We commonly refer to General Motors, Ford, and DaimlerChrysler as the Big Three. But times are changing and this term may be inappropriate in the months ahead. Once considered the giants of the industry in terms of sales, innovation, and overall size, they have continued to lose market share and have fallen behind in technology. Only their size continues to dominate the marketplace.
According to the latest numbers, U.S. market share for GM, Ford, and DaimlerChrysler fell to an unprecedented low of 58.7%, down from 60.2% in 2003, and 61.7% in 2002. On the other hand, Asian automakers jumped two percentage points above their 2003 market share, finishing 2004 with a 34.6% share of market in the U.S. That's pretty good considering that three years ago, Asian imports accounted for 30% of the market.
In fact, the American arms of Toyota Motor Corp., Honda Motor Co., and Nissan Motor Co. sold more cars and trucks in the U.S. in 2004 than in any prior year. On its own, Toyota's U.S. division sold over 2 million vehicles for the first time in its 47-yr history as its sales grew 10% for the year.
If this trend continues, the demise of the Big Three may be around the corner. And I'm not sure that's all bad. Perhaps it may sound a little unpatriotic, but maybe it's time for a change. Not long ago, we were confronted with the dilemma of buying a fuel-efficient, low-cost import or buying American to save jobs and help the economy. However, transplant factories may have eliminated that concern.
Today, we have foreign automotive companies building vehicles in America, with American workers, in what are considered to be some of the most advanced factories found anywhere in the world. Ask someone who owns a Toyota, and I will bet you he will tell you it was built in Kentucky. Honda owners will say their car was built in Ohio. And those acquiring a Mercedes will mention their cars are built in Alabama. On the other hand, ask someone where their GM or Ford vehicle was built, and odds are they won't know.
In her book, "The End of Detroit: How the Big Three Lost Their Grip on the American Car Market," Micheline Maynard suggests that U.S. automakers are run by MBAs and sometimes viewed as banks that make cars. By contrast, foreign automotive companies are run by engineers and manufacturing experts. It's easy to accept that view when approximately one-third of the vehicles sold by the Big Three go to rental car companies, employees/retirees, suppliers, as well as dealers and their families, whereas foreign automakers sell less than 10% in these areas but rather focus on individual sales.
It may be true that U.S. automakers have become more efficient thanks to foreign competition, but efficiency on its own doesn't sell cars. Somewhere along the way, the Big Three forgot to focus on the customer, and the American consumer is reacting to the situation.
If U.S. automakers don't change their approach, they'll continue to strike out with the consumer. That being said, I wouldn't be surprised if we see a new starting lineup for the Big Three this season.
