Gains in market share, that is. It’s market share that counts. That perplexing axiom had been drummed into me in the many decades I spent on the other side. You need to be faster than the overall market, or you fall behind. Of course, you can gain share by giving away cars, but you won’t do that for long.
Detroit had a big comeback last year. Let’s look how big. And let’s discuss whether Bloomberg is right when it predicts that “U.S. automakers led by General Motors Co. may lose share in their home market this year.”
U.S. Automakers By Market Share Gain/Loss 2011
| Automaker | Units 2011 | Share 2011 | Units 2010 | Share 2010 | Share change | |
| Chrysler Group | 1,369,114 | 10.71% | 1,085,211 | 9.36% | 1.35% | |
| Hyundai Group | 1,131,183 | 8.85% | 894,496 | 7.72% | 1.13% | |
| General Motors | 2,503,797 | 19.59% | 2,211,699 | 19.08% | 0.51% | |
| Volkswagen | 443,840 | 3.47% | 359,889 | 3.11% | 0.37% | |
| Volvo Cars | 67,240 | 0.53% | 21,423 | 0.18% | 0.34% | 4.4% |
| Nissan | 1,042,534 | 8.16% | 908,570 | 7.84% | 0.32% | |
| Mitsubishi | 79,020 | 0.62% | 55,683 | 0.48% | 0.14% | |
| Daimler AG | 267,016 | 2.09% | 230,934 | 1.99% | 0.10% | |
| BMW Group | 305,766 | 2.39% | 266,269 | 2.30% | 0.10% | |
| Porsche | 29,023 | 0.23% | 25,320 | 0.22% | 0.01% | |
| JLR | 50,375 | 0.39% | 45,204 | 0.39% | 0.00% | |
| Saab | 5,610 | 0.04% | 4,838 | 0.04% | 0.00% | |
| Maserati | 2,321 | 0.02% | 1,897 | 0.02% | 0.00% | |
| Suzuki | 26,618 | 0.21% | 23,994 | 0.21% | 0.00% | |
| Other | 2,967 | 0.02% | 2,897 | 0.02% | 0.00% | |
| Mazda | 250,426 | 1.96% | 229,566 | 1.98% | -0.02% | |
| Ford | 2,143,101 | 16.77% | 1,964,059 | 16.95% | -0.18% | |
| Subaru | 266,989 | 2.09% | 263,820 | 2.28% | -0.19% | -4.4% |
| Honda | 1,147,285 | 8.98% | 1,230,480 | 10.62% | -1.64% | |
| Toyota | 1,644,660 | 12.87% | 1,763,595 | 15.22% | -2.35% | |
| TOTAL | 12,778,885 | 100% | 11,589,844 | 100% | ||
These are automakers, ranked by their gain (or loss) of share in the U.S. market for the full year of 2011. The big gainers are Chrysler and Hyundai (incl Kia,) followed by GM and Volkswagen. “Big gainers” is relative. Each of the carmakers on top of the list had double digit (in the case of Volvo even triple digit) growth rates. However, when the year was over, the ten carmakers that gained market share only dislodged a combined 4.4 percent of the market. Who lost it?
Let’s go to the bottom of the list. There you see the tsunami victims. Toyota lost a whopping 2.35 percent of the market, more than half of the total market share that had been gained at the top of the list. Toyota is followed by most of the Japanese makers. But oops, amongst the losers is also Ford. Ford gained 9.4 percent in 2011. But with an overall market gaining 10 percent, that gain translates into a loss of share. Market share is brutal. You need to grab it from someone else. And you need to make money while you do it.
The list also provides a partial answer to the question many people asked in private after March 11: Who benefits from the tsunami?
What about this year? Bloomberg asked five analysts that very question. Bottom line answer:
“The U.S. automakers may each increase sales by less than the total market’s growth this year, according to all five analysts surveyed. While falling unemployment, rising consumer confidence and the need to replace aging vehicles will drive demand, increased Japanese output and improved competition from Korean brands and Volkswagen AG will test Detroit’s discipline on protecting profit rather than simply selling products.”
The analysts think that the Detroit Three “may drop a combined 1.3 percent of U.S. market share in 2012.”
That may not sound like a lot. Consult the table, and you will see that it would eat up most of the gains two of the three made in 2011. Who will take that share away? Says Bloomberg:
“Asia’s largest automaker, Toyota, may capture 13.8 percent of the U.S. market this year, from 12.9 percent last year, and Tokyo-based Honda may take 9.5 percent, from 9 percent, analysts estimate.”
