By all rights, 2002 should be one of worst years for new vehicle sales in almost a decade.
Sales have increased every year since 1991 except for two, and one the declines was the small 1% drop-off in 2001 to sales of 17.12 million units from the gargantuan results of 2000 when a record 17.34 million light vehicles were sold.
The last three years have ranked as the top three in history, outdoing the fourth best year, 1986's 16.06 million, by an average of one million units.
However, the competitive nature of this market should keep this year at least the fourth best ever. As long as the economy is indeed turning around, another 16 million-plus year is likely in the cards, meaning that it should be better than any year prior to 1999, except possibly 1986.
Furthermore, if all the right pieces fall into place — corporate profits begin growing early in the year, business investment sharply increases, consumer confidences rises and unemployment falls — super-generous incentives probably could pull the industry close to another 17 million market. But those incentives would have to be even more generous than last year.
Big Three dealers in general will remain the most dependent on manufacturer incentives to move the metal. Although they are not immune to incentives, most of the rest of the industry, especially stalwarts Toyota Motor Sales U.S.A. Inc' s Toyota and Lexus brands, and American Honda Motor Co. Inc.'s Honda and Acura marques, will stay closer to last year's levels without the largess.
When a month looks like its tracking downward toward a 15 million annual rate, that's when the Big Three — on GM's lead — appear ready to pull the trigger and shoot the incentives.
If the trigger is pulled in time, it should be enough in most months to keep monthly sales at a 16 million Seasonally Adjusted Annual Rate (SAAR).
Expect the first half of year to be somewhat sluggish as near-term pent-up demand was wiped out in the fourth quarter of 2001. But with the economy picking up, the second half should get back to a 16-million plus showing.
For most dealers, a decline in industry sales will naturally mean a decline in their new-vehicle volume in 2002 from 2001. Depending on how far the industry falls, there are some brands that could maintain, or increase, their 2001 sales. But the test will be in market share. Three interacting keys will be the basis for who improves market share in 2002 over 2001: strength of the overall product line, new products and manufacturer subsidized incentives.
The biggest growth segment continues to be the cross/utility segment, made up mostly of vehicles that resemble sport/utility vehicles but drive like cars. CUV sales nearly doubled in 2001 from 2000 to 1.01 million units, or 5.9% of the market vs. 3.1% the prior year and 1.8% in 1999.
Look for more significant growth in the CUV segment during 2002, as there will be five new entries into that segment this year.
Another big growth sector for the market in 2001 was large light-trucks. After all the worry about what the price of oil would do to sales of big trucks, market share of large pickups and big SUVs increased last year to a combined 19.3% (nearly one of every five vehicles sold) from 2000's 17.5%.
Other growth came in entry luxury sedans and upper luxury sedans, which had a slight rebound to a 1.0% market share after bottoming out two consecutive years at 0.8%. And note that, led by BMW and Mercedes, the luxury car segment will have more new vehicle intros and major redesigns of existing lines in 2002 than any other segment.
Getting squeezed are midsize sedans, minivans and small pickups, while small cars and midsize and small SUVs are relatively flat.
The brand — again — to watch out for in 2002 is Toyota. Toyota dealers have increased their market share every year since 1995, and will easily do so again in 2002. Toyota Motor Sales, including the Lexus Div., had its first double-digit share ever in 2001.
Toyota Div. market share last bottomed out in 1995 at 6.7%, but topped off last year at 8.9% and surpassed Dodge Div. for the third slot among light-vehicle brands behind Ford and Chevrolet.
On top of its already solid lineup of relatively fresh models, the seemingly invincible Toyota already has its redesigned '03 Corolla in dealer showrooms, and is shoring up the small car segment with the new Matrix sport wagon which just hit dealerships.
Also this year, Toyota has a redesigned 4Runner midsize SUV coming mid-year, as well as an overhaul to the Sienna minivan.
Honda remains a steady engine of growth and its dealers should have no problem increasing market share in 2002.
Even though the midsize car market is shrinking, it's not impacting the Accord. It, along with the Toyota Camry, are still the vehicle of choice among consumers, and without the generous incentives laid out by their major competitors at Chevrolet (Impala), Ford (Taurus) and Dodge (Stratus).
On top of regaining the crown as best selling car in the U.S. last year, Accord gets a redo — always a sales booster — this year for the '03 model year. Furthermore, Honda expands its product lineup with the new midsize SUV (more direct competition for Explorer, Grand Cherokee and TrailBlazer) and the unnamed “Model X” cross/utility vehicle built on the same platform as the hot selling Acura MDX from Honda's sister division.
If that's not enough, Honda dealers also get a redesigned CRV later this year, one of the vehicles that pioneered the CUV segment, and production capacity for its Odyssey minivan — which is eating up market share in the van market, including from Toyota — will be doubled this year after the late-2001 opening of a new U.S. assembly plant.
However, the Big Three brands are not down-and-out.
Chevrolet had a big year in trucks in 2001 and should again in 2002 with the introduction of its TrailBlazer XL and its S-10 replacement, Colorado.
Also Chevy will have the Avalanche available for a full year for the first time and is scheduled to bring its SSR sporty pickup to the market later this year. Chevy dealers might have a slightly tougher time pushing the large trucks with Ford Motor coming out with a major restyling to its Ford Expedition and Lincoln Navigator.
Dodge dealers will have the light-duty version of the redesigned Ram pickup available for the full year, and the heavy-duty (above 8,500 lbs. gross vehicle weight) version entering the market this year.
Haig Stoddard is manager of industry analysis for Ward's Communication.
New Vehicles and Major Redesigns Scheduled for the U.S. During 2002<br />(BY SEGMENT)
Luxury Car
BMW 7 Series
BMW Mini Cooper (new)
BMW Z3
Cadillac CTS (replaces Catera)
Dodge Viper Infiniti G35 (replaces G20)
Jaguar J-Type (replaces XJ Series)
Lincoln Town Car
Mercedes CLK
Mercedes E-Class
Mercedes SL
Mercury Marauder (new)
Nissan 350Z (new)
Saab 9-3
Small Car
Hyundai Tiburon
Pontiac Vibe (new)
Saturn ION (replaces S-Series)
Suzuki Aerio (new)
Toyota Corolla
Toyota Matrix (new)
Middle Car
Daewoo Magnus (replaces Leganza)
Honda Accord
CUV
Honda CRV
Honda Model X (new)
Mitsubishi ASX (new)
Nissan sport wagon (new-unnamed)
Porsche Cayenne (new)
Subaru Forester
Volvo XC90 (new)
SUV
Ford Expedition
Honda Pilot (new)
Hummer H2 (new)
Infiniti large SUV (new-unnamed)
Isuzu Ascender (replaces Trooper)
Kia Sportage
Land Rover Range Rover
Lincoln Aviator (new)
Lincoln Navigator
Toyota 4Runner
Pickup
Chevrolet Colorado (replaces S-10)
Chevrolet SSR (new)
Subaru Baja (new)
Minivan
Toyota Sienna
Large Van
Chevrolet Express
Ford Club Wagon/Econoline
GMC Savana
Note: Vehicles that are entirely new or replacing an exisiting vehicle line are stated as such in parentheses. The remainder of the vehicles listed are slated for redesigns.
Source: Ward's Communications.
