Toyota Tundra Takes Texas, Destroys Detroit Bastion
http://www.bloomberg.com/apps/news?pid=20601109&sid=a7rb0Lapiji8&refer=home
an. 11 (Bloomberg) -- Toyota Motor Corp. is winning the battle for
full-sized pickup buyers in Texas, the biggest market for the trucks
that are Detroit automakers' best-selling models.
Promoting the redesigned 2007 Tundra, Toyota forced General Motors
Corp., Ford Motor Co. and Chrysler LLC to match incentive spending
estimated at about $6,000 per truck. While Tundra's Texas market share
soared 79 percent, competitors' shrank by 5 percent, said
market-research firm R.L. Polk & Co.
Money-losing GM, Ford and Chrysler can ill afford to cede ground to
Toyota City, Japan-based Toyota, especially in Texas, which accounts for
more than one of every seven large-truck sales. The Texas competition
will make it harder for Ford and Chrysler to benefit from the revamped
F-Series and Dodge Ram pickups being unveiled at the Detroit auto show
Jan. 13.
Tundra sales ``are coming from traditionally Ford, Chevrolet and Dodge''
buyers, said dealer Sam Pack, who owns three Ford stores in the Dallas
area. ``Have they negatively affected Ford? No question they have.''
Nationally, 2007 sales soared 58 percent as Toyota redesigned the Tundra
to vault it into the full-size category. Meanwhile, GM's Chevrolet
Silverado, Ford's F-Series, Chrysler's Ram and Nissan Motor Co.'s Titan
fell, leading a 3.2 percent slide for the segment.
Last year's 196,555 Tundra deliveries were less than a third of the
total for the Silverado and the F-Series, the nation's top-selling
vehicle, and slightly more than half of the tally for the Ram.
Still, Toyota's investment of $1.28 billion to open a Tundra assembly
plant in San Antonio in 2006 signals the automaker's aim to win more
full-size truck sales.
`Shrinking Market'
``Where once there were three players and 10 percent year- over-year
sales growth for these vehicles, now there are five players in what
looks to be a shrinking market going forward,'' said Eric Noble,
president of industry-consulting firm Car Lab in Orange, California.
``Profits aren't going to plummet, but they are going to be harder to
achieve.''
All automakers are being squeezed by gasoline averaging $3.10 a gallon
at U.S. pumps and the U.S. housing slump. Unlike GM, Ford and Chrysler,
Toyota has a financial cushion to withstand a truck decline: net income
of 1.64 trillion yen ($15 billion) in the year ended March 31.
In 2006, GM lost $2 billion, while Ford's deficit was a record $12.6
billion. That year's loss for Auburn Hills, Michigan-based Chrysler,
then owned by DaimlerChrysler AG, was $680 million using international
accounting standards, or $1.5 billion under traditional U.S. methods. GM
and Ford haven't released 2007 results, and Chrysler doesn't have to
disclose financial data now that it's closely held.
Toyota Fans
Toyota is rated by 17 analysts as a ``buy,'' compared with two who say
hold and two who say sell, based on a Bloomberg survey. Of 19 analysts
following Detroit-based GM, six advise buying, 10 holding, and one
selling. Four analysts rate Ford a ``buy,'' while seven say hold and
five say sell.
GM rose 90 cents to $23.62 at 4:04 p.m. yesterday in New York Stock
Exchange composite trading and has tumbled 23 percent in the past year,
while Dearborn, Michigan-based Ford gained 18 cents to $6.25 and is down
19 percent for the same period. Toyota declined 2.6 percent to 5,660 yen
in Tokyo and has lost 26 percent in the past year.
Texas has been among the industry's few recent bright spots for
full-size trucks.
As sales fell 14 percent nationally from 2004 through 2007, they rose
5.2 percent in Texas, R.L. Polk auto-registration data show. Texas's
total of 244,945 full-size trucks through Sept. 30 was 61 percent more
than runner-up California's.
Falling Fords
Ford's F-Series fell to 31.9 percent of the Texas market through Sept.
