Why are the Big 3's domestic brands slipping so badly? A visit to Longo Toyota - California's biggest-selling dealership- shows why. Longo Toyota retailed more than 20,000 new Toyotas last year.
The dealership, about 13 miles from downtown Los Angeles, is famed for its ability to connect with the balkanized Los Angeles community. Its salespeople speak more than 30 languages, including the Philippine dialect of Kapampangan and the Ethiopian linguistic splinter of Tigrigna.
That's one reason why 80 percent of Longo Toyota's customers are repeat buyers, says Tom Rudnai, Longo's general manager.
The dealership covers 47 acres, has a 2,000-vehicle inventory, a Starbucks, a Subway and 107 service stalls - and it is looking to expand.
Says Rudnai: "Toyota is telling us the numbers they are looking to hit in the future. We know we have to keep growing. We can never build big enough."
As the Big 3 lose retail customers in the Sun Belt, they are relying more heavily on fleet sales. In Florida - a battleground state where import brands are becoming entrenched - the shift has been dramatic. Last year half of GM's registrations in Florida went to fleet customers, R.L. Polk reports, although the number is high to provide rental cars to vacationers. For comparison, 10.5 percent of Asian registrations in Florida went to fleet customers.
But GM is focusing on the Florida market for a sales resurgence. The company is spending more on advertising to Hispanics there, says Mark LaNeve, GM North America vice president for vehicle sales, service and marketing.
He says the market is complex. "You've got to understand it because it's Cubans, Latin Americans, Puerto Ricans, Mexicans," LaNeve says. "It's not one homogenized group."
Gary Dilts, the Chrysler group's senior vice president of sales, says the share slide is "not a simple fix," especially when trying to lure Hispanic buyers. "It's not just fixing your marketing or product," he says. "You have to train the sales force, too."
There's no question Hispanics are exerting a growing influence on the market. In 2001, Hispanics displaced blacks as the largest U.S. minority group.
Hispanics are expected to represent 25 percent of the U.S. population by 2050. They are 12.5 percent today.
And import brands are edging out the Big 3's domestic brands in the competition for that group. Polk data from 2004 show Toyota Division is the top brand among Hispanics, followed closely by Chevrolet and Ford. Each claims about 15 percent of the Hispanic market.
According to data from Mediamark Research in New York, the percentage of Hispanic households owning import-brand vehicles is higher than the percentage of the general populace owning them. What's more, the percentage of Hispanics owning import-brand vehicles increases as household income improves.
"The lower section of the Sun Belt is where the real big growth is happening," says Jim Lentz, Toyota Division general manager. "Strategically, if we have done anything, it's to concentrate on the Hispanic market."