Two weeks ago, Nissan Motor Co. CEO Carlos Ghosn went to Mississippi to open Nissan's $1.4 billion assembly plant in Canton. Last week, General Motors, Ford Motor Co. and the Chrysler group announced production cuts for the coming weeks.
The events are not linked directly. But they are part of the same long-term trend and are more evidence that the North American market has changed: The Big 3 will lose more market share in segments that were once their exclusive domain.
First off the line at Canton is the Quest minivan, which is a replacement vehicle and won't do much to alter market share. But when the first Nissan Titan pickup rolls off the Canton line next year, the Big 3 will begin losing market share in the full-sized pickup segment. And when Toyota opens its full-sized pickup factory in Texas, the loss will accelerate.
U.S. light-vehicle sales were stronger than expected in May. The industry's seasonally adjusted annual sales rate last month was 16.7 million units, the strongest rate of travel this year. With heavy incentives, GM posted a gain in market share over last May. But Ford Motor's domestic brands and the Chrysler group had smaller market shares than they did last May.
For the first five months of the year, Ford Motor's share was flat while GM and Chrysler were down. Collectively, the Big 3 lost 1.6 points of share in the first five months to stay barely above 60 percent - despite using heavy incentives and pumping more vehicles into fleet sales. Not surprisingly, Toyota Motor Sales picked up 0.5 points of share, and American Honda gained 1.2 points.
The Chrysler group's decision to devalue its inventory of unsold vehicles because of declining residual values is a harbinger of even more incentives. And GM's tacit acknowledgement that it may not achieve its goal of a 29 percent market share this year is a chilling reminder that even sweepstakes-like incentives can't always buy market share.