Grey Days Ahead for US Automakers' Adspend

05 December 2005

US car industry adspend is likely to come under pressure next year, predicts investment bank Merrill Lynch.

The nation's number one and two car giants, General Motors and Ford Motor Company, have both toiled under difficult financial circumstances in 2005, resulting in job losses and production cuts. The turmoil is likely to have a knock-on effect on ad budgets.

A report by analyst John Casesa predicts automakers' adspend in 2006 will flatten at $11.5 billion (€9.82bn; £6.65bn), reversing the trend for steady increases over the last decade. Adspend rose an estimated 6% to $11.4bn this year.

However, Casesa does not forecast any cuts next year. Automakers plan heavy new-model launch schedules; a generally more competitive market; brand-rebuilding strategies; and the increasing need to close sales deals.

This year GM increased it 2005 second quarter marketing spend to $200 million to promote its employee discount scheme [WAMN: 30-June-05].

  • Meanwhile, November new-vehicle sales fell both for Ford and GM over the same month last year. GM's figure was 11% lower but it can draw comfort that sales actually rose 14% over a dismal October. Ford saw its sales drop 15% in November versus the prior year.

    Nissan North America said it sold 77,212 units, or 7.8% fewer Nissan and Infiniti vehicles last month than a year ago. Infinti sales dropped 14% and the Nissan brand was down 6.7%. Mercedes-Benz USA reported 18,284 units sold in November, 548 fewer than a year ago, when it posted its second-best November.

    Chrysler Group was also down 7% over the prior November, with 159,898 new cars and trucks sold. Yet the Chrysler 300 sedan had its best month ever, selling 12,647 units.

    Japanese manufacturers, in contrast, posted robust sales figures. Toyota sales climbed 5.6%, the best ever November performance for its Toyota, Lexus and Scion models. Honda's tally was also its best ever for November, with Honda and Acura vehicle brand sales up 6.4% compared to last year.

    Germany's Volkswagen Group's VW brand was up 4.8%, while sibling Audi recorded the best November in its history.

    Data sourced from; additional content by WARC staff