Pickup truck competition, a resurgence in small cars and dealer fallout from problems at General Motors and Ford Motor Co. are three issues dealers must watch, J.D. Power and Associates President Steve Goodall says.
Goodall outlined those issues - he termed them "below the radar" - at the J.D. Power and Associates International Automotive Roundtable here.
He also said J.D. Power projects U.S. sales of about 17 million light vehicles in 2006, growing steadily to an unprecedented 17.6 million vehicles by the end of the decade.
Though that economic forecast is relatively stable, Goodall says dealers should pay attention to:
- The battle for full-sized pickup sales. This segment generated more than $3.3 billion in total retail gross profit for dealers in 2005, more than any other vehicle segment, Goodall said. But dividing that pie will change with the redesigned Tundra coming from Toyota next January.
"The domestic manufacturers will be facing increasing pricing pressure in order to maintain volume," Goodall said. "We forecast a slight decline in share for GM and a larger decline for Ford by 2010."
Goodall said that Ford's full-sized pickup U.S. market share is projected to fall from 35 percent in 2005 to 32.8 percent in 2010.
He said that GM's share of the U.S. full-sized pickup market could fall from 40.5 percent to 39.3 percent. Toyota's share, meanwhile, is predicted to jump from 5.1 percent to 8.2 percent.
Overall pickup sales are projected to fall by 6 or 7 percent in 2006 and then increase slightly for the remainder of the decade. But pickup sales won't return to the level achieved in 2004 and 2005,Goodall said.
A total of 3,149,925 pickups were sold in the United States in 2005.
- Growing sales of compact cars, especially B-segment cars. Manufacturers will introduce 25 compact car models during the next four years, Goodall said. Neither dealers nor manufacturers make much money on these vehicles - the average dealer gross for cars such as the Chevrolet Aveo or Kia Rio is $500 a vehicle, he said.
But they are a way to lock new-car buyers into a brand. According to the Power Information Network, 55 percent of entry compact car owners purchase another compact or premium compact car from the same brand.
- Dealer fallout from the reduction in volume from GM and Ford. Those automakers "face a legacy problem with their distribution systems," Goodall said.
"The basic structure doesn't allow for the dealers to be as profitable as they should be."
Toyota dealers in 2005 sold an average of 1,623 vehicles per store, he said, adding that Ford dealers sold an average of 729 vehicles per store, while Pontiac dealers sold only 170 vehicles per store.
You may e-mail Amy Wilson at [email protected]