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March 10, 2003

USA: Import brands capture market share in Texas – report

The US vehicle industry is surprised by how fast Asian and European car makers are capturing market share in the state of Texas, according to a report by Automotive News Europe. Texas is the second-biggest US new-vehicle market after California and long considered a fortress for the major US automakers: General Motors, Ford and the Chrysler unit of DaimlerChrysler.

By bcusack

The US vehicle industry is surprised by how fast Asian and European car makers are capturing market share in the state of Texas, according to a report by Automotive News Europe.

Texas is the second-biggest US new-vehicle market after California and long considered a fortress for the major US automakers: General Motors, Ford and the Chrysler unit of DaimlerChrysler.

Since 1997, GM, Ford and Chrysler have lost a combined 18.8 percentage points of car share and 5.5 points of light-truck share in Texas, cutting the domestic-brand share to 38.6% and 79.9%, respectively, according to retail registration data from R.L. Polk in Southfield, Michigan, USA.

GM alone has lost 10.3 points of car share in that period, Polk says.
Each point of Texas market share is about 4,000 cars or 7,000 trucks. A strong “Buy American” ethic has put Texas families in Ford, Chevrolet or Dodge pickups for generations. But such fierce loyalty is fading.

“Ten years ago, no one in Texas knew what a Subaru was. Now I have three dealerships,” says Randy Gillman, head of a family empire of 16 domestic and foreign franchises selling from 27 showrooms across Texas. “We’re seeing a more sophisticated buyer now.”

Don Herring, who owns two Mitsubishi dealerships in Plano, says the new Texan is young, hip — and often born somewhere else.

“That old Ford, Chevy or Dodge buyer — we don’t get him,” Herring says.
“We have people from all over America living in Texas now. They’re not the old cowboys.”

The losses of GM, Ford and Chrysler in Texas reflect shifts across the USA.
Since 1997, the three US car makers have lost 14 percentage points of car share nationally to just 46.7%. They lost 8.6 points of light-truck share to 76.2%. The figures include fleet sales.

With four of every five sales, GM, Ford and Chrysler still dominate trucks in Texas. Their pickups were the state’s three best-selling models, and 37% of all registrations.

But shares are eroding. And the competition suddenly got tougher last month when Toyota said it will build a 150,000-capacity, full-sized pickup plant in San Antonio.

With a new Texas-built truck, Toyota wants to double its share of the US large-pickup segment by 2007 to 10%, about 250,000 vehicles a year.

Picking Texas was no accident, Toyota officials say. “This is called truck country,” Toyota CEO Fujio Cho said. “The size of the market in itself makes it necessary for us to be here. It’s our expectation that people will be more receptive to a locally made truck.”

In December, Nissan will introduce a new full-sized Titan pickup, even bigger than models from GM, Ford and Chrysler.

On the car side, the US vehicle makers seem to have lost control.

Patricia Fincher Harless, owner of the Madisonville Auto Mall that sells Chevrolet, Oldsmobile, Buick, Pontiac and GMC, says Ford was her top competitor when she opened in 1999. Now it’s Toyota.

Harless says she suffered “big-time” losses to Toyota on trucks and sport-utilities, while Kia and Hyundai are hitting her Chevrolet Cavalier sales with low prices.

The rise of sport-utilities sharply increased Texas truck volume, but GM, Ford and Chrysler sales did not keep pace, says Lonnie Miller, director of analytical solutions for Polk.

Import brands gained partly because they offered car-based sport-utilities. Toyota and Lexus offer eight such models.

“The smaller SUVs are especially strong among [urban dwellers], and that will continue,” Miller says. “Texas may be becoming more of a transplant state. These aren’t just oil towns anymore.”

Sport-utilities are 24% of light-truck sales in major metropolitan areas such as Dallas, Houston, Amarillo and Lubbock, up 5 share points in three years, Miller says.

The US automakers expect a boost from new products. Ford’s new F-150 pickup arrives this autumn. New Ford cars coming soon are the Five Hundred, a Freestyle crossover and a redesigned Mustang. GM has big hopes for the next Chevrolet Malibu and Pontiac Grand Prix, says Larry Hice, head of GM’s South Central Region.

But, tellingly, Hice says competition between the US automakers is internal: “Our main competitors are Ford and Dodge. That’s who we tussle with down here.”
Texas women have become major import buyers, said Bob Eagle, general manager of a chain of Honda, Acura, Isuzu, Toyota, Volvo, Mazda, Aston Martin, Lincoln and Mercury dealerships in Houston and Dallas.

“The import brands are attracting a lot of women buyers because of their reputation for durability, quality and reliability,” Eagle says.

John Thornhill, dealer principal of Thornhill Auto Group (Buick-Pontiac-GMC-Ford-Mercury) in Waxahachie, worries that the loyalty Texans have shown to domestic product could swing to import brands, making it hard to win them back.
“If GM, Ford and Chrysler can put quality and style in the showroom, the customer will come back,” Thornhill says. “But if we keep falling behind, we will keep losing share.”

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