U.S. automakers may lose share in their home market this year

Article by Christian A., on January 30, 2012

The domestic market share of U.S.-based automakers could shrink by 1.3% in 2012, according to a survey of five analysts by Bloomberg. However, they think that this setback will be somewhat alleviated by holding onto some of their gains against the Japanese automakers, which were affected the most by the natural disasters in 2011. General Motors, Chrysler Group LLC and Ford Motor Co. all widened their share in 2011 for the first time since 1988. Ford's discontinued Mercury and Volvo brands are not included in this equation.

Toyota Motor Corp. and Honda Motor Co. could face stiffer competition upon their recovery from Japan’s earthquake and the flooding in Thailand, reducing their combined slice of the market to its levels seven years ago. All the five analysts think that the U.S. automakers might all raise their sales by lower than the total market's growth in 2012. Meanwhile, declining unemployment, increasing consumer confidence and the need to replace aging vehicles will boost demand.

On the other hand, the U.S. automakers won’t only have to raise sales. They would also need to remain profitable as they contend with the increase in Japanese production and the rise of Korean brands and Volkswagen AG. Jesse Toprak, an analyst at the auto-pricing researcher TrueCar.com, said that losing market share is “never positive” but the U.S. automakers will still grow.

He explained that these automakers are more focused on their cost structures so that people would want to buy the product instead of just going for the incentive. The analysts think that its sales may increase in 2012 to an average of 13.6 million vehicles, from having recorded 12.8 million in 2011. This continues the recovery from 27-year low of 10.4 million cars and light trucks set in 2009.

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