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June 25, 2008

The Domestic Car Business.....Is Anyone Buying Anything?

Analysis of: GM May Need A Loan, And Soon | www.forbes.com
This analysis is solely the work of the author. It has not been edited or endorsed by GLG.
Analysis By:
Jack Sayer, Managing PartnerJack Sayer
Managing Partner, Sayer Partners LLC
Implications: We know that no wants to buy gas guzzlers, right? Correct, but some of them, along with other luxury high-enders are also selling.

Analysis: It's no surprise that hybrids and subcompacts are selling well. But what about the Lexus LX, an SUV that averages 14 miles per gallon? its sales for the first five months of the year have more than doubled.

Sales of cars and light trucks have been down 11% in May from a year ago. But a few cars have bucked the downward trend. A number of them are small: Sales of the tiny Fit from Honda have risen 64% since the beginning of the year. The Toyota Scion xB is up 59%.

But there are also some surprising winners-including a handful of gas-guzzlers. Sales of the Toyota Sequoia rose 29% to 14,100 in May from a year earlier, making it the only vehicle in the "large utility" segment for which sales have grown this year. Sales of the low volume Dodge Viper more than doubled to 515.

Another big vehicle showing a sales jump is the Toyota Tundra, a pickup that averages 15 mpg. Its sales have risen 8.5% since the beginning of the year, even as sales of large pickups have slumped 22% overall.

Sales of the Mercedes Benz M-Class are up 20% for the year-to-date. Could be the models' spiffy new 19 inch wheels, chrome trim and a new grill.

The market for large vehicles is being supported not only by high-income consumers but also by families. Many of these shoppers are turning to midsize "crossover" vehicles like the Ford Edge, driving the segment up 7.1%. Crossovers with three rows, like the Mazda CX-9 and the GMC Acadia, have also sold well.

Other examples of models that have suddenly surged in popularity include the van-like Mazda5, up 46%, and tall wagons Hyundai's Kia Rondo, which more than doubled, and the Toyota Matrix, up 56%.  

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Generated at 2008-10-12T21:45:17.397