Year In Review: Auto Biz Made For A Good Read

The auto business makes a good novel: it's only just predictable enough to remain interesting; the personalities are just believable enough to be compelling, and sometimes--like Malcolm Bricklin, who was notably absent this year--quixotic enough to be almost unbelievable.

And if it were a fiction, 2007 could be a denouement. We had Chrysler parting from Daimler and being sold to a company with a name straight from '50s pulp fiction, Cerberus Capital. Doc Savage, anyone? This was also the first year in which a non-domestic automaker became the de facto No. 2 player in the U.S., with Toyota passing Ford in monthly sales since May.

Chrysler and Ford, meanwhile, snagged top executives from Toyota this year. Chrysler LLC tapped Jim Press to be vice chairman and president, and Lexus Vice President Debra Wahl Meyer to be vice president/CMO. Jim Farley, who was Lexus general manager, left the company to become group vice president/marketing at Ford.

With crude oil approaching $100 a barrel and gasoline topping $3 for much of 2007--and the credit crisis putting negative pressure on the auto market--small was big, and mpg trumped hp. Honda Fit, Toyota Yaris, Chevy Aveo, and Nissan Versa were among vehicles that sold strongly this year despite a softer overall market.



And an even smaller vehicle is poised to enter the U.S. this coming year. Daimler AG's Smart Car launched with a $99-down reservation offer, well before the car itself arrived. This month, Daimler CEO Dieter Zetsche said more than 30,000 downpayments were received for the car.

Per consumer auto research and shopping Web site, compact-car sales were up 2.4% and compact SUV sales were 5.8% this year versus 2006. U.S. market share for compact cars grew about 1% this year, from 17.5% in 2006. And market share for hybrid vehicles--led by Toyota's Prius, which for the first time made the Top 10 list of most-researched vehicles on Edmunds--increased 61.5% compared to last year. Prius sales were up 71%.

Jesse Toprak,'s executive director of industry analysis, says compact vehicles were the only gainers this year. "It's most significant if you look at the landscape," he says, "because most categories posted declines, whereas compact cars--especially sub-compacts and hybrids--gained. So, although the size of the overall market declined this year by 3%, compact cars--including compact SUVs and crossovers--increased."

As in recent years, Nissan, Honda and Toyota grew market share at the expense of the Big Three. Per, Honda's market share grew from 9.1% to 9.7%; Nissan's saw an uptick from 6.2% to 6.7%; and Toyota's rose from 15.3% to 16.3%. The firm says Toyota's monthly sales topped Chrysler's all year. Since May, Toyota has been the No. 2 automaker in the U.S., surpassing Ford.

If the buyer shift toward smaller vehicles favored Honda and Toyota this year, Toprak says it is because consumers think the two automakers are better represented than the domestics with fuel-efficient cars and trucks.

"Many consumers assume Honda and Toyota product lineup comprises more efficient vehicles in every category," he says. "But if you look at domestics, you see more and more gas-efficient vehicles. It's the perception among consumers that Japanese automakers have more gas-efficient vehicles that winds up favoring them in this market."

And 2007 may be the year when something happened in the U.S. automotive business that hasn't been seen since the 1940s: the startup. Tesla Motors, a Silicon Valley firm which sells a $97,000 two-seat electric car and promises a four-seater at half the price, opened an R&D center in Detroit. The company has said its 2009 Tesla Roadster is sold out via wait-list payments of $5,000. Carlsbad, Calif.-based Aptera is bowing a sub-$30,000 electric-assist, three-wheeled car it claims gets 300 mpg.

General Motors also bowed a plug-in electric concept, Volt, which it plans to begin selling in 2010. "They need a dramatic vehicle like this to change the landscape, to get people interested in lineup," says Toprak. "Prius was a pioneering example of hybrid technology on a distinct-looking vehicle; it helped them capture the environmentally friendly crowd, but it also stood out. Chevy Volt is potentially in same situation." said the most-researched car on its site this year was the Honda Civic, followed by its Accord and then Toyota Camry. Six of the Top 10 most-researched cars were Toyotas or Hondas. Eight of the Top 10 most-researched trucks, SUVs and minivans were Toyotas or Hondas.

Domestic manufacturers' market share dropped from 55.2% in 2006 to 52.3% this year.

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