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2006: A look back - A look ahead  
  Winners and losers were prominent in 2006 but pricing and financing remains at the mercy of gas prices.
 Personal finance calendar  Personal finance calendar 

Gas prices, interest rates spark big auto changes

Rarely has there been a year like 2006, when the winners and losers in the automotive industry were so starkly prominent.

The headlines out of Detroit were so gloomy that it's a good thing those windows in the corner offices of top execs at General Motors, Detroit and DaimlerChrysler don't open.

Hurt by at least eight months of gas prices at $3 a gallon or higher, sales of big sport-utility vehicles and pickup trucks were in a death spiral for most of the year.

And a truism of business in Detroit is that a company's fortunes are tied to its trucks and sport utility vehicles. Sales of light trucks -- which include SUVs, pickups and minivans -- make up 60 percent of sales for GM, 61 percent for Ford and 76 percent for Chrysler. As a result, the Detroit-based automakers are expected to see significant cuts to their market shares.

Some good news did emerge in September, when gas prices began a steep dive and, not surprisingly, SUV and pickup sales turned upward by 5.3 percent compared to a year earlier. Even full-sized SUVs, which experienced the steepest sales slide, saw some renewed life as sales of the redesigned Chevrolet Suburban, Tahoe and GMC Yukon moved upward.

Nonetheless, 2006 could be remembered as the year that sales of cars began to rebound against sales of trucks -- which include minivans, SUVs and pickups. The last time cars outsold trucks was 2001, when the split was 50.4 percent to 49.6 percent. When the final numbers for 2006 are tallied, it's likely that trucks will hold on 50.1 percent over 49.9 percent for cars.

"You can still see a consumer shift towards passenger cars, but our truck sales weren't as negative as they've been in recent months," Ford sales analyst George Pipas said in October.

That shift toward cars over trucks, combined with public perceptions of who builds the most reliable, fuel-efficient vehicles, accounted for the other major industry news for 2006: The sharp rise of Toyota.

When you speak of the Big Three, it's no longer Ford, General Motors and DaimlerChrysler. In 2006, Toyota took over the No. 3 spot from DaimlerChrysler, selling an estimated 2.5 million vehicles in its Toyota, Scion and Lexus divisions.

Even more troubling for those who root for U.S. teams, on the basis of car sales alone, the Toyota division will finish 2006 as No. 1 in the United States, followed by Chevrolet and Ford divisions.

For consumers, 2006 was another year when manufacturers tried to lure them with wave after wave of pricing and finance deals.

After gobbling up the "employee-pricing'' deals that were so prominent in 2005, buyers turned lukewarm to them in 2006.

A study by Kelley Blue Book showed that in 2006, 37 percent of buyers preferred zero-percent financing, up 11 points from a 2005 survey. The 2006 study found that employee-pricing programs have become the least appealing sales incentive, rated tops by just 10 percent of respondents.

-- Posted: Nov. 1, 2006
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