blue oval brand might well be mounting a significant challenge to the established order. The larger Fusion is old but it is still a big seller: year to date sales totalled 86,212 compared to the Camry's 107,264.
So might the Fusion pull past the Camry in May? It will undoubtedly outsell the Toyota, and should also easily be way higher in the sales charts than the similarly sized Honda Accord sedan. May Accord production looks like being as low as around the 11,000-12,000-vehicle mark, while Ford has reportedly built some 20,600 Fusions. That might even see it as high as position 1, 2, 3, 4 or 5 in the car sales charts, behind (in no particular order) the Chevy Cruze, Ford Focus, Nissan Altima, and here's a surprise for some, the Volkswagen Jetta.
VW's Puebla plant in Mexico has been building ever-greater numbers of the Jetta sedan (and old-shape sedan and wagon) in the last few months. It seems as though as many as 25,000 cars were made during May, enough to put the Jetta sedan and wagon into the top three or four of the US car market should most of those models have gone north of the border. In April, US market sales of the combined Jetta sedan and wagon were 16,955 and 57,976 for the year to date. That's a rise of 63% year on year.
If the Jetta outsells the Civic and Corolla in May, you can bet that VW of America will be shouting it from the rooftops. Note also that production of the all-new US-built (2012MY) Passat has just started, with the car priced very aggressively at just under $20,000, some $7,000 less than the former, German-built model. So in second half of 2011, we might well see another Volkswagen muscling in on the established models in the US car market's two biggest segments.
If VW promises to shock many once its May sales numbers are issued, so too might Nissan North America. Long the underdog, Nissan has excellent products but not quite the same image as Toyota or American Honda. Still, no one should have been surprised when the Altima wrested the number one slot from the Accord and Camry for the month of March with a whopping sales tally of 32,289 cars. The smaller Sentra has also been doing well, month in, month out, while the built-in-Mexico Versa leads the subcompact segment thanks mostly to a low sticker price.
It is believed that Altima production has been not nearly as greatly affected by the parts shortages that have caused so much downtime for Honda and Toyota's North American plants. If that's the case, Nissan's mid-sizer might even top the sales charts again in May, or at least secure itself a place ahead of its two Japanese rivals.
What then of Hyundai and Kia? It wouldn't be a stretch to think of the combination as having possibly outsold Toyota's and Honda's cars last month. Of course, the Japanese duo have one-off problems that are already being steadily resolved, but nonetheless it would be an historic achievement for Hyundai and Kia's American operations to trump their bigger rivals.
The US-built Sonata is already America's sixth best selling car with 73,616 sales in the first four months, just behind the smaller Chevrolet Cruze (73,365) and ahead of its direct rival the Chevrolet Malibu (73,446). The Sonata might be doing well but it is the smaller Elantra that could pull a big surprise in May and get close to its competitors, the Focus, Cruze and Jetta sedans.
Elantra sales momentum has been building for many months, mostly since the car went into production alongside the Sonata at Hyundai's US plant in Montgomery, Alabama last November. Following the shift of Hyundai Santa Fe production to Kia's US plant in summer 2010, capacity for the Elantra at Montgomery is now believed to be 150,000 units per annum. A five-door hatchback will follow in the coming months, and seems likely to be positioned as an extra, more expensive model: the 2012 Elantra Touring.
All of the background information on the little Hyundai is by way of saying, this is a car to keep a very close eye on. The 2011MY Elantra sedan was the seventh best seller in the US car market in April, its 22,100 sales placing it just behind the combined Corolla and Matrix (24,215). It can be assumed that it will have grabbed the Toyota's place in May but how high will it be in the sales charts? The answer to that question and all the others posed in the paragraphs above will be revealed in the next day or so.