Top Automakers Pledge U.S. Sales Growth From Slew of New Vehicles; Analysts Expect Flat Market

DETROIT January 12, 2005; John Porretto writing for the AP reported that the world's top automakers used one of the industry's biggest stages in recent days to roll out their latest cars and trucks, at the same time pledging to use the fresh offerings to attract greater numbers of new customers and expand their businesses. Here's the rub: The math doesn't add up.

Many analysts and top automotive executives say the U.S. market in 2005 is likely to be flat, maybe even down a bit, from a solid sales year in 2004. However, at this week's media preview for the North American International Auto Show, a common theme among the automakers, particularly the Asians and Europeans, was growth.

But across-the-board growth is highly unlikely.

Many observers predict Asian brands such as Toyota and Honda will continue their assault on Detroit's Big Three in 2005. Asked Monday if General Motors Corp., the world's largest automaker, can grow its business in the United States this year after watching it fall 1.4 percent in 2004, Chairman and Chief Executive Rick Wagoner said, "We can. We're going to try."

That said, much of the buzz around this week's show was the continued onslaught of new products from Asian and European automakers, some of which will compete in categories dominated for years by American brands.

A bright spot for Detroit's Big Three was good reviews for several important products introduced in Detroit.

Chris Ceraso, an analyst with Credit Suisse First Boston, in particular liked the looks of Saturn's Aura "concept" car, which the GM brand says provides a peek at its upcoming replacement for the L-Series mid-size sedan. The car is expected to join Saturn's revamped lineup in 2006, sharing the underpinnings of other midsize models such as the Pontiac G6 and Saab 9-3.

"What's most notable here is we may be looking at the first Saturn product that does not make us nauseous," Ceraso said in a research note Wednesday. "In fact, we must admit, it looked really good."

Ceraso also was bullish on Ford Motor Co.'s new Ford Fusion midsize sedan, an important car for the company that fits between the Focus and new Five-Hundred flagship sedan. It will compete against models such as the Toyota Camry and Honda Accord, the top-selling cars in America last year.

"This is a tough segment, but riding on the highly regarded Mazda 6 underpinnings, the Fusion may be able to win some buyers," Ceraso said.

Another Big Three vehicle that attracted attention was Chrysler's new Dodge Charger, a high-performance sedan that takes its name from a muscle car of the '60s. The Charger, part of a product offensive at the U.S.-based division of DaimlerChrysler AG that includes 25 new or redesigned vehicles by the end of 2006, is scheduled to go on sale this summer.

"I think the Charger will do well," said Jesse Toprak, senior analyst for Edmunds.com, an independent company that provides online automotive information. "It still has a loyal following from way back when."

Still, Toprak said, much of the media attention at the show surrounded the Asians and Europeans. Honda Motor Co., for example, unveiled its first pickup, the Ridgeline, which is clearly aimed at the midsize truck market that for years was Detroit's domain.

Hoping to revive demand for its flagship Avalon sedan, whose North American sales were off 28 percent last year, Toyota Motor Corp. debuted a redesigned version in Detroit. Toyota also plans to increase the number of gas-electric hybrid vehicles it allocates for the United States, expanding its lead in that category.

Nissan, too, continues to bolster its diverse lineup. On Sunday, it unveiled a concept sports car called the Azeal. The sleek Azeal may indicate what's in store for 2007, when Nissan plans to bring out an entry-level car to capture young buyers now driving Toyota's Scion and similar brands.

As a trio, Japan's Big Three automakers saw their U.S. market share rise from 24.1 percent in 2003 to 26.2 percent in 2004. Many forecasts call for all three to grow their share again in 2005.

In an interview Tuesday, Toyota President Fujio Cho said Japan's No. 1 automaker was eager to have a larger presence in the United States, which could mean more manufacturing plants.

"We'd like to be considered a 100-percent American company," Cho said.

European brands saw their U.S. business decline 4 percent last year, but they hope to reverse the slide with a slew of new models in 2005. Among the offerings: the next-generation Volkswagen Jetta, the second-generation Mercedes-Benz M-Class and Porsche's new 911 Cabriolet.

While the winners and losers among the automakers will emerge as the year unfolds, Toprak said a certain winner is the American consumer. He said buyers can expect to find continued rebates and financing offers on many models in the ultra-competitive marketplace, and the choices will be broader than ever.

"Many automakers are going for more limited production runs to capture those specialized segments," he said. "That means more new models. It used to be compact cars, midsize cars, trucks and SUVs. Now some vehicles are hard to categorize. But with all the new products, the consensus is it's a great time to be a consumer."