Auto Makers Pile It On
The year 2004 should be a better year for new vehicle sales in terms of volume, and probably profit. The economy is on the mend, interest rates remain low, stocks are up, employment is improving and tax rates are lower and freeing up more cash for spending. Even the manufacturing sector will likely get a bigger lift as long as the U.S. dollar remains weaker compared to the Euro and Yen. The down side
![WardsAuto logo WardsAuto logo](https://eu-images.contentstack.com/v3/assets/blt7121b6ec5c11097b/blt45f10b537a75bb26/65d72d47647c28040affd46b/Generic_image_WA.png?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
The year 2004 should be a better year for new vehicle sales in terms of volume, and probably profit.
The economy is on the mend, interest rates remain low, stocks are up, employment is improving and tax rates are lower and freeing up more cash for spending.
Even the manufacturing sector will likely get a bigger lift as long as the U.S. dollar remains weaker compared to the Euro and Yen. The down side is that imports could have profit-margin squeezes because of the exchange rates.
But since many imports are luxury vehicles, an improving economy could encourage that cadre of consumer to ante up more to offset any price increases.
There's also a better mix of products in the pipeline, meaning more cross/utility vehicles and expansions in other segments.
Ward's expects light-vehicle sales in 2004 to rise from an estimated 16.6 million in 2003 to a range from 16.8 million to 17 million, with a bias toward 17 million.
The more heated the competition gets, the more likely stepped-up incentives and other marketing pushes will raise overall volume, even if the average profit margin is lower.
Manufacturers will try to lighten incentives as the economy strengthens, but the competitive nature of the industry, which will get more intense as the year progresses, could reverse that move.
By the end of 2004, there will be 273 light vehicles in production and on sale in the U.S. market, compared to 254 at the end of 2003.
The hottest segment in the industry remains crossovers — vehicles that resemble SUVs but have passenger car qualities. There will be seven new entries in the segment ranging from the entry level Hyundai Tucson to the midsize Chevrolet Equinox and Ford Freestyle up to the luxury BMW X3.
Another more heavily contested area will be with large-size light trucks.
Nissan North America Inc. is adding 100,000 units of available product to the large-pickup fray with its new Titan, and another 55,000 big SUVs thanks to the Nissan Pathfinder Armada and Infiniti QX56.
Minivans will see fiercer competition, too, and the segment may even see a sales turnaround from the downturn it's undergone in recent years. Ford Motor Co. will have a full year's worth of the new Ford Freestar and Mercury Monterrey vans as will Nissan with its revamped Quest.
Furthermore, General Motors Corp. at mid-year reinvigorates its minivan line with its new “sport crossovers”, the Chevrolet Uplander and Pontiac Montana SV6. Not stopping there, it adds the Saturn Relay and upscale Buick Terraza.
Oldsmobile Silhouette goes away mid-year, but its impact will be negligible. The segment gets testier as Honda redesigns the Odyssey and DaimlerChrysler offers a fold-down third-row seat option for the Dodge Caravan and Chrysler Town & Country.
Another area to watch is small cars, a segment that has been largely in decline.
GM is bringing in 70,000 South Korean-built Chevrolet Aveos to compete in the low end against the Hyundai Accent, Kia Rio and Toyota Echo. At the higher end, it debuts the Cavalier-replacement Chevy Cobalt this year, although it will not replace the Pontiac Sunfire.
More interesting is how Toyota North American U.S.A. Inc.'s new Scion brand does in 2004 when it begins expanding its availability across more of the U.S. If Toyota has its way, Scion bring 100,000 units annually to the small car market.
Other car segments, that have been bleeding sales to trucks, are likely to experience more squeezing than growth thanks to new products.
In the mid-size car segment, Ford introduces the new midsize Five Hundred and Mercury Montego this year, while still keeping the Ford Taurus in production.
BMW North America LLC tentatively brings two new luxury cars to the market — 1 Series and 6 Series — while redesigning the popular 3 Series. At the same time, Lexus does makeovers on the Is 300, GS 300 and GS 430 — including all-wheel-drive options on the GS models — overhauls are done to the Audi A6 and Infiniti M45, and Cadillac replaces the aging Seville with the rear-/all-wheel-drive STS.
In the end, car sales overall are not likely to increase, and more players will make those segments even more heated than they are now. Growth will happen on the truck side with crossover vehicles being the big gainers again, but competition will remain intense.
This kind of competition could make a 17-million unit sales outlook look low.
Haig Stoddard is manager of industry analysis for Ward's Communications.
Read more about:
2004About the Author
You May Also Like