Market Share for U.S. Autos May Continue Slipping but Staying Power Stronger Than Recent Trends Suggest, Says S&P CreditWeek Special Report

S&P Ratings and Equity Transportation Analysts join with JD Powers to examine future for global auto manufacturers.

NEW YORK - March 11, 2006: In a comprehensive report on the world auto industry to be published by Standard & Poor's on Monday, Standard & Poor's equity analyst, Efraim Levy, says that U.S. automakers, despite restructuring efforts, new product introductions and incentives, will continue to lose market share in 2006. At the same time, analysis by J.D. Power Associates, like Standard & Poor's, a division of The McGraw-Hill Companies, suggests that U.S. carmakers may have more staying power than recent trends suggest.

These and other articles on related auto topics produced by Standard & Poor's rating and equity analysts and economists, appear in the March 16 issue of Standard & Poor's CreditWeek, the investment research and opinion leader's weekly publication on credit risk. An online version of these articles as well as video commentary by the authors will be available, beginning March 16, on www.standardandpoors.com.

"Despite a favorable backdrop of relatively high employment and low financing rates, U.S. automakers, in our opinion, will collectively lose market share to foreign manufacture again in 2006, particularly in the luxury vehicle category," says Levy. "Additionally, Standard & Poor's Equity Research believes the U.S. will face margin compression on two fronts, the first as a result of higher retiree and health-care costs. The second results from a combination of rising gas prices and increased sales of crossover utility vehicles which will negatively impact sales of higher margin large SUVs." Levy focuses his attention on the prospects of U.S. automakers, General Motors and Ford as well as their Asian counterparts Toyota , Honda and Nissan .

In an article by J.D. Power chief economist, Robert Schnorbus, and senior manager of marketing and statistical sciences, Dan Seldin, the authors examine the historical factors that lead to the success of Asian manufacturers in the U.S. auto market and what the Big Three U.S. companies can, and are doing, to improve product quality. According to Schnorbus, "U.S. manufacturers failed to grasp that a product's quality is the most important factor in customer satisfaction and, ultimately, customer commitment. While the Big Three have closed the quality gap, they still have to overcome consumers' quality bias that favors the Asian manufacturers. However, the good news is that Detroit has the potential to continue dominating the U.S. market."