By The Numbers: May Showers Detroit's Customers With Profit-Killing Incentives

Frank Williams
by Frank Williams

Last month, I field tested a new methodology for analyzing the American car market. Reader feedback on TTAC’s month-by-month sales charts of “key” U.S. models was overwhelmingly positive. Your most excellent comments and insightful methodological suggestions were noted, logged and, where possible, incorporated. OK, so, May car sales were the highest so far this calendar year. Without further ado, here’s how our 19 models floated within this rising tide.

Passenger Cars

Taken as a whole, U.S. passenger car sales showed a sharp upturn in May. The Chevrolet Impala , Chrysler 300 and Toyota Camry all rebounded from their April dip. Ford did not share in this good fortune. After climbing steadily, Fusion sales dropped below 2006 levels for the first time since last November.

The Camry’s still the segment leader, but the Impala’s coming on fast. The mid-sized Canadian is now selling more briskly than it did during GM’s epic “fire sale for everyone” back in 2005 and was GM's best-selling passenger car in May. That said, GM lavished $1500 in incentives on the Impala– the highest amount they offer on a Chevrolet passenger car.

Pickup Trucks

For the first time since February, Silverado sales have topped last year’s levels. The good news comes with a minor caveat: GM is still producing and selling the “Classic” (non GMT900-based) Silverado, a cheaper model that’s buoyed by $2k to $3K rebates and dealer incentives. Still, the new model’s leading the charge.

Meanwhile, assisted by massive incentives (up to $5K rebates plus dealer incentives) the Dodge Ram also bested last year’s number. Chryslerberus is planning a redesigned Ram for 2009 with diesel engines across the board. They’ll most likely increase the incentives to keep current sales from tanking in anticipation of the new model.

Ford's F-Series continues to show lower sales than in previous years. Look for Ford to add to its $3k rebate as the Glass House Gang fight to keep their perennial best-seller at the top of the sales charts.

Tundra sales showed another record month. It remains to be seen if the model’s camshaft problems will damage the Tundra’s momentum, or if Toyota’s rep for bulletproof build quality will reduce the issue to a minor bump in the road.

In any case, the Toyota’s entry into a declining market has had the anticipated effect: pickup truck margins are down across the board.

Truck-Based SUVs

Tahoe and Explorer customers shrugged off high gas prices. Tahoe’s May sales have remained steady for the past three years. Explorer sales reached the highest level since last September.

Dodge and Toyota weren’t so lucky; Durango and 4Runner sales both continue their downward trajectory. The Durango has practically flat-lined in the mid-4K range, while 4Runner sales are the lowest they’ve been since last October.

Small SUV/CUVs

CUV sales split into two distinct camps: the old and the new. Sales of the elderly Chevrolet Equinox and Chrysler Pacifica fell well below those of previous years. If Chevy and Chrysler want to remain competitive in this hot market segment, they have to hit refresh in a big way, and fast.

Sales of the recently refreshed Ford Escape and Toyota RAV-4 rose sharply. The more boldly grilled Escape hit an all-time high in May, with the gas – electric hybrid model accounting for 14 percent of the total. RAV-4 sales were up by more than 2K units over last month, and against the same month last year.

New Models

All three of the new-for-‘07 models I’m tracking showed increases in May. The Jeep Compass rebounded slightly above last month’s performance, but still remains below the curve for the year. The GMC Acadia continues almost straight-line steady growth. After an inexplicable dip last month, Ford Edge sales are back, and they ain’t bad.

Total Sales

GM, Chrysler and Toyota all saw higher sales in May than in April, and with higher sales than May ’06. Even though Ford showed an increase from April, they still remain well below the previous years’ sales levels. (For cumulative sales YTD, click here: GM, Chrysler, Ford, Toyota .) But the numbers mask a worrying development.

In spite of The Big 2.8’s pledge to wean themselves from incentives, they haven’t. In May, GM’s incentives rose 6.1 percent (year on year) to a $2,950 per vehicle average. Ford’s incentives rose by 4.6 percent to $4,040 per vehicle. Chrysler's incentives soared by 7.1 percent to an average of $4,178 per vehicle. (Toyota’s incentives averaged $1,140 per vehicle.)

This does not bode well for Detroit. In 2006, GM and Chrysler’s North American operations lost an average of $1,436 and $1,072 respectively per vehicle. Ford lost a whopping $5,234 per vehicle. In contrast, Toyota and Honda made $1,200 on every vehicle sold. The greater Detroit’s incentives, the lower their profits. Or, let’s face it, the greater their losses. It’s still early daze, but 2007 is turning out to be a “make or break” year for The Big 2.8.

Frank Williams
Frank Williams

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  • Veritas399 Veritas399 on Jun 08, 2007

    Ford lost $5,234 per vehicle in 2005? Wouldn't they be on track to lose even more due to slower sales this year than last, and the fixed cost being spread over fewer vehicles? No wonder Billy Ford is singing the blues! ;-)

  • Voice of Sweden Voice of Sweden on Jun 08, 2007

    Sales statistics by model for Sweden may 2007 In Sweden Audi is very popular, it outsells BMW, which outsells MB. But Volvo and Saab tops the chart, who could have guessed? "country" of "origin" at the top: se, se, se, se, de, de, de, de, fr, de, de, jp, cz, jp, de, cz, fr, de, se, se, fr, de ... Very few asian cars compared to the USA. 1 VOLVO V70 2 SAAB 9−3 3 VOLVO V50 4 SAAB 9−5 5 FORD FOCUS 6 VW GOLF 7 VW PASSAT 8 AUDI A4 9 PEUGEOT 307 10 AUDI A6 11 OPEL ASTRA 12 TOYOTA COROLLA 13 SKODA FABIA 14 TOYOTA AVENSIS 15 BMW 3−SERIE 16 SKODA OCTAVIA 17 RENAULT MEGANE 18 BMW 5−SERIE 19 VOLVO C30 20 VOLVO S80N 21 PEUGEOT 207 22 VW POLO 23 HONDA CR−V 24 VOLVO S40N 25 RENAULT CLIO 26 VOLVO S60 27 TOYOTA YARIS 41 28 TOYOTA AYGO 29 TOYOTA AURIS 30 PEUGEOT 407 31 MERCEDES C−KLASS 32 CITROEN C4 33 FORD FIESTA 34 TOYOTA PRIUS 35 AUDI A3 36 MAZDA6 37 VOLVO XC90

  • VoGhost Key phrase: "The EV market has grown." Yup, EV sales are up yet again, contrary to what nearly every article on the topic has been claiming. It's almost as if the press gets 30% of ad revenues from oil companies and legacy ICE OEMs.
  • Leonard Ostrander Daniel J, you are making the assertion. It's up to you to produce the evidence.
  • VoGhost I remember all those years when the brilliant TTAC commenters told me over and over how easy it was for legacy automakers to switch to making EVs, and that Tesla was due to be crushed by them in just a few months.
  • D "smaller vehicles" - sorry, that's way too much common sense! Americans won't go along because clever marketing convinced us our egos need big@ss trucks, which give auto manufacturers the profit margin they want, and everybody feels vulnerable now unless they too have a huge vehicle. Lower speed limits could help, but no politician wants to push that losing policy. We'll just go on building more lanes and driving faster and faster behind our vehicle's tinted privacy glass. Visions of Slim Pickens riding a big black jacked up truck out of a B-52.
  • NotMyCircusNotMyMonkeys dudes off the rails on drugs and full of hate and retribution. so is musky.