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2005, U.S. Consumer Shift to Quality Continues at Quickened Pace, But GM and
Ford Avoid Disastrous Market Share Plunges with Big Discounts and Huge Financial
Losses: Is a Big Three Product Worth a Dime?
Auto on Info January 2006
In 2005, U.S. Consumer Shift to Quality Continues at Quickened Pace, But GM and Ford Avoid Disastrous Market Share Plunges with Big Discounts and Huge Financial Losses: Is a Big Three Product Worth a Dime?
By James B. Bleeker
Toyota Motor Corporation, with a 1997-2001 Reliability Percentrank average of .90, saw its U.S. auto sales rise by 10% in 2005, over those of 2004, to set a tenth consecutive annual sales record. Its U.S. car sales rose 17%, and its U.S. truck - SUV, minivan, and pickup - sales rose 2%.
The following table provides detailed information regarding Toyota Motor Corporation's U.S. sales in 2005, together with 1997-2001 model, line, and manufacturer Reliability Percentrank averages. Those models that were among July 2005's Hottest Ten (actually dozen, by tie), per WSJ's lot-stay time, for all manufacturers, are in bold blue. (The Wall Street Journal publishes the Hottest Ten list rather irregularly, likely because it changes so little over time.) That model that received CAA's most recent Pyramid Award for ownership satisfaction is italicized.
Table I: 2005 Toyota Sales, Percentage Changes, and 1997-2001 Reliability Percentrank Averages, by Line, Type, and Model Manufacturer Division Type of Vehicle Model Sales Volume Percentage Change for 2005 from 2004 1997-2001 Reliability Percentrank Average Toyota Motor Corporation 2,260,296 10.1% .90 Scion Division 156,485 57.7% N/A xA 28,033 16.3% N/A xB 54,037 15.3% N/A tC 74,415 166.0% N/A Toyota Division 1,800,916 7.7% .90 Passenger Car 981,645 13.4% N/A Avalon 95,318 162.3% .86 Camry1v,1r,1f,R6 431,703 1.4% .90 Corolla1r,R6 341,290 2.8% .93 Prius*^,1r,1s,R6 107,897 100.5% .851 Light Truck 819,271 1.8% N/A Sienna*,1s,1f (minivan) 161,380 1.8% .80 Highlander1v,1r,1s,R6 (SUV) 137,409 3.6% .981 4Runner1v,1s,R6 (SUV) 103,830 -8.8% .96 Land Cruiser1r,1s,R6 (SUV) 4,870 -27.9% .91 Tundra1r,1s,R6 (pickup truck) 126,529 12.9% .921 Tacoma1f (pickup truck) 168,831 10.8% .94 Lexus Division 302,895 5.5% .92 Passenger Car 151,226 11.5% N/A ES 3301 67,577 -10.7% .952 LS 430*^,1r,1s,R6 26,043 -19.0% .972 GS 300R6 27,807 303.5% .933 GS 430 5,650 320.5% .932,3 SC 430R6 (hardtop convertible) 8,360 -13.6% N/A IS 300 15,789 58.8% .901 Light Truck 151,669 0.2% N/A RX 330*^,1,1s and 400hR6 (SUV) 108,775 2.4% .922 GX 4701s (SUV) 34,339 -2.7% N/A LX 470 8,555 -12.8% .852 Note: Corolla sales total includes Matrix wagon. 1Based on data for 2 or fewer model years 2Includes data for preceding model number 3The GS 300 and the GS 430 have pooled reliability data and consequently a common Reliability Percentrank. Bold blue script indicates that the model was in July 2005's Hottest Ten, for all models of all manufacturers. Italicized script indicates that the model received CAA's most recent Pyramid Award for ownership satisfaction. Underscored script indicates that the model is a Consumer Reports 2004 Quick Pick. A gold asterisk (*)indicates that the model is a CR 2004 Top Pick. A gold caret (^)indicates that the model is a CR 2005 Top Pick. A gold one (1)indicates that the model is a CR 2005 overall Quick Pick, a Quick Pick with very good or excellent ratings in five categories - road performance, predicted reliability, safety (accident avoidance and crash protection), owner satisfaction, and fuel economy. A gold 1v (1v)indicates that a version of the model is a CR 2005 overall Quick Pick. A gold 1r (1r)indicates that the model is a CR 2005 reliability Quick Pick. A gold 1s (1s)indicates that the model is a CR 2005 owner satisfaction Quick Pick. A gold 1f (1f)indicates that the model is an IIHS 2005 Best Pick Frontal. A gold R6 (R6)indicates that the 2006 model has received a Consumer Reports predicted short-term reliability rating of "Most Reliable." Additional 2006 models by Toyota Motor Corporation that are on CR's Most Reliable list are the Toyota Echo, the Toyota Matrix wagon, the Lexus IS300, and the Toyota RAV4 small sport utility vehicle. The Toyota Motor Corporation models showing the largest sales gains in 2005 over 2004 were the Lexus GS 430 sedan, up 320.5% to 5,650, the Lexus GS 300 sedan, up 303.5% to 27,807, the Scion tC, up 166.0% to 74,415, the Toyota Avalon large sedan, up 162.3% to 95,318, the Toyota Prius gas-electric hatchback, up 100.5% to 107,897, the Lexus IS 300 sedan and hatchback, up 58.8% to 15,789, the Scion xA, up 16.3% to 28,033, the Scion xB, up 15.3% to 54,037, the Toyota Tundra pickup truck, up 12.9% to 126,529, and the Toyota Tacoma pickup truck, up 10.8% to 168,831.
