The Big Three US automakers may not have much to celebrate in December if they give more market share to Japanese rivals and their sales further evaporate, as analysts expect.
"We are certainly expecting ongoing market share erosion," Deutsche Bank analyst Michael Heifler said, a day after General Motors Corp, Ford Motor Co, and DaimlerChrysler AG's Chrysler Group said US sales fell in November.
GM, the world's largest automaker, said on Thursday that November US sales fell 11 percent, while Ford's sales fell 18 percent and DaimlerChrysler AG's Chrysler Group fell 7 percent.
In contrast, Japanese automakers Toyota Motor Corp and Honda Motor Co Ltd had gains of 5.6 percent and 6.4 percent, respectively.
"November sales suggest Ford and GM will likely see sizeable earnings pressures into 2006," Goldman Sachs analyst Robert Barry said on Friday.
Several analysts expect weaker year-over-year sales in 2006, with demand for SUV's - the longtime cash cows for US automakers - still waning.
"I think the weakness in sales will continue," Standard & Poor's credit analyst Scott Sprinzen said. "Especially in the SUV category. Gas prices may stabilise, but the shock effect of the rise in gas prices is not going to go away any time soon."
US automakers used big summer incentives to clear out 2005 models, which pulled many buyers into the market earlier in the year, creating a "payback" effect that caused slower sales in the fall.
GM and Ford both cut fourth-quarter production forecasts, But GM said it would raise its first-quarter production target by 6 percent compared with year-ago levels.
Ford set its first-quarter production target 2.5 percent lower than a year earlier, with the volume of trucks set to be 12 percent lower.
Goldman's Barry called this "especially troubling because trucks continue to be much more profitable than cars, meaning it will take Ford selling multiple Fusions to make up for a single lost Explorer sale."
Some analysts wondered if Detroit would turn up the heat on its long-running price war, which has eroded profits.
"We think attempts by the Big Three to spot any product quality improvements are trumped by large discounts that actually send a message of inferior quality," Barry said.
The US automakers, which launched new consumer incentives in mid-November, lost US market share to Japanese automakers Toyota and Honda in the same month.
"We anticipate an ongoing slowing of auto demand in the US that will impact all automakers," Merrill Lynch analyst John Casesa said.
"Sales competition will likely increasingly focus on the fundamental elements of competitive products, strong brands and customer bases, which should highlight the Japanese automakers' relative superiority in these areas," he added.
Both GM and Ford said on Thursday that they expect US industry sales to be better in December than they were in November.
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