Steve Fong of Sierra Autocars spoke of trends in the retail market for automobiles.

In the United States, in recent years the volume of cars sold was as follows:  (1)  in the period from 2005 – 2007: 16 -17 million cars;  (2) in 2008: 13.8 million cars ; (3) in 2009, 10 million cars, and (4) in 2010: 11.5 million cars.

(Sales have increased in the rest of the world more than they have in the U.S.)

In California, in recent years the volume of cars sold was as follows:   (1) in 2007: 2 million cars; (2) in 2009: 1 million cars (i.e., 50 percent less); (3) in 2010: 1.3 million cars (an improvement).  The improvement was not attributable to economic improvement, but was caused by (a) the greater need for vehicle travel in this state and  (b) the replacement cycle (the need to replace worn out cars).

Compared to the rest of the U.S., there is usually greater turnover of cars in California. However, this year there is less turnover.

We next consider comparative market share per different manufacturers.  Four manufacturers have gained in market share from 2009 to 2010:  Ford, Chrysler, Nissan, and Hundai.  Ford increased from 15.2 per cent (in 2009) to 16.2 percent (in 2010).  Chrysler advanced from 9.2 percent (in 2009) to 9.5 percent (in 2010).  Nissan gained from 7.4 percent (in 2009) to 7.8 percent (in 2010).  Hundai  progressed from 4.4 percent (in 2009) to 4.8 percent (in 2010).

In contrast, three manufacturers lost market share from 2009 to 2010:  General Motors, Toyota, and Honda.  General Motors declined from 19.6 percent (in 2009) to 19 percent (in 2010).   Due to recalls and quality issues, Toyota took a dramatic drop, decreasing from 16.6 percent (in 2009) to 15.2 percent (in 2010).  Honda slid from 11.3 percent (in 2009) to 10.6 percent (in 2010).

Pursuant to the law of supply and demand, the decline in sales caused manufacturers to slow down production, scheduling an output of 12.5 million cars for 2012.   The reduction in supply will result in higher prices for consumers.

Steve Fong next turned to a comparison between Hondas and Toyotas.  In terms of quality, Honda maintains a five star rating for safety.  Honda also boasts the highest EPA average, having three hybrids with zero emissions.  Honda also has a better resale value than Toyota.  On the other hand, Toyota has big fleet-rental accounts,  with the result that in two to three years, the one-time rental cars will come back into the market as used cars.  Also, Honda spent more time than Toyota in (a) research and development as compared to (b) advertising (with Honda emphasizing the former and Toyota the latter).

Finally, Steve Fong  addressed the comparative advantages of leasing and purchasing from the standpoint of the consumer and the manufacturer.  (1)  From the standpoint of the consumer, a lease enables the consumer to get into a new vehicle every 3 to 4 years.  However, if the leased car goes over a certain mileage, there is a penalty at the end.  (2)  From the manufacturer’s perspective, the alternative of a lease has several advantages:  (a) it is easier to negotiate a lease payment than a price; and (b)  the lessee becomes a repeat customer.