Will the "Detroit Three" Ever Become the "Big Three" Again?

Wednesday, October 28, 2009 by James Dimond

There's still a lot of press regarding automotive industry challenges like the recent GM and Chrysler bankruptcies and related dealer closings, but has anyone looked at the domestic  OEM’s market share lately? I have and the industry trend is very sobering – GM, Ford and Chrysler combined retail market share has dropped over 10 percentage points during the last five years and is currently hovering around 40%. Yes, almost two out of every three vehicles currently purchased at retail in the U.S. is an import. I know that the definition of an import is fuzzy at best with Hondas built in Ohio and Subarus built in Indiana; but for the purposes of this discussion, let’s consider anything not made and/or distributed by the Detroit Three an import. We’ll also count future Fiats and Alfas as domestics since they will be distributed through Chrysler dealers.

My crystal ball is as cloudy as anyone else's, but I don’t see this sharp downward trend reversing in the near term. With the impending demise of Saturn and Pontiac, the reduction in GM and Chrysler dealerships and the heightened import competition (particularly Hyundai, Kia and VW), Detroit Three share can’t help but continue to slide even further. Add to the mix a newly refocused Toyota and vehicles from China and India on the horizon, and one can only wonder where the domestic share will bottom out.

I can say that from R. L. Polk's automotive forecast, we expect the Detroit Three total market share (including fleet units) to stabilize around 40% over the next five years. Even with Ford's recent uptick in share, I predict the Detroit Three to account for only 25% to 30% of the retail U.S. market within the next five years. What's your forecast, and what, if anything, can the Detroit Three do to become the Big Three again?

Posted by James Dimond, Vice President of Global Network Planning, Polk (10.28.2009)

Comments for Will the "Detroit Three" Ever Become the "Big Three" Again?

Wednesday, October 28, 2009 by Glenn Mercer:
No argument with this posting, but I wonder if we're looking at this from the wrong side of the microscope, as it were. Europe for decades has been a "Big Six" market (Fiat PSA Renault BMW VW Mercedes, and call it "Big Eight" if you throw in GME and Ford Europe). If we call the EU market sorta kinda similar in size to the NA market, then maybe the NA market has been the aberration, with its Big 3, rather than the natural state of affairs. I mean, it is a preoccupation with volume here. I'd rather be one of the Big Six AND MAKING MONEY than one of the Big Three and bankrupt. As we all know, the relationship between volume and profits is weak. So I guess I would rephrase your last question as "What can the D3 do to become profitable again?" and forget market share for now. (I know, there is a minimum volume below which they cannot drop, but you get my larger point I am sure.)
Wednesday, October 28, 2009 by james dimond:
Glenn - Thanks for your quick response, and I totally agree with your points on volume and profits. I'm not sure, however, that comparing the United States to all of Europe is an apples-to-apples comparison for the intended message of my blog. I note the sharp drop of market share (or volume)of domestic OEMs in the U.S. If Italian OEMs had a simlar dramatic loss of share to imports in Italy, or German OEMs in Germany or French OEMs in France, a valid comparison could be drawn. Hopefully, the reader responses to my blog question regarding share will also apply to volume and profits. Stay tuned.
Thursday, October 29, 2009 by Glenn Mercer:
Italian OEMs? There is more than one? (Just pulling your leg...)

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