That’s already 1.5 percent. Volkswagen will grab 0.3 percent, Hyundai 0.1 percent, think the analysts. Who else than the Detroit 3 is in for a haircut? Except for Nissan, which is predicted to experience a 0.2 percent slide, no other losers are mentioned in the Bloomberg story.
Who do you think will gain or lose?
You do not need to be clairvoyant to predict gm losing market share; they have 30 years or more of practice and are generally quite proficient at it.
From the Captain Obvious compendium: Saab will definitely lose market share.
I think there are other potential factors out there to think about that may WELL put an ointment into the predictions and that is costs of vehicles for what they offer, the quality of said vehicles and what people are willing/comfortable to spend right now.
Yes, the economy is improving and many are looking to replace aging vehicles (some quite old and high mileaged) but they may NOT be as comfortable purchasing something quite so spendy at this time.
All that to say, it may well help the big 3 if people decide the domestics are a better value than the foreign competition and actually buy their product.
Or people will be buying used instead of new and that could hurt just about everybody.
Maybe, but used cars cost nearly as much as new ones. Why buy used?
For a car that’s no more than 2-3 YO, I agree, but not for anything older than that though.
True, used cars ARE overpriced, no matter the year or age, my 03 Mazda Protege5 (non speed) originally went for $8422 with just over 110K miles on it in excellent shape but since I was financing, the dealer had to drop the price to just over $6600, just to be able to sell it in a finance deal since most banks don’t like to finance cars that are over 100K miles.
That tells me that even 9 YO cars are going for more than they were even a year ago and I got $1000 trade in on my tired, but still running 92 Ranger truck and I was asked what I thought the truck would be worth in trade and that’s what I told them and the dealer accepted.
It’s easier to buy used. Buying new is really a pain and I hate looking at new cars. I always feel soiled afterward.
This time around, whether I buy new or used, I’m thinking of wearing a trenchcoat and bowler while I pay cash out of a combination-locked briefcase.
I disagree with the analysts, as usual. The buying public doesn’t seem all that enamored of any of Honda or Toyota’s latest product. IF Chrysler has made significant quality gains, and Hyundai/Kia don’t fall off the wagon, then Honda and Toyota are going to have to go double hard to regain market share. That said, I think GM will be the big loser in maintaining share next year. The products are just not that interesting in any segment, except a few Cadillac offerings.(and maybe the Sonic Turbo)
No, Toyota MIRVed the Prius this year. They’ll pick up share unless their factories just can’t keep up.
Since last years numbers were skewed by the tragedies in Japan, there will be a correction based on the Japanese group finding their equilibrium in the market. This will likely lead to a slip in the shares of the Detroit group. Chrysler is reducing fleet sales, and with the problems faced by Fiat in Europe, they need their transaction prices to continue upward. Ford led the group in fleet sales last year, but the Panther is gone, and the new Escape will not be pushed into fleets as was done with the current model. Ford is also looking for higher transaction prices, which their new models may help generate. I claim no insight into GM’s marketing plans. I just feel a slight loss of momentum coming this year, that they may reverse in 2013. Having said all that, I’m really curious as to how much share the Japan group actually regains. 2011 saw their first setback in many years, and it will be interesting to see how they respond to adversity.
I’ll say the same thing I have said when posts on who sold more than whom come up – who cares? What matters is who is making the most MONEY! What was Porsche’s profit on those 29000 cars? Or BMW’s on thier 300K or so?
“What matters is who is making the most MONEY!”
That’s simplistic. The profitability of a mainstream automaker is based in part on economies of scale. Volume isn’t completely irrelevant.
“What was Porsche’s profit on those 29000 cars? Or BMW’s on thier 300K or so?”
You can’t really compare a margin-oriented luxury automaker such as Porsche with volume producers such as GM, Toyota or Hyundai. Porsche charges high prices to make up for its lack of volume. Obviously, the luxury approach isn’t possible with every brand.
True, and I respect your opinion in general, Pch101, but important to remember as Apple reminded everyone that what ultimately matters is profit, not market share. Market share is certainly one way to get there, but winning the market share game with razor thin (or negative) margins is a losing game. “Profit share” isn’t as fundamental a concept as it’s not a zero sum quantity, but it sure tells you who’s in the best competitive position. E.g. if Ford could consistently end up as number three or four in market share but number one in profit share, with GM fighting VW for 1st in market share but number three or four in profit share, Ford would be out competing the field (random example, switch company names as you like). The trick of course being consistency.
