US car makers continue to suffer at the hands of strong competition from Asia.

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The latest sales figures reinforce the idea that the big American car makers are gradually losing their dominant hold on the domestic market. Asian manufacturers are proving increasingly adept at reading consumer demand and tailoring their offerings to it. The likes of Ford and GM will continue to sees sales decline unless they act to ensure that they are reading market expectations correctly.


Once considered the domain of the big domestic manufacturers, the US new car market has continued to see a growing penetration by the leading Asian vehicle manufacturers, resulting in a declining market share for the top two American vehicle manufacturers – General Motors and Ford.


In April 2005, GM’s sales fell by 7.4%, while Ford’s sales fell by 1.5%. In stark contrast, year-on-year sales at Toyota, Honda and Nissan increased by 21.3%, 13.6% and 27% respectively. In total, Asian brands accounted for 37.5% of the US new car market in April 2005 according to Bloomberg, setting a record that will only serve to highlight the plight of US car makers at present.


Ford experienced its 11th consecutive year-on-year decline in sales for the month of April and its 26th month of market share decline. General Motors, meanwhile, has experienced a seventh consecutive month of market share decline. One of the common issues facing both vehicle manufacturers is the growing popularity of smaller cars, which are more fuel-efficient. This trend, favouring the range of compact models offered by Asian car makers, has been exacerbated by the fuel price spike seen over recent months.

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Hybrid vehicles, in which Toyota and Honda are particularly strong, have been selling particularly well. Less fuel efficient models, however, such as SUVs, have performed less well and as a result, GM and Ford have seen figures hit due to their strong presence and reliance on this type of vehicle.


The emergence of Asian players in the US market cannot solely be attributed to their model ranges – other factors, such as technological innovation in the manufacturing process and the non-unionised nature of many Asian workforces, also play a key role. Yet there is no escaping the fact that the likes of Toyota and Honda are encroaching on the big US firms because they are better able to give the American public what it wants.


SOURCE: DATAMONITOR COMMENTWIRE (c) 2005 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.