American car makers Ford, General Motors and Chrysler all gain first quarter market share for first time in 20 years

2012 Dodge Ram pickup trucks sit on display 2012 Dodge Ram pickup trucks sit on display at Sam Leman Chrysler, Dodge, Jeep in Peoria, Ill. (Jan. 27, 2012) Photo Credit: Bloomberg News

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For the first time in two decades, General Motors Co., Ford Motor Co. and Chrysler Group LLC pulled off a sweep in the first three months of a year, with all three gaining U.S. market share in 2013s first quarter.

The momentum likely built in April versus Toyota Motor Corp. and Honda Motor Co., according to a survey of analysts by Bloomberg News. The average estimates of analysts are that the U.S. carmakers will post bigger sales gains than Toyota and Hondafor this month.

The renaissance in Detroit is real, Mike Jackson, chief executive officer of AutoNation Inc., the biggest U.S. auto dealership group, said this month in a telephone interview. They have fantastic new products, and theyre in a very good positionto compete.

Shoddy cars that U.S. automakers offered for three decades cost the loyalty of the 75 million-member baby boom generation. Thats changing thanks to across-the-board improvement in quality that has closed the gap on once-dominant Toyota, said GeorgeMagliano, senior principal economist for IHS Automotive.

From now on, the window has been opened to everybody, Magliano, who is based in New York, said by telephone. The baby boomers used to walk in like zombies and buy the Toyota. They dont do that anymore. They can buy a Korean car, they can buy aVolkswagen, and they certainly can buy a Detroit car.

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Rising Demand

U.S. light-vehicle sales probably climbed 11 percent in April to 1.31 million, the average estimate of nine analysts surveyed by Bloomberg. The annualized industry sales rate, adjusted for seasonal trends, may have risen to 15.2 million, the averageof 17 estimates, from 14.1 million a year earlier. That would keep the market on pace for its best year since 2007.

Ford, GM and Chrysler gained 0.7, 0.5 and 0.2 percentage points of market share during the first quarter, the first time all three have gained share in that period of a year since 1993, the height of the sport-utility vehicle boom, according toAutomotive News Data Center, which conducted the analysis at the request of Bloomberg News.

The three Detroit automakers now control 45.6 of the U.S. market through March, up from a first-quarter low of 43.8 percent in 2009, according to the data center. In the first three months of 1993, during then-President Bill Clintons first term,they shared 74.3 percent of the market, according to Automotive News.

Painful Restructurings

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U.S. automakers strides have been building in the past half decade after a painful downturn spurred restructurings that spared only Ford from bankruptcy. The three companies rid themselves of uncompetitive cost structures and plowed investments intocars that could hang with Japans giants.

Millions of recalls by Toyota in 2009 and 2010, Japans tsunami the next year and shaky rollouts of new product such as Hondas Civic in 2011 opened the door for U.S. consumers to give Detroit another shot.

Ford, which made more money than it ever has in North America during the first quarter, probably led the three U.S. automakers with a 17 percent increase in U.S. sales this month, the average of 11 estimates. The Dearborn, Mich.-based companys$2.4 billion pretax profit in its home region in the first three months of the year was powered by its industry- leading F-Series trucks and new Fusion sedan and Escape utility.

Widespread Gains

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All you have to do is look at the earnings numbers from Ford to see that theyre doing well, said Alan Baum, principal of Baum & Associates, an auto consulting firm in West Bloomfield, Mich. F-Series drives its profits, but they also cantmake enough of the Fusion and the Escape.

The gains being made by U.S. automakers are widespread. Fords Fusion, which ranked outside the ten best-selling models last year, has jumped to No. 6 this year through March. The 38 percent sales increase posted by Detroit-based GMs Cadillac wasthe largest of any brand in the industry during that span, and Chryslers passenger car deliveries surged almost one third.

Chrysler, based in Auburn Hills, Mich., probably extended its streak of year-over-year U.S. sales gains to 37 months by posting a 10 percent rise in April deliveries.

Chrysler said yesterday that first quarter net income dropped 65 percent while reaffiriming its full-year forecast. CEO Sergio Marchionne said on a Jan. 30 earnings call that shipments in the quarter would be hurt by introductions of the Jeep Compassand the Ram Heavy Duty pickup as well as preparation for the new Jeep Cherokee, which caused production of the predecessor Liberty to end last year.

GM sales also may have increased 10 percent, the averages of 11 estimates.

Weaker Yen

Holding onto their market share gains wont be easy. Concerns are building about Japanese automakers answering Detroits rebound by using the weakening yen to their advantage, either by cutting prices or putting more content into their cars withoutcharging more for it.

The yen has weakened about 18 percent versus the U.S. dollar since Oct. 31, when Prime Minister Shinzo Abe advocated for its decline to aid his countrys economy. Morgan Stanley has estimated the currency boost will give Japanese automakers anadvantage of about $1,500 per car, while U.S. carmakers have put the figure at $5,700 per vehicle.

Were going to have to watch very closely what happens competitively as the Japanese competitors were able to benefit from the weak yen, Bob Shanks, Fords chief financial officer, said last week during a conference call. We are starting aroundthe world, not just in North America, very selectively and very early, to see some signs. Theyre taking advantage.

Camry Competition

So far this year, sizable U.S. sales increases have eluded most of the Japanese automakers even with the yens drop. Toyota, which is based in Toyota City, added 0.3 percentage points of U.S. market share through March, while Tokyo-based Hondasshare was little changed and Nissan lost 0.7 points, according to Autodata Corp.

Honda and Toyota sales may have risen 7.3 percent and 3.1 percent in April, respectively, the average estimate of eight analysts. Nissan probably will post the industrys biggest increase, with a 26 percent surge, the average of eight estimates.

Toyotas plan is for its Camry sedan to remain the top- selling U.S. car for a 12th consecutive year, amid tougher competition from Fords Fusion and Hondas Accord, U.S. Group Vice President Bill Fay said in an April 26 telephone interview. Camrydeliveries slipped 4.3 percent in the first quarter.

People see the new Fusion and like it and the Accord is doing well, Fay said. Our goal, in spite of better competition, is for Camry to stay No. 1.

Value Proposition

Volkswagen AG, based in Wolfsburg, Germany, may post a 3.3 percent gain in combined sales for its Volkswagen and Audi brands in March, the average of four estimates.

There are signs that Seoul-based Hyundai Motor Co. and Kia Motors Corp. are losing some of the gains they made in the U.S. during the past two decades because of production constraints and the Korean won strengthening relative to the Japanese yen.The two affiliates, which report sales separately, lost 0.2 and 0.6 percentage points of market share through the first three months, according to Autodata.

Hyundai and Kias struggles may have endured in April. Combined sales for the two companies probably slipped 2.4 percent, the average of seven estimates. The two companies are constrained by a lack of local production capacity and the yens 16percent drop against the South Korean won since the end of October.

We may see the Japanese automakers get more aggressive in terms of marketing and in terms of packaging more content into their vehicles and not raising prices, Michelle Krebs, an analyst for auto researcher, said by telephone. Thatsthe Koreans game. Thats how they gained a foothold the value proposition. Thats not in their favor now.

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