United States Autos Report Q2 2008

Light vehicle sales in the US continued on a downward spiral as expected in 2007. A decline of 2.6% took total sales down to 16.148mn units as the Big Three domestic players continued to suffer and lose even more market share to foreign brands. However, BMI's recently published US AutomotivesRreport suggests that even the Asian brands that have weathered the storm well in the US are starting to feel the pinch of the tough operating conditions now. The gravity of the situation is underlined by the fact that Japan's Toyota, which claimed the number two spot in the US market in 2007, is the latest to admit that a reduction in inventories is required.

With US and Asian manufacturers now very much in the same boat, co-operation seems to be the logical way forward. Nissan and Chrysler have embraced this strategy through a deal which will see Chrysler provide a pick-up truck for Nissan in North America in return for a Japanese small car. The small car, based on a Chrysler concept car, will be rolled out in 2010 for sale in North America and Europe.

Nissan's truck, due out in the following year, will use the platform of the next Dodge Ram and will also be sold in North America and possibly other markets.

Despite the harsh industry conditions leading to such agreements, BMI's new Business Environment Ratings for the automotive industry in the Americas, shows the US ranking second out of nine markets with a score of 64.2 from a possible 100. One of the big drawbacks is the negative output growth forecast for the US over the next five years. While this is a testament to the extent to which the market has developed, the ratings reflect the limits carmakers operating in the US market currently face. Currently it is a question of who fully utilises output capacity rather than whether capacity actually exists.

In terms of sales, the Asian brands continue to muscle in on their domestic counterparts, with Toyota taking its assault on the Big Three a step further in overtaking Ford for second place. Ford appeared to be struggling throughout 2007, as sales fell by 11.8%. The decline has been attributed to the company's withdrawal from daily rental sales throughout the year, which contributed a 62% cut in sales. Toyota, on the other hand pushed sales up by 3.1% for the year, led by a 3.8% rise in car sales. In Q108, however, Toyota's sales were also down by 5.6%, suggesting that competition in the year ahead could be much closer.