Toyota's Hottest Sellers in 2005 Lexus GS 430 Lexus GS 300 Scion tC Toyota Avalon Toyota Prius Lexus IS 300 (No Icon Available) Scion xA Scion xB Toyota Tundra Toyota Tacoma The above links are to onsite review pages for the 2005 models. Toyota's Scion line, up 57.7% for the year, is a new line. It is intended to meet the tastes and needs of young adults; however, it has, as well, proven popular with Baby Boomers - older folks who are generally young at heart.
The Toyota Prius, up 100.5% for the year, is Toyota's gas-electric hybrid. The extraordinary popularity of the post-2004 editions is likely a consequence of a combination of factors. First, the post-2004 Prius is a midsize sedan. Second, it employs new gas-electric power-train technology that delivers more power and performs greater work per unit of energy source. This gives it an acceleration comparable to that of the Camry midsize sedan and increases its estimated EPA rating for in-city driving from 55 miles per gallon to 60 miles per gallon.1 In short, the post-2004 editions of the Prius are a bigger car with better gas mileage than its pre-2004 editions. Third, the Prius is a Consumer Reports 2004 Quick Pick, a CR 2004 Top Pick, a CR 2005 reliability Quick Pick, a CR 2005 owner satisfaction Quick Pick, a CR 2005 fuel efficiency Quick Pick, a CR 2005 Top Pick, and a recipient of a Consumer Reports 2006 "Most Reliable" rating. (In October, Toyota announced a Special Service Campaign to recall some 2004-2005 Priuses for repair of a software glitch and expressed confidence that the repair will solve the Prius' stalling problem. See "Prius Has Stalling Glitch, NHTSA Commences Investigation," Auto on Info, June 2005 and "Toyota Recalls a Batch of Priuses in the U.S., Japan, and Here and There, a Batch of Scion tCs in the U.S., and a Bunch of Various Models in Southeast Asia and Australia," Auto on Info, November 2005.)
The reliability of the North-American-made Toyota Avalon has improved in recent years (a 2000-2001 RPA of .94 vs. a 1995-1999 RPA of .82); however, for model year 2006 Consumer Reports accords the Avalon a predicted short-term reliability of only average, something of a disaster for a Toyota. Only time will tell what its actual short-term (1-to-3-year) reliability, mid-term (4-to-6-year) reliability, and longer term (7-to-8-year) reliability will be.
U.S. sales of the Lexus LX 470 in 2005 exceeded those of the Toyota Land Cruiser, a more Spartan cousin, by 75.7%.
The likelihood of finding a 2006 made-in-Japan Toyota Corolla or Camry on a U.S. dealer lot is small; Toyota Motor Corporation reports that 96.9% of the Corollas sold in the U.S. in 2005 were made in North America and 93.3% of the Camrys sold in the U.S. in 2005 were made in North America. If made-in-Japan is an uncompromisable criterion, most likely the U.S. consumer will have to buy used, if a Toyota Corolla or Toyota Camry is his/her desire. (However, the consumer may try telling the dealership, "Look for it. If you can't find it, there's no sale.") U.S. consumers seeking a made-in-Japan 2006 Lexus RX 330 are more fortunate; only about 2/3 of the RX 330s sold in the U.S. in 2005 were made in North America. U.S. consumers looking for a made-in-Japan 2006 Toyota Avalon have no hope at all, as all of the Toyota Avalons sold in the U.S. are made in North America; this may account for their modest predicted short-term reliability.
