The era of the Big Three auto makers ended officially in Canada last month as their share of the Canadian market fell to less than 50 per cent for the first time.
The watershed moment came amid double-digit sales declines for DaimlerChrysler Canada Inc., Ford Motor Co. of Canada Ltd. and General Motors of Canada Ltd., that pulled their share of the market down to 49.96 per cent in October.
Today's Detroit-based three are a pale shadow of the giants that dominated the Canadian and U.S. markets in the 1960s, when GM alone held 50 per cent and there was talk of breaking the company up into smaller players. GM is still the largest in North America but its share has fallen roughly in half since the glory days.
Successive energy crises -- culminating in the spike in gasoline prices in both countries in the past few months -- have sent consumers in search of smaller vehicles, playing directly to the strengths of Japan-based manufacturers such as Honda Motor Co. Ltd., Toyota Motor Corp. and others.
"It's consistent now that Toyota and Honda are beating Ford or Chrysler on a monthly basis," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. "We very clearly have four companies that are competing for the second to fifth spots."
Offshore-based auto makers used the profits from growing sales on the passenger car side of the market to develop vehicles aimed at the heart of Detroit's profitability -- the truck side of the ledger, which includes sport utility vehicles, minivans and pickup trucks.
Detroit did not plough the massive profits generated by surging SUV sales in the 1990s back into cars until quite recently. That leads one veteran analyst to conclude that it will be virtually impossible for the Detroit-based three to return to dominance.
"Now, every significant competitor is in every significant segment," said Joseph Phillippi, who has been watching the industry since the 1960s and now heads Auto Trends Consulting Inc. in Short Hills, N.J. "When I started out, imports were 7 or 8 per cent of the market and [of those] Volkswagen was No. 1."
The trend of Asia and Europe-based manufacturers overtaking their Detroit-based rivals in light vehicle sales has been evident for some time, but became official in October once sales of heavy trucks are stripped from the Canadian numbers.
In 1990, the Big Three held 70 per cent of the Canadian market and their share actually rose to its most recent peak of 76.4 per cent in 1995 amid soaring SUV sales and the rise in the value of the Japanese yen against the Canadian and U.S. dollars.
Canadians purchased 115,195 light vehicles last month, 57,562 of them from DaimlerChrysler Canada, Ford Canada or GM Canada. The Detroit-based three grabbed 54 per cent of the 119,800 vehicles sold in Canada in October, 2004.
Toyota Canada Inc. outsold Ford last month and came within a whisker of nudging the Chrysler group out of second spot.
Sales of Civic compact cars by Honda Canada Inc. totalled more than sales of Ford and Chrysler passenger cars combined.
Over all, sales in Canada fell about 4 per cent from year-earlier levels, in part because the Chrysler group, Ford and GM offered employee discounts to all buyers during the summer months that pulled more consumers into the market.
"The conclusion of employee pricing combined with overall market challenges this month contributed to weak industry performance," noted Bernie Clement, vice-president of sales and services for DaimlerChrysler Canada.
It's called payback, George Pipas, manager of U.S. sales analysis for Ford Motor Co., said on a conference call yesterday.
As they did in September, auto makers in both countries reported big declines in sales of some pickups and SUVs amid record-high gas prices.
The price of gasoline continues to fall across Canada, according to the latest weekly survey of pump prices. The nationwide average cost of a litre of regular gasoline fell to 90 cents as of yesterday morning, down 2.8 cents, according to the survey from M.J. Ervin & Associates Inc. in Calgary.
The big losses for the Detroit-based three in the U.S. market were in SUVs and pickups.
Ford said U.S. sales of Expedition SUVs plunged 51 per cent and sales of its key moneymaker, F-series pickups, slumped 32 per cent.
At the Chrysler group, Dodge Durango and Chrysler Pacifica SUVs and Dodge Ram pickups posted hefty declines. It was a similar story for GM's big Suburban and Hummer H2 SUVs and GMC Sierra and Chevrolet Silverado pickups.
There was more bad news for GM as bond-rating agency Moody's Investors Service Inc. pushed the company's debt deeper into junk territory. "The ongoing erosion of GM's competitive position and market share is evident in the company's significant third-quarter operating loss, which contributed to $6.6-billion [U.S.] of cash consumption for the nine months ended Sept. 30," Moody's said.
The tale of the best sellers
The year-over-year change in the Canadian best-seller sales figures for the top five auto makers reflect the decline of the Big Three's market domination. GM is still No. 1, but four companies are now competing for the second to fifth spots.
The Big Three Canadian market share
76.5%
1995 AMID SOARING SUV SALES AND THE RISE IN THE VALUE OF THE YEN AGAINST THE CANADIAN AND U.S. DOLLARS
49.9%
OCTOBER, 2005 AFTER A SPIKE IN GASOLINE PRICES SENT CONSUMERS IN SEARCH OF SMALLER VEHICLES
Ford: F150
5,769
OCTOBER '04
4,377
OCTOBER '05
Chrysler: Dodge Caravan
4,126
OCTOBER '04
4,677
OCTOBER '05
Toyota: Corolla
3,175
OCTOBER '04
3,734
OCTOBER '05
General Motors: GMC Sierra & Chevrolet Cobalt
3,361
OCTOBER '04
4,402
OCTOBER '05
Honda: Civic
4,168
OCTOBER '04
6,812
OCTOBER '05
SOURCE: DESROSIERS AUTOMOTIVE CONSULTANTS INC.
© The Globe and Mail
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