• by Karl Greenberg , December 29, 2006

The year just passed was tumultuous even for the typically stormy automotive business.

It was a year in which Nissan North America made its corporate move from the heart of U.S. auto culture, southern California, to the relative hinterlands of Tennessee.

It's a year in which Ford and GM, after a rocky 2005, launched new turnaround plans. It was a year full of rumors of deaths exaggerated and alliances unrealized: that Ford, struggling to stay afloat after losing in 2005, would go under, in some form; that GM CEO Rick Wagoner, fending off stakeholder Kirk Kerkorian, would himself be ousted; that DaimlerChrysler would spin off its Chrysler Group; that GM would ally with Nissan; and most recently, that Ford would form an alliance with Toyota.

It was a year that, despite record gasoline prices, managed to finish with what will likely be around 16.4 million units sold.

The gainers were import brands, but General Motors has managed to hold on to share partly with a new warranty deal, and new versions of its Silverado and Sierra pickups.

The Chevy Silverado, representing the biggest portion of the highest single-platform volume for GM, launched with patriotic fanfare in September, using a Campbell-Ewald-created campaign derided by ad critics but celebrated by dealers and featuring the song, "My Country" by rocker John Cougar Mellencamp, and a theme, "Our country. Our truck." The patriotism is emblematic of an effort to counter Toyota, which has been running corporate advertising all year promoting its U.S. product footprint as a setup to its most important launch in years, the redesigned Tundra in the first quarter next year.

In turnaround mode all year was General Motors, which lost $10.6 billion in 2005, hasn't earned a quarterly profit in the U.S. since 2004, and saw its share of the U.S. market drop to around 24% this year, from over 30% 10 years ago. In addition to efforts to streamline operations, more sharply define its divisional brands, and get its vehicles on the shopping lists of the younger buyers who have forsaken the domestics, the company has tried to get away from incentive blitzes by focusing on "value" rather than deal-of-the week offers. For example, GM this year launched a 5-year, 100,000-mile transferable powertrain warranty program to validate its quality improvements.

Divisionally, the company has anointed Saturn as its ambassador to the world of Toyota and Honda owners, by giving that formerly product-starved division new vehicles and new ads. A new campaign this year, featuring the tagline "Like always. Like never before," preceded the launch of several vehicles, including the Aura sedan, a new version of the Vue SUV, a hybrid version, and a new crossover called Outlook.

High gasoline prices hurt SUV and trucks sales, especially at Chrysler Group, which lost its CEO Dieter Zetsche to the home office in Stuttgart, Germany at around the time inventories of hitherto hot vehicles like Chrysler 300, Dodge Magnum, and Dodge Ram and Durango, began hitting record levels.

The change, which put Tom LaSorda in the top position, also coincided with rising dealer ire about having to take delivery of vehicles they couldn't sell. Thus the ouster, in the fall, of sales and marketing chief Joe Eberhardt, and rumors that Wolfgang Bernhardt, who left Chrysler for VW might be headed back, especially since musical chairs at Volkswagen's Wolfsburg, Germany HQ, puts Audi chief Martin Winterkorn in the chairman's position at VW starting next week.

While it's unlikely Bernhardt would want anything less than top position at Chrysler, one thing is certain: the company is counting on new smaller vehicles, like Jeep Compass and Dodge Caliber to ignite sales. Currently, around 75% of Chrysler's volume is weighted toward minivans, pickups and SUVs.

Last week Chrysler Group CEO LaSorda went to Stuttgart to present a restructuring plan, after Chrysler lost $1.5 billion in the third quarter. Reports suggest that the plan, which the company will unveil in February, includes layoffs and the closure of at least two plants in the U.S.

Ford, whose "Way Forward" plan helped fuel its largest quarterly loss in 14 years, $5.8 billion last quarter, has put its operations up for collateral to borrow $18 billion to fund restructuring. But before that, CEO Bill Ford stepped aside after running the company for five years. Former Boeing leader Alan Mulally took over this fall as Ford's financial and sales woes deepened despite "Way Forward," which began in late 2005. The company is counting on its new crossover Edge, backed by a campaign aimed squarely at urban and culturally diverse audiences, to turn its fortunes around, as it trims its payroll to cut costs.

Last year saw imports continue to dominate in cars even as they expanded control of SUVs and crossovers. Nothing proves that more than Toyota becoming the No. 2 automaker worldwide, surpassing Ford and on track to be No. 1.

Toyota, which is set to oust GM in worldwide sales next year, sold 8.8 million vehicles this year. That is below the 9.2 million vehicles GM predicted it would sell worldwide this year. But while Toyota, which plans to sell 9.34 million vehicles next year, is expanding its factory footprint in the U.S., GM and Ford are both closing plants and tightening capacity.

General Motors' former 10% stakeholder Kirk Kerkorian had counted on his proxy on the board Jerry York to force changes, such as an alliance between GM, Nissan and Renault. When that deal fell apart, Kirk bailed out of General Motors entirely.

Meanwhile, analysts say next year will be slower than it has been in almost a decade. Detroit firm CSM predicts 16.2 million units will move next year.

While the good news for buyers is that they will have more vehicles to choose from and more deals to sway them, automakers are faced with shoehorning vehicles into a packed market. CSM--which said that automakers launched 60 new models in 2006, and will roll out 40 more next year--predicts that GM will stay level with about 23.5% of the US market next year; with Ford at 18.2% and Toyota at 16.3%. DaimlerChrysler--including Mercedes and Chrysler Group brands--will round out 2007 with a 14.7 share of the market.