Halfway to Zero

The Domestics’ market share is slipping away.

By Chris Haak

07.09.2007

The first half of 2007 is behind us, and after some crunching of sales numbers, Automotive News reported today that the market share of the Big Three domestic manufacturers (GM, Ford, and Chrysler) has dipped to 50.2% of the US vehicle market in June, thanks in large part to GM’s June sales meltdown. Meanwhile, sales of Japanese branded vehicles in the US rose to 37.5%. Since the Domestics’ share was 56.0% in June 2006 and the Japanese brands’ share was 32.5% in June 2006, this means that almost one for one, every point of market share that Detroit gave up was snapped up by a Japanese brand. European and Korean brands took up the remaining 0.8 percentage points of market share.

What does this mean? Well, unlike an era a generation or two ago, when GM alone held more than 50% of the US auto market, three US-based companies together are likely to not be able to hold onto that share even together. GM has already said that they will not sit idly by while Ford, Chrysler, and even Toyota outspend them on incentives, so expect possibly a slight bump in July in domestic sales, but the long term writing has been on the wall for a while.

Not only has the US auto market become more fragmented – with more models, more brands, and even more countries of origin than ever before – but the domestic brands falling asleep at the wheel for a decade or two in the 1970s and 1980s certainly has harmed their current situation. For decades, their import competition steadily chugged along, improving their products in terms of comfort and reliability with each generation, convincing one buyer after another to switch brands, Detroit didn’t do much about it. Now that this ship has left the harbor, and foreign competition has raised expectations and created a generation or two of satisfied customers, Detroit needs to come up with products and marketing that will convince satisfied import owners – or at least current domestic owners thinking of switching to the import side, that their products are worth buying. To do that, they’ll need not only superior products, but substantially superior products. They need to look better (and in some cases, the domestic models actually do look better than their import competition), but also have better reliability, better fuel economy, a nicer interior, and be priced competitively. It’s a tough hill to climb, and it pains me to say it, but I don’t think we’ll see Detroit at 50% market share again, ever.

By the way, the title of this article is not intended to imply that Detroit is on its way to zero market share (although the trend line does move in that direction). At some point, it will level off, but who knows when that will happen? The glass is definitely half empty at this point.

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Author: Chris Haak

Chris is Autosavant's Managing Editor. He has a lifelong love of everything automotive, having grown up as the son of a car dealer. A married father of two sons, Chris is also in the process of indoctrinating them into the world of cars and trucks.

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6 Comments

  1. Imagine a duopoly or oligopoly dictated by Honda and Toyota, being flooded of appliances without a bit of passion….maybe I’m too much pessimist. However, I spotted this rant about GM at the Motor Trend blog

    Speaking of imports, there is some rumors of “comeback kids”, the ones who didn’t set their wheels in Canada and the US since a long while ago like Fiat and Peugeot (Renault is also rumored to do a comeback but I hadn’t heard any news of it recently, as for Citroen, their fate is on the hands of Peugeot). For Peugeot, a guy nicknamed “flipper” mentionned at Leftlanenews this interesting quote “Peugeot+ Mitsubishi=Renault+Nissan?” although others mentionned then some Peugeots models could be sold as Mitsubishi. It might be interesting to see what’s the following years will reserve for Mitsubishi and Peugeot-Citroen.

  2. You have to wonder just where the floor is for the Big 3. I thought we had reached it, but I guess not. At what percentage of market share will Ford stabilize? Ditto for GM and Chrysler. Where is the floor?

  3. The floor is ZERO, that’s the floor. The American companies are going to fail their way to the bottom by continuing to churn out bad cars that fall apart quickly.

  4. beeooo, I don’t think the numbers back up your contention that American companies are churning out cars that fall apart quickly. In fact, they are probably making the best cars they have ever made. The problem is, the competition isn’t sitting still and is also making some of its best stuff ever. On top of that, after a few decades of making cars that did fall apart early in their life, millions of consumers don’t trust that the domestics are nearly as good as, or better than in some cases, the imports, so they stay with what’s worked for them in the past…Toyota, Honda, and Nissan.

  5. More evidence that this country’s labor workers have been sold down the river by large corporations only interested in the cheapest labor possible even if it means good Americans go hungry. Buy another import becuase you can ALWAYS GET A JOB AT MCDONALDS!!!!

  6. the domestics actually have an even tougher hill to climb when you consider how difficult it is for them to EXPORT any thing they make in NA. they have zero credibility overseas.

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