Summary
Amid negative sales results at General Motors and Ford, DaimlerChrysler sales rose slightly in March. However the real interesting statistic is the sales results of Hyundai and Toyota which were up 3% and 6.9% respectively.
Analysis
March is always an interesting month in the U.S. automotive industry. As everyone well knows March ends the first quarter of the year and though all automakers want to end on a strong note March also brings the start of the Spring sales season. This year was interesting on many levels. "The General", General Motors, seemed to dominate the business headlines but DaimlerChrysler was hard at work on the sales side. DaimlerChrysler found itself with a large inventory of vehicles entering March and so they did what the U.S. automakers do best they slapped a lot of cash on the hood of some of their most popular models - pickups, minivans and Jeeps. and moved the metal. It worked, sort of. DaimlerChrysler sales were up by 2.9%which is more than their cross town rivals can say, but it drove their rebate dollars to the pole position.
While DaimlerChrysler was working hard to keep their sales up, what happened with Hyundai and Toyota? You guessed it, they continued to do what the Japanese automakers do best, they quietly moved vehicles without the artificially cheap leases and steep discounts. They made it look easy. Hyundai sales were up 3% and Toyota 6.9%. The Toyota juggernaut rolls on!
It's interesting to think of the automaker's marketing techniques like their manufacturing processes. The U.S. automakers like to utilize the push system while the Asians use the pull system.
The U.S. automakers like to think about vehicles in terms of the emotional attachment that the consumer feels with the vehicle and sales of those vehicles in terms of "The Deal." This method is more of a Push system. They push vehicles onto the consumer or conversely they pull demand forward utilizing lease pull-aheads, subsidized residual values and other financial tricks. The philosophy goes that if the price is attractive enough then the American consumer will jump into the market. I agree there is some amount of truth in this line of thinking. I mean if the deal is good enough why not drive a new car instead of an older one and it certainly has kept the assembly plants running and the cars flowing. Unfortunately this also helps to explain, for instance, why Chrysler's vehicles usually sell very well in the first couple years of a model's life cycle and then tend to drop sharply. Chrysler's vehicles are generally viewed as bold and trendy. Of course the problem with trendy is that American's tastes are changing faster and faster.
The Asian automakers are more pragmatic in their approach to vehicle sales. They continue to focus on durable vehicles instead of "The Deal." This method is more of a Pull system. Consumer demand pulls vehicles into the market place, just like their manufacturing methodology. This theory goes that consumers, who are happy with their current Asian vehicle, when the time is right, will loyally come back to the showroom and will purchase another Asian vehicle. Perhaps this helps to explain their success. Imagine a durable vehicle at a decent price. Sounds like a true value proposition to me. I guess maybe that's why it works. It also affords the Asians the time and money to incrementally improve on their one major fault - styling. It sure seems as through they are beginning to figure out some better styling. Look out the juggernaut rolls on.
The rest of the Spring sales season will be interesting to watch. Will General Motors and Ford get aggressive like DaimlerChrysler in April? Will DaimlerChrysler keep the pressure on General Motors and Ford by continuing their incentives? Will the Asians continue to take the American market one vehicle at a time and post strong April sales? Will Toyota overtake Chrysler this year as the #3 sales leader? Stay tuned. It will be exciting to watch.
