I knew this would happen. On Monday, news surfaced that General Motors Corporation (NYSE/GM) and Ford Motor Company (NYSE/F) had both reported a decline in sales in September. Were you surprised? I sure was not. If you have been following my columns, you’ll understand where I’m coming from. I have commented on the hurdles facing U.S. automakers and the fact that, unless they are dealt with, it will continue to be a difficult journey. For those of you who have not read my past columns on the U.S. auto sector, here’s a summary.
The reality is that U.S. automakers must make better cars. Some of you may take exception to this, but it is the simple truth. Consumers are now savvier when purchasing big-ticket items such as cars. They want cars that are built to last, with low maintenance expenses.
In general, U.S. cars do not satisfy this requirement, whereas Japanese automakers do. This is clearly reflected in the recent sales numbers; Japanese automakers have continued to experience record U.S. sales and growth at the expense of the big three. In fact, it is expected that Toyota Motor Corporation (NYSE/TM) will soon overtake General Motors as the number one automaker in the U.S. And don’t even ask about Ford and DaimlerChrysler AG (NYSE/DCX); these two laggards need to address their own issues.
In September, a major decline in SUV sales impacted all automakers, U.S. and Japanese. But after three months of employee-pricing discounts and strong sales, U.S. automakers came back to reality and saw declining sales in September, versus rising sales for Japanese automakers.
GM saw its sales plummet 24% in September, along with flat sales from January to September. Ford reported a 20% drop in September sales. The saving grace for the industry was DaimlerChrysler, which saw a four-percent increase in September sales.
As far as the Japanese automakers go, Toyota sales surged 10% in September. The company also experienced a record third quarter and an 11% increase in January-September sales. Nissan Motor Co. saw even stronger numbers, with September sales up 16.4%, while Honda Motor Co., Ltd. (NYSE/HMC) reported an 11.7% rise in September sales.
The numbers continue to tell the story. U.S. automakers need to react and build better cars in order to compete with the Japanese, otherwise the negative trend for U.S. automakers will continue.