Honda Motor Company, with a 1997-2001 RPA of .84, saw its 2005 U.S. auto sales rise 5% to set a ninth consecutive annual sales record. Its U.S. car sales fell a fraction of 1%, but its U.S. truck sales rose 14%. Honda Motor Company's models showing the largest sales gains in 2005 over 2004 were - excluding the Honda Insight and Acura NSX, which have nominal sales - the Acura RL sedan (1997-2001 RPA of .89 and with a CR 2005 predicted short-term reliability in the second highest category, but with a CR 2006 predicted short-term reliability of only average), up 101.4% to 17,572, the Acura TSX (a CR 2005 owner satisfaction Quick Pick and a CR 2005 overall Quick Pick), up 15.2% to 34,856, the Honda Odyssey minivan (1997-2001 RPA of .81 and with a CR 2005 predicted short-term reliability in the second highest category but with a 2006 predicted short-term reliability of only average, also a CR 2005 Top Pick and an IIHS 2005 Best Pick Frontal), up 13.4% to 174,275, the Honda Pilot sport utility vehicle (too recent to have a 1996-2000 RPA, but with a CR 2005 and 2006 predicted short-term reliability in the second highest category and a CR 2005 owner satisfaction Quick Pick and a CR 2004 and 2005 Top Pick, and with the Pilot EX-L edition a CR 2005 overall Quick Pick), up 12.2% to 143,353, and the Honda S2000 convertible (with a 1997-2001 RPA of .81 and with a CR 2005 predicted short-term reliability in the middle category and a CR 2005 predicted owner satisfaction in the highest category), up 6.6% to 7,780.
Honda's Hottest Sellers in 2005 Acura RL Acura TSX Honda Odyssey Honda Pilot Honda S2000 The above links are to onsite review pages for the 2005 models. In 2005, the Honda Odyssey minivan outsold the Toyota Sienna by 12,895 vehicles, or 8.0%, and the Honda CR-V sport utility vehicle outsold the Toyota RAV4 by 79,701 vehicles, or 113.0%. Both of the latter two have solid reliability histories; the Honda CR-V has a 1997-2001 RPA of .99 and the Toyota RAV4 has a 1997-2001 RPA of .93. With regard to the reliability of the minivans, the Honda Odyssey has not fared well of late. Its 1999-2001 Reliability Percentrank average is only .70 (in contrast to its 1995-1998 RPA of .975) and Consumer Reports accords its 2006 model year a predicted short-term reliability of only average (rather matching its early 2002 Reliability Percentrank of .53), something of a disaster for a Honda-engineered product. However, as with the North-Ameican-made Toyota Avalon, only time will tell what the Odyssey's actual short-term (1-to-3-year) reliability, mid-term (4-to-6-year) reliability, and longer term (7-to-8-year) reliability will be.
Nissan Motor Company, with a 1997-2001 Reliability Percentrank average of .81, saw its U.S. auto sales rise by 10% in 2005 to set an annual sales record. Its U.S. car sales rose 7%, and its U.S. truck sales rose 13%. Nissan Motor Company's models showing the largest gains in U.S. sales in December 2005 over December 2004 were the Infiniti M45 sedan (too recent for a 1997-2001 RPA, but with a CR 2006 predicted short-term reliability in the highest category), up 1052.1% to 24,000, the Nissan Pathfinder sport utility vehicle(1997-2001 RPA of .85 but with a CR 2006 predicted short-term reliability of only average), up 100.4% to 76,156, the Nissan Murano sport utility vehicle (too recent for a 1997-2001 RPA, but with a CR 2005 and 2006 predicted short-term reliability in the second highest category and with the Murano SL edition a CR 2005 overall Quick Pick), up 20.4% to 74,454, the Nissan Sentra sedan (1997-2001 RPA of .66 and with a CR 2005 predicted short-term reliability in the second lowest category but with a CR 2006 predicted short-term reliability in the second highest category), up 12.1% to 119,489, the Nissan Xterra sport utility vehicle (1997-2001 RPA of .74), up 9.0% to 72,447, the Nissan Altima sedan (1997-2001 RPA of .78 and with a CR 2005 and 2006 predicted short-term reliability in the middle category, also with the 3.5 SE V6 edition a CR 2005 safety Quick Pick), up 8.6% to 255,371, and the Nissan Armada sport utility vehicle (too recent for a 1996-2000 RPA, but with a CR 2005 and 2006 predicted short-term reliability in the lowest category), up 6.3% to 39,508.
