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Market Share Wars Set to Intensify in 2012

Japanese hope to regain lost ground, but Detroit gets aggressive.

by on Jan.09, 2012

Detroit will use product, not rebates, to fight for more share, insists GM NA President Mark Reuss.

It could turn into a battle royale this year as Japanese makers look to claw back lost sales and lost share.  But Detroit’s Big Three have tasted blood and aren’t ready to go into retreat.  Meanwhile, Korean and European makers are also ready to pull out the big guns, industry analysts are suggesting.

The loss of market share by Honda and Toyota will certainly make the domestic makers more competitive this year, analysts say. But it could also touch off the sort of incentive wars, observers fear, that can rapidly wipe out industry profits.

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“Toyota and Honda will get some of the market share back but they won’t get all of it,” says Jesse Toprak, vice president and analyst with

The earthquake and tsunami in Japan in March and the subsequent flooding in Thailand in November created shortages that cost Toyota, Honda and even Subaru some market share in 2011, according to Paul Taylor, the chief economist for the National Automobile Dealers Association.

“You can’t sell what you can’t get,” Taylor said. “It changed market share,” he said. “We expect the Detroit 3 to be fighting to hold on to their market share gains,” Taylor said during the Automotive Outlook Conference put on by the Society of Automotive Analysts in conjunction with the North American International Auto Show.

Brendan Mason, of PwC Autofacts, said during a presentation to the SAA, it will be difficult for Detroit’s three automakers to hold on to last year’s market share gains. But the U.S. market is extremely competitive and he doesn’t see a dramatic shifts in share in 2012, he said.

“We see only slight shifts,” he said. “(The market) is very crowded and very competitive,” he added.

(Detroit aims to take control of the midsize market segment for the first time since the 1980s. Click Here for that story.)

The analysts also indicated they are confident sales of new vehicles will continue to grow in 2012 and could surprise on the upside. Economic conditions, credit availability and new vehicles will help bring customers into shows, Taylor said.

“There are a lot of introductions at this show,” he noted.

Some makers, notably Toyota, have ramped up spending on givebacks in recent months, leading some to fear that could escalate if domestic makers feel they have to fight back.

But among those at the SAA conference, there wasn’t much anticipation of an all-out price war this year since manufacturers are more disciplined than in the past when incentives were used to drive sales.

Meanwhile Mark Reuss, president of GM North America, said he didn’t have a market share target in 2011 and doesn’t have one for 2012. The key to success for GM going forward is retaining customers, Reuss told reporters after the unveiling of the new Cadillac ATS.

“We have been working on that and I think we can surprise some people,” said Reuss. The effort goes beyond introducing new vehicles such as the ATS. “It also includes taking care of the customer. It’s a long term approach,” said Reuss, insisting, “Our dealers are ready for this.”

Retaining customers can also be extremely lucrative. It saves GM as $100 million every time one-tenth of 1 percent of the company’s customers are satisfied enough to return to GM fold, Reuss said.

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