Japan’s automotive powerhouses, Honda and Toyota, are in a strong position to pick up U.S. marketshare in the next three to four years, according to the new edition of the “Car Wars,” report from Merrill Lynch.
Product replacement rate and showroom age drive marketshare shifts, noted Merrill Lynch analyst John Murphy during a presentation to the Automotive Press Association in Detroit. The longer product life cycles of Detroit’s three automakers were one of the key reasons that the domestic carmakers lost marketshare over the years.
However, the industry is changing and product life cycles are converging. While Toyota and Honda will have a narrow edge in the next half decade, Ford and Fiat Chrysler also have aggressive schedules for introducing new products that will help them protect their current share of the U.S. market.
The study, however, shows that gains by the domestic companies will be relatively small, Murphy said. Conversely, the Korean companies, Kia and Hyundai, will find their marketshare under pressure in the next few years.
(Toyota teaming up with Ford on smartphone technology. For more, Click Here.)
Murphy added product activity is solid across the board. This is consistent with a cyclical recovery and should support U.S. auto demand as well as industry-wide profits as new vehicle introductions are overweight in the crossover vehicles of all sizes. The shift is occurring around the globe, and should drive a positive or profitable product mix shift for model years 2016-2019, he said.
A few other points from Murphy:
- The convergence of product cycles continues at the larger manufacturers, but there is some volatility in model years 2016 and 2017. Despite this, Honda is clearly the leader.
- GM product launches for MY2016-19 should support marketshare and, more importantly, pricing, despite the extreme skepticism of investors.
- Ford’s solid product cadence remains above average and should at least sustain pricing as it focuses on profit and leverages its global platforms.
Fiat Chrysler’s product cadence is slow in MY2016, despite the introduction of a new Alfa-Romeo sedan in the first half of the year, but picks up significantly in MY2017-19. This should be enough to support marketshare, but appears short of driving targeted share gains.
(Click Here for a test drive of the all-new 2016 Mazda Miata.)
Honda leads all OEMs and is likely to gain share due to the influx of new vehicles, including a entries in the truck segment. Toyota’s refresh rate is above average and a focus on Lexus could be a bonus. Other Japanese OEMs, including Nissan, remain at risk for losses, Murphy said.
(Ford launching all new Sync 3 this summer. Click Here to learn more.)
Hyundai and Kia pick up the pace in 2016 and then fade in MY2017-19. Combined with a concentration on small cars, this creates risk to marketshare.