Japanese cars to outsell U.S. models in state

0 Comments | Oakland Tribune, Dec 27, 2006 | by Matt NaumanSTAFF

Californians will buy more Japanese cars and trucks than domestic models in 2006, something that has never happened before despite the state's long-held reputation for loving Toyotas and Hondas.

By the time the year ends next week, state residents will have bought 938,839 Japanese brand vehicles and 859,206 from the traditional Big Three nameplates, including Ford, Chevrolet and Dodge, according to a forecast by the state's auto dealers.

That would give Japanese automakers a 44.8 percent share of the California market, compared with 41.0 percent for the Big Three. Nationally, through November according to Automotive News, domestic brands have a 53.9 percent share of the U.S. market, while Japanese brands have 34.8 percent share.

The state numbers come from a forecast prepared for the California Motor Car Dealers Association by Auto Outlook, a Pennsylvania researcher. It includes retail and fleet sales. The 2006 numbers, based on vehicle registrations, reflect a 2.7 percent gain from 2005 by Japanese brands, and a 9.2 percent loss by the Big Three.

"It's not a big surprise. This is a very import-oriented marketplace," said Jesse Toprak, executive director of industry analysis with Edmunds.com in Santa Monica. "The significance for the average Joe on the street is not much," he said. "But, from a marketing standpoint, it gives the domestics a harder challenge in the California market."

It's no surprise in Santa Clara County, where Toyota is the dominant brand, and just five Japanese five nameplates -- Toyota, Scion, Lexus, Honda and Acura -- garner 51.4 percent of sales.

"In Toyota's case, it seems like we have what customers want," said Art Wicker, president of Piercey Toyota in San Jose. "We have hybrids. We just have the cars that are in demand."

For years, domestic makers like Ford and General Motors retained their advantage in California due to their full lines of vehicles, the number of trucks they sold to businesses and their heavy fleet sales, said George Peterson, president of the AutoPacific consultancy in Tustin. "Even though it looks like your next-door neighbor never owns a domestic vehicle, that other business does add up," Peterson said.

"But now, all of the Japanese and even the Koreans are really bulking up. Their lines are getting fuller and fuller."

This year, Peterson said, "We finally found the tipping point."

In 2003, when Micheline Maynard wrote "The End of Detroit: How The Big Three Lost Their Grip On The American Car Market," she predicted that the Big Three's share of the U.S. market would fall below 50 percent by 2010. Through the first 11 months of 2006, it's at 53.9 percent, down from 57.1 percent in the same period a year ago.

"In the hearts and minds of many American consumers, Detroit's traditional Big Three auto companies have lost their grip on the car market," wrote Maynard in her book.

Despite having design studios in Southern California and regional offices in the state, the domestic automakers for too long considered California to be "way on the periphery," Peterson said. Today, they're trying to fight back with California-specific marketing programs, such as Ford Motor's effort to push its hybrid and lower-emission PZEV, or partial zero emission vehicle, gasoline models in the state, but it remains a challenge.

There remains a perception in California, Toprak said, that domestic vehicles have inferior quality to the Japanese, even though it's not true statistically. Plus, he said, California's diverse population seems to prefer Toyota, Honda and other import brands, he said.

"I'm sitting here in traffic on the 405," Toprak said, "and I'm surrounded by Accords and Camrys."