Nissan's Hottest Sellers in 2005 Infiniti M45 Nissan Pathfinder Nissan Murano Nissan Sentra Nissan Xterra Nissan Altima Nissan Armada Subaru division of Fuji Heavy Industries, Ltd., with a 1997-2001 RPA of .82, saw its 2005 U.S. auto sales rise 5%. Its car sales rose 12% but its truck sales fell 9%.
Mazda Motor Corporation, with a 1997-2001 RPA of .70, saw its 2005 U.S. auto sales fall 2%. Its car sales rose 3%, but its truck sales fell 14%.
In summary, the 2005 sales by the auto manufacturers of quality products were solid; sales by Toyota and Nissan were excellent, both with an increase of 10%.
At the other end of the quality spectrum, General Motors Corporation, with a 1997-2001 RPA of .30, saw its 2005 sales drop 4%.
Chrysler Group of DaimlerChrysler, AG, with a 1997-2001 RPA of .40, saw its 2005 U.S. auto sales rise 5%.
Ford Motor Company, with a 1997-2001 RPA of .51, saw its 2005 U.S. auto sales drop 4%.
GM and Ford sales drop would have been much larger, but for their huge discounts (that brought big losses) in the summer of 2005. However, these worked well for only about a month, as if those buyers who thought little quickly convinced themselves that a GM-Ford product was worth something greater than nothing and those who thought more couldn't, or at least couldn't convince themselves that even the much reduced asking prices were anywhere close to true value. And through it all, Toyota quality attracted buyers like filings to a magnet.
Auto manufacturer U.S. market shares changed considerably in 2005. Reliable Two market shares saw bigger increases in 2005 than in 2004; GM and Ford market shares saw nearly identical declines. The following table provides the 2005 market shares, together with historical market shares and estimates of natural market shares.
Table II: Fractional Shares of the U.S. New Passenger Vehicle Market for the Reliable Two, Nissan, Hyundai, and the Big Three for Years 1993, 1995, 1997, 1999, 2001, 2003, 2004, and 2005, Estimates of Natural Market Shares, Distances to Natural Market Shares, and Distances Traversed from 1993
Manu- facturer 1993
1995 1997 1999 2001 2003 2004 2005 Estimate of Natural Market Share* Remaining Distance to Natural Market Share Distance Traversed from 1993 Toyota .07 .07 .08 .09 .10 .11 .12 .13 .23 .10 .06 Honda .05 .05 .06 .06 .07 .08 .08 .09 .14 .05 .04 Nissan N/A N/A N/A N/A .04 .05 .06 .06 .16 .10 N/A Hyundai N/A N/A N/A N/A .02 .02 .02 .03 .05 .02 N/A GM .34 .33 .31 .29 .28 .28 .27 .26 .04 -.22 -.08 Ford .26 .26 .25 .24 .23 .19 .18 .17 .07 -.10 -.09 Chrysler .15 .15 .15 .16 .16 .13 .13 .14 .00 -.14 -.01 *The Estimate of Natural Market Share for each manufacturer, save Hyundai, is the fractional share of new registrations of passenger vehicles in New Zealand in 1996. New Zealand was chosen in order to remove from the decision-making process, or at least reduce the influence of, such factors as old name recognition, repetitive buying patterns, and normatively motivated attitudes. The intent was to obtain an estimate as to what share each manufacturer would be able to attain in an environment of rational decision-making, as best each individual is able. The year 1996 was chosen as it is the most recent year in American Automobile Manufacturers Association's 1998 edition of World Motor Vehicle Facts. Hyundai's Natural Market Share Estimate is based on (1) its 1996-2000 Reliability Percentrank average relative to GM's and (2) its product prices relative to those of GM. A different method of estimating the Natural Market Share of Hyundai is used as its reliability has notably improved since the late 1980s, but still does not significantly differ from GM's.
