Wednesday, August 02, 2006

Toyota Drives Past Ford in American Market

July 2006 was another bad month for Detroit car makers. It is rather telling that GM had the best performance as their sales fell by "only" 19.5% compared to July 2005 sales. Ford fell 35.2% and Chrysler 37%.

Now, to be fair, these numbers are not as dreadful as they seem as sales in July 2005 was temporarily boosted by huge and unsustainable (They were in fact selling below cost) discounts. Even so, the trend for Detroit car makers are not good.

Even while Detroit car makers saw their sales decline, Japanese Toyota saw their sales rise 16%. Another Japanese car company, Honda saw its sales rise 10% while Korean car manufacturer Hyundai saw its sales rise 6%. Nissan (who is 44% owned by French Renault)however saw its sales fall 19.5%.

Toyota are now not only several times bigger than Detroit car makers combined in terms of stock market value (something which is related to the fact that Toyota makes hugh profits, while Detroit companies are suffering losses), and bigger than all but GM in terms of cars sold, they have now surpassed Ford in terms of cars sold not only in global sales but also even in sales in the U.S market.

While there are many other deeper problems for Detroit car makers (many of which can be traced to UAW ), a factor which is accelerating the decline of Detroit car makers and the success of Toyota and other Japanese and Korean car companies is rising gasoline prices. The Asians are much better in fuel economy, something which is getting increasingly important for consumers as gas prices rise. Something which is illustrated by the fact that while Ford saw sales of its most gas guzzling models fall by 45%, sales of is more fuel efficient models rose .


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