With pent-up vehicle demand finally being realized, in combination with low interest rates, 2013 will be a busy and very profitable year for automakers. Much to investors’ relief, this is happening with record high transaction prices and low incentive costs. Sedan and truck segments are expected to fuel the sales growth this year; however, those vehicles mean two very different things to automakers. Sedans and trucks have a distinct impact between market share and the bottom line; it just depends on each automakers’ strengths. Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC) are consistently strong in the sedan segment and are rewarded through market share, while Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) dominate truck sales, bringing in a large portion of profits from the segment. Let’s look at both segments and see how each automaker is making noise in 2013, and what potential risks are out there.
First off, let’s look at how January sales turned out.
|Model||January 2013||% Change From January 2012|
|Toyota Corolla / Matrix||23,822||32.4%|
Even with the F-Series and Silverado owning the top two spots, sedans still make up a majority of all units sold. Sedans will fuel growth in automakers’ market share, because of the segment’s high sales volume. There is no shortage of heavy hitters making noise in 2013. Ford has to eager to see a full year of sales from its popular and recently remodeled Fusion. Toyota’s Corolla and Camry were both in the top 5 in January vehicle sales and will continue selling well. Honda will rely on its Civic and freshly remodeled Accord to keep pace with its competitors.
There’s a common theme with those vehicles — more so than just being top 10 in sales. They’re all fuel-efficient, and right now consumers are demanding to save money at the pump. It might surprise you to hear there’s a difference between fuel-efficient and environmentally friendly. When consumers buy a Fusion, rather than a Focus electric, they’re opting to save money at the pump to later spend on groceries. Consumers would make the opposite purchase to be environmentally friendly. The latter are less worried about saving money, as evidenced by the high price tag paid, and more about reducing their carbon footprint. The important note here is, for the next five to six years, fuel efficiency will dominate consumer behavior, and these vehicles will sell accordingly.
Sedans represent market-share gains for automakers, especially those well positioned in fuel efficiency. Now, sedans don’t have nearly the same influence on the bottom line as trucks do. Let’s look at that impact for automakers.