In 2006, Toyota Motor Sales U.S.A. surpassed Chrysler Group in annual domestic sales. Now American Honda is poised to supplant the struggling Detroit automaker as the forth best-selling brand in the U.S.
From January through November, American Honda has sold 1.044 million vehicles in the U.S. which gives it a 200,000 unit lead over Chrysler Group. Last December, Chrysler held a 21,000 vehicle sales lead over Honda. By year’s end, Chrysler’s lead had increased by an additional 5,000 units. The odds against Chrysler mounting a year-end sales surge sufficient to overtake Honda now appear beyond the realm of possibility.
Chrysler spokesperson, Kathy Graham, said her company is aware of the situation but says it is only temporary. She said, “We are taking the steps that are necessary to have a good foundation and to build consumer confidence.” She pointed to Chrysler’s aggressive marketing and increased ad spending as evidence of the automaker’s aggressive actions. Chrysler also offers significantly higher cash incentives than other automakers, both foreign and domestic.
Graham said, “We are on the right path. There will be short-term pain to get to our long-term goals.”
American Honda is taking a “business as usual” attitude toward its increased market share. American Honda executive vice president John Mendel said, “We only look at our sales and our objective. We may look at Civic and Corolla or Accord and Camry, but not at who ranks where.”
Opponents of Chrysler’s federal bailout are pointing to the latest rankings as proof that the automaker is beyond saving. Mendel, however, offered a generous assessment of Chrysler’s prospects and said that the economic meltdown has resulted in confusion throughout the automotive industry.
Last summer’s Cash-for-Clunkers program proved a boon for Honda and other foreign automakers whose vehicles were ideally positioned to benefit from the program’s criteria. Toyota was the clear winner with 18.9% of all Cash-for-Clunkers sales. Honda came in below other domestic automakers, GM and Ford, with 12.9% of sales generated by the program, but ahead of Chrysler which garnered only 9.1%. Chrysler was severely disadvantaged, having recently emerged from bankruptcy and suffering from already-depleted inventories.
Mendel said, “We are all in the same hospital, and some of us are more critical than others.” Referring to Honda’s recent struggles, he said, “Everyone is hurting. We cut Formula One. We cut 200,000 units of production. It was the right thing to do, but it was painful.”
Mendel summed up his assessment of the auto industry very succinctly. “Either you pay in production cuts, increased fleet sales or increased incentives, but everyone is paying right now,” he said.