30, down 5.5 percentage points from a year earlier, while Silverado was
little changed at 26.7 percent and Ram rose 1.4 points to 19.8 percent,
according to Southfield, Michigan-based R.L. Polk. Nissan's Titan
slipped to 2.9 percent from 3.1 percent. The Tundra rose to 8.4 percent
from 4.7 percent.
``I hear the market is down. We're up 120 percent,'' said Dale Minor,
general manager of Freeman Toyota in the Dallas-Fort Worth suburb of Hurst.
The new Tundra has a wheelbase as much as 3.7 percent longer than its
predecessor, and options include a new V-8 engine. Matching Detroit's
size and power lets Toyota keep buyers who chose GM or Ford pickups
after driving their cars and SUVs, U.S. sales chief Jim Lentz said in a
2007 interview.
Depending on the model and before incentives are factored in, the Tundra
ranges in price from $22,290 to $42,070, while the F-150 ranges from
$17,345 to $39,500, according to auto- pricing Web site Edmunds.com.
Automakers' Incentives
Toyota relied on incentives to spur sales, spending up to $6,400 on each
Tundra, according to estimates from CNW Marketing Research Inc., which
includes items such as rebates and discount financing. Bandon,
Oregon-based CNW projects Ford spent $6,647 for each F-150, GM $6,019 on
each Silverado and Chrysler $6,477 on each Ram.
The increased competition for buyers takes a toll on profit margins,
even in Texas, some dealers say.
Ford dealers now make profit of 10 percent to 11 percent on a full-size
truck, down from 14 percent to 15 percent a few years ago, said Pack,
the Dallas-area Ford dealer. F-Series trucks are the only Ford model
with profit of 10 percent or more, he said. Automakers don't disclose
profits by model.
U.S. automakers say they will fight to retain customers. ``It's a hotly
competitive segment with extreme owner loyalty,'' GM Vice Chairman
Robert Lutz said in a December interview in Sterling Heights, Michigan.
``You'd be hard-pressed to find a domestic pickup owner who says, `I'm
dissatisfied and I'm going to look for a Japanese truck.'''
Fighting for Texas
Nor are GM and Ford conceding Texas, where their sales still outpace
Toyota's.
``We were successful in Texas. Even in a down market we maintained our
market share,'' Craig Eppling, a GM spokesman in Dallas, said in a Jan.
9 interview. ``We held our own against Toyota, whereas some of the
market-share gains came out of the other competitors.''
Toyota's Texas results don't appear to be ``all that different from the
nation,'' Ford spokesman Jim Cain said in an e-mail. ``They clearly dug
deep to reach their sales goals.''
Prices for the new F-Series and Ram haven't been announced. The trucks
are scheduled to go on sale in the second half.
``Everyone is still going to keep their nose in the game,'' said Lonnie
Miller, director of industry analysis at R.L. Polk. ``They're still
probably chasing the same buyer. The number of buyers isn't growing that
fast.''
Tundra Misses Target
Even with Tundra's 2007 leap, Toyota trailed the 200,000- truck target
it disclosed almost two years ago. The automaker set the same goal for
2008, below its capacity to make as many as 300,000 Tundras at plants at
San Antonio and Indiana.
``Marginal pickup buyers'' have switched to more fuel- efficient
vehicles, said analyst Joe Barker of CSM Worldwide in Northville,
Michigan. ``They are essentially those owners who don't necessarily have
a lifestyle need for a pickup.''
Work-truck demand is slipping, too, with U.S. housing starts at their
lowest since 1993. Contractors in trades connected to the housing
industry make up as much as 28 percent of the pickup market, CNW
President Art Spinella said.
``Until these housing-related things turn back up or fuel prices drop,
the full-size pickup truck business will continue to be a challenge,''
said Earl Hesterberg, chief executive officer of Group 1 Automotive
Inc., a Houston-based auto retailer that represents GM, Ford, Chrysler
and Toyota. ``It's a shrinking segment and has more intense competition.''
--
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