Big 3 Becomes Big 7; More Competition in Cars

With the resurgence of GM and Ford, mistakes by Toyota, and records sales by Hyundai, car buyers have more choices than before, and they are using them. Please consider U.S. Car Business in Major Shift.

U.S. auto sales rose 11% in December, capping a year that suggests the industry is on the verge of one of the most dramatic shifts in its history.

For most of the past century, the U.S. car industry was dominated by General Motors Co., Ford Motor Co. and Chrysler Group LLC. Now, as a result of both long-term trends and the upheaval of the last two years, the Big Three are about to be replaced by a Gang of Seven as the industry's driving force.

In 2010, Hyundai Motor Co. saw its U.S. market share climb to just short of 5%. If the Korean auto maker crosses that threshold as expected this year, the U.S. market will have seven manufacturers—GM, Ford, Toyota Motor Corp., Honda Motor Co., Chrysler, Nissan Motor Co. and Hyundai—with market share of 5% or more. That's a dramatic shift from the days when the three Detroit companies dominated the market and dictated the industry's direction.

In 2008 and 2009, the Detroit Three were beaten down by massive losses and, later, bankruptcy. But in 2010, Ford and Chrysler both gained market share. GM, while its share slipped less than a percentage point, is on its way to reporting billions of dollars in profit for 2010 as its sales rise.

Meanwhile, Hyundai, which a decade ago was laughed off as a maker of cheap, small cars, said its December sales climbed 33% to 44,802. For the full year, its sales totaled 538,228, up 24%. It was the first year Hyundai's U.S. sales exceeded 500,000 vehicles.

Light Vehicle Sales By Month



The Wall Street Journal has a nice interactive chart of light vehicle sales, shown above. The spike in August 2009 is "cash for clunkers".

The big winner for December is "Other" with 322,595 out of 1,144,739, a substantial 28.2% of the market.

Other 322,595 - 28.2%
GM 224,127 - 19.5%
Ford 190,191 - 16.6%
Toyota 177,488 - 15.5%
Honda 129,616 - 11.3%
Chrysler 100,702 - 8.8%

Chrysler is long gone from the Big-Three, never to return.

The overall sales numbers look respectable until you total them up.



click on chart for sharper image

Sales are back to 1991 levels. Population adjusted, the chart would look even worse.

Nonetheless many will point to the bailout of GM by the Bush and Obama administrations as a success. Nothing could be further from the truth. It was bankruptcy that saved GM, not a bailout.

GM would have gone bankrupt sooner without government interference and would have recovered sooner as well. There was no need for government to get involved at all.

I always said GM would go bankrupt but survive, and that is what happened. It would have happened just the same without government interference.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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