Snow Job? Why Some Carmakers Were On The Sunny Side Of The Street In January

Feb 5 2014, 4:04pm CST | by

Snow Job? Why Some Carmakers Were On The Sunny Side Of The Street In January

It’s curious, isn’t it, that January’s wintery weather affected some carmakers more than others?

General Motors, Ford Motor and Toyota Motor all saw substantial sales declines for the month. “January was off to a solid start, but the weather conditions slowed industry sales in key markets late in the month,” said Bill Fay, Toyota division group vice president and general manager, after reporting a 7.2 percent sales decline. Ford’s sales fell 7.5 percent and GM’s declined 11.9 percent compared to a year ago.

But the snow and frigid temperatures didn’t seem to bother others, like Chrysler or Nissan. Both reported healthy sales increases in January, up 7.6 percent and 11.8 percent, respectively. Nor did it affect Subaru, which specializes in all-wheel-drive cars that are well-suited for winter driving. It had the biggest gain of any carmaker, up 19.3 percent.

Regional differences no doubt explain some of the results. Asian carmakers outsell domestic brands in large West Coast markets where bad weather wasn’t a factor so generally speaking, their customers weren’t hunkered inside like many GM and Ford buyers. If that’s true, does that mean Chrysler shoppers are just heartier, then – more willing to brave the elements?

A closer look at the sales figures shows there were other factors at play. And they serve as a warning sign, perhaps, that competitive pressures are intensifying, with dangerous consequences for automakers that make the wrong move.

In January, Chrysler benefited from incremental sales of the new Jeep Cherokee as well as the updated Dodge Durango, heavily pitched on TV by the fictional anchorman Ron Burgundy. But Chrysler was also the only manufacturer to sweeten consumer deals from the prior month, according to JD Power PIN data. In the hotly contested pickup market, for instance, Chrysler was the highest spender on incentives in January, which helped fuel a 22.5 percent gain for its Ram pickups. It also boosted lease incentives on its mid- and large-sized passenger cars, and gave dealers bonuses for selling more vehicles.

Why did GM suffer a bigger decline than Ford? One reason: GM sold 10,000 fewer rental cars in the month, a 40 percent drop. It’s only temporary, though – GM expects its sales to rental companies to be about the same as 2013.

Fleet sales – not just to rental companies, but also to businesses and government agencies – played a big role in the success that Nissan Motor and Hyundai Motor saw in January. Both carmakers hiked their sales to fleet customers by more than 25 percent. Without an extra 4,000 vehicles sold to fleet buyers, for example, Hyundai wouldn’t have been able to eke out a 0.7 percent gain for the month.

Overall, Ford had the highest incentives for the month, both in terms of dollars ($3,699 per vehicle), and as a percentage of average transaction price (12.3 percent). (Industry-wide, the average incentive was $2,813 per vehicle, or 9.5 percent of average transaction price.) About 80 percent of the F-150 pickups Ford sold in January were leftover 2013 models, with incentives as high as $4,800. But that’s to be expected as Ford manages the sell-down of the current generation F-series in preparation for the launch of its redesigned 2015 pickup late this year.

All of which is to say that with a flurry of new models coming, and the industry’s torrid growth pace leveling off, competition has never been tougher. And automakers will have to decide whether to fight for market share or protect their profit margins. It’ll be interesting see which strategy they pursue.

Source: Forbes Auto

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Roads Versus Rail: The Big Battle Over Public Transportation
Roads Versus Rail: The Big Battle Over Public Transportation
EDITOR’S NOTE: Forbes has just published Curbing Cars: America’s Independence From The Auto Industry, an eBook investigating why a growing number of Americans are giving up their cars. Written by Forbes contributor and...
 
 
The Lyrical Portfolios Of Hip-Hop's Wealthiest Artists
The Lyrical Portfolios Of Hip-Hop's Wealthiest Artists
From Beats by Dre to Roc Nation Sports, the portfolios of the Forbes Five include a diverse range of investments. Birdman, Jay Z and Diddy have sought profits in liquor while every member retains some income through...
 
 
Innovation Direct™ Leading the Charge in Marketing of Slide-N-Hide/Cargo Carrier Invention
South Miami, FL, April 16, 2014 --(PR.com)-- An innovative new product designed to effectively address a common problem related to transporting cargo, the Slide-N-Hide/Cargo Carrier, has been developed by Kevin...
 
 
Sound Auto Wholesalers Announces a Discounted Service and Maintenance Plan Exclusively for Vehicle Owners
Sound Auto Wholesalers has launched a plan called "The $20/20% Service Plan" exclusively available on vehicles purchased at Sound Auto Wholesalers.
 
 
 

Latest from the Network

Pro2col Announces Its Presence at InfoSec and an Exclusive Distribution Deal with Thru
London, United Kingdom, April 16, 2014 --(PR.com)-- Leading independent file transfer specialists Pro2col has today confirmed it will be exhibiting at InfoSec from 29 April to 1st May 2014 at Earl&#8217;s Court....
Read more on Business Balla
 
Johnny Depp: Age gap with Amber isn't an issue
Johnny Depp doesn't think the age gap between him and his fiancée Amber Heard is an issue. The 50-year-old actor believes the 27-year-old screen beauty, who he fell for on the set of 'The Rum Diary', has a lot to teach...
Read more on Celebrity Balla
 
Lady Gaga praises 'admirable' Lily Allen
Lady Gaga thinks Lily Allen is "admirable" for calling her a "martyr". The singer is extremely grateful to her fellow pop star for defending her latest album 'ARTPOP', which hasn't been selling as well as her previous...
Read more on Celebrity Balla
 
Thousands of Retail Locations Ready to Service Future PinoyWallet Holders
New York, NY, April 16, 2014 --(PR.com)-- PyxPay and Fuze Network entered into a participation agreement for Fuze Network to accommodate loading funds onto PyxPay&#8217;s closed-loop debit card accounts. The...
Read more on Business Balla
 
Abnormal Volume Stocks To Watch On Wednesday
Looking through the closing trading data for the Russell 1000 components, there are some abnormal volume stand-outs that traders will be interested to watch during Wednesday’s upcoming session. To compile this list, we...
Read more on Business Balla
 
Northwestern MutualVoice: What You Should Know Before Taking A Loan From Your Life Insurance
Aside from the death benefit, one of the great things about permanent life insurance is that it builds cash value. Your policy becomes an asset you own. As you build cash value in your policy, you can easily access that...
Read more on Business Balla
 
Spring Is Blossoming -- Are You?
With the spring in full swing here, I realize that nature has such wisdom to share with us as leaders if we let it. As I watch the bursting forth of the young bright green leaves on the trees, hear the symphony of the...
Read more on Business Balla
 
Five Keys To BRAVE Innovation
In most industries, the lowest cost player makes money selling large quantities of product or service at a low price with great discipline. The differentiated player makes money selling smaller quantities of product or...
Read more on Business Balla
 
Roads Versus Rail: The Big Battle Over Public Transportation
EDITOR’S NOTE: Forbes has just published Curbing Cars: America’s Independence From The Auto Industry, an eBook investigating why a growing number of Americans are giving up their cars. Written by Forbes contributor and...
Read more on Auto Balla
 
I Want To Work For Diddy: Meet Sean Combs' Real Revolt Recruits
Back in 2008, a program called I Want To Work For Diddy made its debut on VH1. As its title suggests, the program follows a handful of Millennials as they perform outrageous tasks in order to win approval—and,...
Read more on Business Balla
 
 
Auto Balla Sexy Balla Sport Balla TV Balla Politics Balla Movie Balla Apple Balla Business Balla Ad Balla Celebrity Balla