Collegian Venues - your weekend starts here
  Collegian Chronicles



Get a deal with Daily Collegian Coupon Corner
  The Daily Collegian Online	 - Published independently by students at Penn State NEWS
[ Wednesday, Sept. 13, 2006 ]

Foreign cars dent U.S. sales

Collegian Staff Writer

Cameron Diaz has one. Leonardo DiCaprio has four.

No, not bad movies -- these celebrities and many other consumers are choosing foreign cars instead of domestic brands, and U.S. automobile makers are fighting to keep the American market from slipping to foreign competition.

This past Labor Day weekend, all three major U.S. car manufacturers -- Ford Motor Company, General Motors (GM) and DaimlerChrysler -- announced either decreased sales or forecasts of a shoddy fourth quarter, according to a recent Consumer Affairs report.

"The Big Three were making high profits due to SUV and pick-up truck sales, and now that the price of gas has gone up and stayed up, profits are starting to go down," Russell Chuderewicz, an economics professor, said. "They realize what they need to do, but there is some lag until they can get that done."

Conversely, Toyota Motor Company, based in Japan, has experienced a rise in profits.

"Total sales this summer were up about 20 percent from last year," said Corey Confer, general manager of Joel Confer Toyota, 120 E. Clinton Ave. "Toyota doesn't have to pay their customers to buy their cars. They offer some incentives and a lower price, and the customer doesn't have to worry about negotiating. Domestic dealers think the public is stupid."

Ford made headlines when it announced Sept. 5 that Bill Ford, its CEO, would step down immediately to be succeeded by Alan Mulally, the former CEO and president of Boeing.

This news came after Ford revised and doubled its 2006 second-quarter losses from $123 to $254 million. It later put one of its premier wings, Aston Martin, up for sale, according to a CNN report.

PHOTO: sss

Both DaimlerChrysler and GM have been plagued by recalls in their truck lines. The remaining stock of year-old models has also caused both companies to offer large rebates and generous financing options.

GM, like Ford, later revised its second-quarter numbers by adding an additional $200 million in loss, according to a published Reuters report.

Despite the gloomy situation on paper, local dealers have remained optimistic about their sales.

"Zero percent financing really helped move 2006 models," said Barry Golding, assistant manager of State College Ford Lincoln Mercury Inc., 3140 W. College Ave. "We cleared out all of our '06 inventory. Anything that was small sold well, particularly the Fusion and Focus."

Foreign automakers are up in arms about the deals U.S. car companies use every summer.

These include instant rebates, zero percent financing for up to 72 months and dealers paying for gas costs, to clear out their old inventory, according to a report in Wards Autoworld Magazine.

"Everybody who is using heavy incentives [is] destroying the future of the industry -- if it continues," Peter Schwarzenbauer, CEO and president of Porsche Cars North America Inc., said in a Wards Autoworld magazine interview. "Unless we see major changes here, philosophical changes, this will be damaging for all of us."


 

Send an Opinion Letter to the Editor about this article.


   





TOP  HOME
Blogs  About  Contact Us  Back Issues  Advertising 

Copyright © 2008 Collegian Inc.
Updated: Wednesday, September 13, 2006  12:15:50 AM  -4
Requested: Friday, September 05, 2008  11:29:08 PM  -4
Created: Wednesday, May 07, 2008  6:57:33 PM  -4