Hurt by at least eight months of gas prices at $3 a gallon or higher, sales of big sport-utility vehicles and pickup trucks were in a death spiral for most of the year.
And a truism of business in Detroit is that a company's fortunes are tied to its trucks and sport utility vehicles. Sales of light trucks -- which include SUVs, pickups and minivans -- make up 60 percent of sales for GM, 61 percent for Ford and 76 percent for Chrysler. As a result, the Detroit-based automakers are expected to see significant cuts to their market shares.
Some good news did emerge in September, when gas prices began a steep dive and, not surprisingly, SUV and pickup sales turned upward by 5.3 percent compared to a year earlier. Even full-sized SUVs, which experienced the steepest sales slide, saw some renewed life as sales of the redesigned Chevrolet Suburban, Tahoe and GMC Yukon moved upward.
Nonetheless, 2006 could be remembered as the year that sales of cars began to rebound against sales of trucks -- which include minivans, SUVs and pickups. The last time cars outsold trucks was 2001, when the split was 50.4 percent to 49.6 percent. When the final numbers for 2006 are tallied, it's likely that trucks will hold on 50.1 percent over 49.9 percent for cars.
"You can still see a consumer shift towards passenger cars, but our truck sales weren't as negative as they've been in recent months," Ford sales analyst George Pipas said in October.
That shift toward cars over trucks, combined with public perceptions of who builds the most reliable, fuel-efficient vehicles, accounted for the other major industry news for 2006: The sharp rise of Toyota.
When you speak of the Big Three, it's no longer Ford, General Motors and DaimlerChrysler. In 2006, Toyota took over the No. 3 spot from DaimlerChrysler, selling an estimated 2.5 million vehicles in its Toyota, Scion and Lexus divisions.
Even more troubling for those who root for U.S. teams, on the basis of car sales alone, the Toyota division will finish 2006 as No. 1 in the United States, followed by Chevrolet and Ford divisions.
For consumers, 2006 was another year when manufacturers tried to lure them with wave after wave of pricing and finance deals.
After gobbling up the "employee-pricing'' deals that were so prominent in 2005, buyers turned lukewarm to them in 2006.
A study by Kelley Blue Book showed that in 2006, 37 percent of buyers preferred zero-percent financing, up 11 points from a 2005 survey. The 2006 study found that employee-pricing programs have become the least appealing sales incentive, rated tops by just 10 percent of respondents.
In 2005, says Jack R. Nerad, executive editorial director and executive market analyst for Kelley, "All three American manufacturers participated in and heavily promoted their employee pricing programs. This year, General Motor's lack of participation in the employee pricing wars and the less prominent promotion of the programs by Ford and Chrysler did not spur car-buyers into the market or make them feel compelled to buy the way they did the previous summer.''
It's also likely that many consumers in 2006, with an eye on the upward spiral of interest rates, saw a zero-percent loan -- for as long as 72 months on some of the slowest-selling big SUVs -- as a bargain.
Late in 2006, General Motors added a tried and true sales incentive -- longer factory warranties.
The other thing that 2006 will be remembered for is that it was the first year since the 1970s that the subject of fuel economy of new vehicles really began to get traction, with both consumers and manufacturers. Ads for new vehicles stressed the uppermost federal highway fuel economy numbers -- even an ad for Chevrolet's Corvette stressed its EPA highway rating of 26 mpg.
And as 2007 models began to appear in dealer showrooms there were new small cars designed to appeal to fuel-conscious buyers. A handful of gas-electric hybrids remained the fuel-mileage champs, but these new small cars -- principally the Honda Fit, Toyota Yaris and Nissan Versa – promise fuel economy in the high 30 mpg range at prices at least $1,000 less than the cheapest hybrid.
Still, with gasoline prices falling well below $2.50 a gallon, there is some doubt whether these new fuel-sippers – which are significantly smaller sedans than U.S. buyers are accustomed to -- will create more than a blip.
''All of those (new vehicles) would make people sit up and take notice, but each one of those is a relatively niche vehicle,'' says George Peterson, president of California-based Auto Pacific, which does independent marketing and product consulting for the auto industry.
''The entire segment will account for only about 400,000 vehicles of the 17 million expected to be sold in 2007. It won't really swing the fuel efficiency of the U.S. fleet.'' |
