Both Ford and GM have lost a significant amount of market share over the past couple years (Ford's down around 18%, GM's around 24%). Sales at GM are down 10% so far in 2005. Ford continues to struggle despite new introductions like the Mustang and F-150. Meanwhile Chrysler's not suffering so bad. I believe DCX sales are up about 4% this year.
I cite 2 big reasons for this decline. First, GM has hypnotized the public with incentives. They deliberatly raised their MSRPs in order to offer ridiculous rebates in the thousands of dollars. So people go out on the internet shopping for a new vehicle and they see that the list prices for all the GM vehicles are higher than everyone else, so they mark them off the list. Besides that, it's created the opinion among car buyers that you should expect to pay many thousands below sticker price for a vehicle.
Second, rising fuel costs (or rather the perception of rising fuel costs... fuel is actually still very cheap compared to historical highs) are driving people away from larger vehicles - the traditional domain of Ford and GM.
Why is DC still doing okay? Well, it's been a good couple years for them. They're making "exciting" products that people want to own (300C, Durango, Charger, Magnum) while Ford and GM are making things like the 500 (yawn) and the Equinox (yawn).
Nevertheless, the perception that in order to get a "good deal" you've got to pay $4000 under sticker price and get 0% APR has hurt all the auto makers. Profit margins continue to be trimmed, to the point where dealerships are now actively protesting actions by the manufacturers that result in the dealer "taking it in the shorts". I read a statistic somewhere that the number of domestic car dealerships in this country is falling... it's hard to stay open when you're making so little profit (and selling so few cars).
Personally, I blame GM for many of the industry's current woes. They dug their own hole when they started with the 0% financing and $6000 rebates. GM is now trying to get their dealers to "push" factory warranties - so much so that a dealership group in Virginia recently sued them (and won). An extended warranty on a large GM truck costs the consumer $1475 but $610 of that is pure profit - right back to the OEM.
So here we have DCX, enjoying growth while GM and Ford wither. From their point of view, why bother to continue to support a 7/70 powertrain warranty when if you cut it now people will get used to it and accept it, allowing you to continue to under-cut the other 2 auto makers on price since you don't have to pay the overhead associated with 7/70 warranties.
Did anyone else notice that Hyundai quietly stopped offering 10/100 bumper-to-bumper warranties? They now offer 10/100 powertrain warranties, and 5/100 bumper-to-bumper warranties instead. You have to pay extra to get the 10/100 bumper-to-bumper warranty.
When the market is this competitive (and getting more so every day), you've got to go to extremes to get a piece of the action. People want to pay nothing and expect to get perfection. Not to mention people modifying their vehicles and expecting the OEM to cover failures attributable to those modifications.
It's a harsh automotive world out there. Glad I'm not a dealer.
-Ryan
p. s. congratulations if you actually bothered to read all that!
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