2006 Rosy for Imports, Luxury Cars | Adweek
Advertisement

2006 Rosy for Imports, Luxury Cars

Advertisement

LOS ANGELES Automotive analysts here predicted the continuation of many broad trends in 2006, including the rise of foreign and luxury-class vehicles.

"No matter the rhetoric of Detroit, the import share will continue to grow," said Wes Brown, analyst with Iceology, Westwood, Calif. He said that Toyota, which nearly topped domestic sales of 2 million units in 2005 for the first time, and far exceeded that figure when including its luxury Lexus and hip Scion divisions, would continue to move inexorably to an overall No. 1 status.

The analysts predicted Toyota of Torrance, Calif., would continue to advertise its contribution to American industry, in contrast to a period when the company was said to have shied away from trumpeting its rising prominence for fear of backlash or even government protectionist intervention.

"They've been running an ad campaign talking about how many jobs they create and how they design their cars in the U.S.," said Brown.

"Toyota's fear of backlash, following a long period of 'voluntary restraint allocation,' is over," said Todd Turner, analyst at Car Concepts, Thousand Oaks, Calif.

Brown said that the success of the luxury market means "more and more people are finding rationalizations for the value of luxury brands, whether it is brand image, features, styling or better quality."

Nearly every luxury line was up through November 2005, according to Car Concepts. The sector volume leaders were Lexus (up 5 percent to 268,000 units), BMW (up 2 percent to 240,000), Cadillac (up 2 percent to 212,000), Acura (up 7 percent to 191,000), Infiniti (up 4 percent to 124,000) and Audi (up 6 percent to 74,000). Smaller volume hits included Land Rover (up 31 percent) and Porsche (up 1 percent) while only Ford's Lincoln division (down 12 percent) and Jaguar (down a dramatic 44 percent) bucked the trend. Mercedes was down only a single tick to 193,000 units.

Turner said that while Honda's division is "vulnerable" because of the failure of the Ridgeline to help expand its offerings to a pickup truck, the Asian nameplates would continue to proliferate. "Nissan will follow a great year with another, entering new segments and expanding U.S. production capacity," he predicted.

Gardena, Calif.-based Nissan sold 862,000 units through November, per Car Concepts data. With Suzuki up a healthy 10 percent on the year and Mazda's volume high (239,000 units) despite being down 2 percent, only Mitsubishi (down 24 percent) and Isuzu (off 56 percent) continue to bottom out.

Turner said Nissan's move to Tennessee would have no long-term impact on the brand, not even damaging its "California car culture" image. "Nissan is keeping its strategic forces and design center here, as well as its advertising agency [Omnicom Group's TBWA\Chiat\Day, Playa Del Rey, Calif.]," he said.

Korean brands Hyundai of Fountain Valley, Calif., and Kia in Irvine, Calif., will continue to erode domestic, not Japanese, market share, Turner said. "It threatens the Big Three more because their product is about value for the dollar and providing that is a bit of a commodity," he said. "The Korean brands won't become aspirational for several years. In the meantime, they'll be competing with Chevy Cobalt and Malibu, Ford Focus, Pontiac's G6 and even some of the crossovers. The Koreans are hitting their markets and targets accurately and their products are becoming appreciated for design and quality, rather than just value."

Turner said Chrysler alone has a bright future in Detroit. "It will continue to at least not lose market share, and may even pick up points in the next few years," he said.

Both analysts said hybrid-vehicle demand would continue to outpace production for the foreseeable future. "It's one of those vehicle concepts that has actually created more demand out there than we can even see," said Brown. "Except when it comes to trucks or performance vehicles, consumers don't see any tradeoff."