With regard to 2006 market shares, December 2005 sales changes likely provide the best guide. This means that Toyota should end the year with a U.S. market share of .14 (up .01), GM - .24 (down .02), Ford - .16 (down .01), and Chrysler - .13 (down .01). With such changes, it should be business as usual for the Big Three, save for a possible GM financial restructuring via a Chapter 11 bankruptcy filing. However, if GM's market share drops to .23 or less, bold, brilliant, innovative, and daring leadership should likely be installed lickety-split. Similarly for Ford, if Ford's market share drops to .15 or below.
In the Hyundai vs. General Motors war, GM retreated (with a U.S. market share drop of a notch) and Hyundai advanced (with a U.S. market share gain of a notch).
U.S. 2005 auto sales by Saab, a European subsidiary of General Motors with a 1997-2001 RPA of .43, rose 1%, and sales by Volvo, a European subsidiary of Ford with a 1997-2001 RPA of .29, fell 11%.
In the niche markets, Porsche 2005 U.S. auto sales rose 2%, BMW sales rose 4%, and Mercedes-Benz sales rose 2%. Old line European nobility is still around.
Source for 2005 auto manufacturer sales data: "December 2005 U.S. Auto Sales," the Associated Press, January 4, 2005, available at Yahoo! News
Source for detailed Toyota sales data: "Toyota Reports 2005 and December Sales," January 4, 2006, at http://pressroom.toyota.com/Releases/View?id=TYT2006010484765
Source for Nissan sales data: "Nissan Announces Best Year in Its U.S. Sales History," January 4, 2006, available at http://www.nissannews.com/corporate/news/current/20060104101737.shtml
Source for Honda sales data: "American Honda Posts Ninth Consecutive Year of Record Sales in 2005," January 4, 2006, http://www.hondanews.com/CatID1000?mid=2006010454040&mime=asc
Source for Reliability Percentranks and Percentrank averages: Auto on Info's Table I-MVRP
Source for July 2005's Hottest Ten: "Hot Off the Lot," Wall Street Journal, August 11, 2005, p. D3 (See "By WSJ's Lot Stay Time, Toyota Has 8 of Hottest 12," Auto on Info, August 2005.)
Sources for Consumer Reports 2004 Quick Picks: Consumer Reports, February 2004, p. 49 and Consumer Reports, May 2004, p. 53, Consumer Reports, August 2004, p. 51, Consumer Reports, December 2004, p. 59
Source for CR 2004 Top Picks: Consumer Reports, April 2004, pp. 8,9
Source for CR 2005 Top Picks: Consumer Reports, April 2005, pp. 6,7
Sources for CR 2005 Quick Picks: Consumer Reports, April 2005, p. 31 and Consumer Reports, August 2005, p. 51, the latter providing the "best all-around Quick Picks"
Source for CR 2005 predicted short-term reliability ratings (save for the Infiniti M45): "Vehicle Profiles: A User's Guide," Consumer Reports, April 2005, pp. 40-73
Source for CR 2005 predicted short-term reliability rating for the Infiniti M45: Consumer Reports, September 2005, p. 51
Sources for IIHS Best Pick Frontals: "Toyota Camry and Honda Accord Dominate Results of IIHS' Frontal Offset Crash and Side Impact Tests," Auto on Info, April 2005, "Toyota Sienna and Honda Odyssey Minivans Score Best on IIHS 2005 Crash Tests, Receive "Best Pick Frontal" Designation; GM's Chevrolet Astro, GMC Safari, Pontiac TransSport / Montana, and Chevrolet Venture Score Worst," Auto on Info, April 2005, and "Toyota Tacoma Pickup Truck Scores Best on IIHS 2005 Crash Tests, Receives "Best Pick Frontal" Designation," Auto on Info, April 2005
Sources for Consumer Reports' 2006 predicted short-term reliability ratings of "most reliable": "Asian Auto Brands' Reliability Uneven," Christine Tierney, Detroit News, October 27, 2005, at http://www.detnews.com/2005/autosinsider/0510/27/C01-362825.htm and "Asian Vehicles Rank Low in Survey," Sharon Silke Carty, USA Today at Detroit Free Press, October 27, 2005, at http://www.freep.com/money/autonews/reliable27e_20051027.htm (The list in the Detroit Free Press omits the Toyota Echo in its list of small car recipients of CR's 2006 "Most Reliable" rating. To see a breakdown by manufacturer and line, go to "Toyota, Honda, Subaru, and Nissan's Inf