“important to remember as Apple reminded everyone that what ultimately matters is profit, not market share.”
That isn’t the lesson that I would take from Apple. And Apple’s long-term track record is quite mixed, so it isn’t necessarily a good model for how most businesses should be run.
Apple illustrates how a strong brand in certain industries can create excess margin. Right now, Apple is firing on all cylinders, but during much of its history, Apple has been lackluster and nothing to be envied.
The auto industry’s equivalent of Apple is probably BMW. There is only so much room for companies that mirror BMW.
And the auto industry has to contend with substantially higher production costs than does a company such as Apple, which necessitates that there be enough volume to cover those costs. Whereas much of the cost of technology products is front-loaded in the development, the costs of maintaining an auto production line stay relatively high throughout the production process. That difference should not be ignored.
“Market share is brutal. You need to grab it from someone else. And you need to make money while you do it.”
Correct in as far as it goes, but in a rising market like last year I am sure someone like Ford is OK with “only” increasing sales 9%. That translates into greater revenue and profit (as seen by their latest financial results) since some costs are fixed. Sure market share is good but profitability is the key to a sustainable future.
The data is interesting, I cannot imagine many Toyota and Honda buyers who were frustrated by the lack of cars went to Chrysler. These are aggregate results so I would expect Chrysler gained from say GM and Ford, who in turn gained from Toyota and Honda. Is there anyway to find out for sure?
“Correct in as far as it goes, but in a rising market like last year I am sure someone like Ford is OK with “only” increasing sales 9%.”
As someone who works for a consumer company I can tell you, no, they are not OK with that. The market increased 10%. If you did not increase 10% you are losing. You left sales on the table from the previous year. And in any sort of business, you never want to lose.
“And in any sort of business, you never want to lose.”
You’re being like Krhodes above you, but at the opposite extreme.
Margin and volume both matter. A mainstream automaker that focuses on volume exclusively at the expense of margin ends up like the old GM, i.e. bankrupt.
Different automakers employ somewhat different strategies. Under Mulally, Ford seems to be modeling itself on a variation of the Toyota-Honda model — reasonable market share, with above-average margins. While Ford maintains much of its volume with high fleet sales, which is quite different from either Toyota or Honda, Ford doesn’t appear to be as generous with the retail consumer as are the other domestics.
Ford seems to be willing to sacrifice some amount of share in favor of higher average retail transaction prices. I don’t think that the same can be said of either GM or Chrysler, particularly the latter, as it needs to have economies of scale to achieve just modest levels of long-term profitability.
“Ford seems to be willing to sacrifice some amount of share in favor of higher average retail transaction prices.”
OMG. Wake up. The excuses are already flying. Did you consider Ford WILL be giving up some amount of share because:
1) Poor quality rankings in Consumer Reports and JD Powers
2) High price tags
3) Many Ford quality complaints surrounding transmissions and myTouch on the web.
Also, Toyota and Honda will be picking up market share because they rule the reliability rankings.
Ford has quality problems, and it will cost them dearly. That is what happens when you spend the minimum on engineering because you have outrageous UAW bills to pay.
If I was Mullay, I would be firing executives responsible for the quality disaster, and I would hire labor lawyers in order to cut the UAW benefits. That is the only fix.
Do you think people will flock to the 13 Fusion because of the looks? That is such a 1970s attitude. As long as Ford is in the lower half of the pack in reliability rankings, many will not even step into a Ford dealer.
Look at Canada. The latest figures have GM in a slide. H/K is only a few hundred units behind them in 4th place. H/K and Chryco are the ones to watch. Their product mixes have appeal, amazingly Chryco/FIAT is executing well and None of the Japanese seem to have anything new for 2013. Mild refreshes at best. Ford is holding steady and GM seems to be lost in the wilderness. They shot their wad with the Cruze and it’s not holding up. I doubt the small Daewoos will be any better.
As I posted in another thread, Chrysler’s total in Canada is impressive, but in cars they are an also-ran, in 8th place. The product mix may need some work yet …
I think the Emperor’s New Clothes have been revealed. The interiors of Honda and Toyota aren’t up to US cars.
Additionally, in my experience, the quality of Honda isn’t what it was 20 years ago. More and more Korean cars
appear on the roads. I think it will be very hard to claw back sales for Japanese makers. Also there
Is no cost advantage for made in Japan iron.
You say that, but in an article from Feb 2nd on this very site we see that the Civic is the 3rd best selling car in January. So clearly, the American public doesn’t care at all about your experiences with the quality of Honda and are going to continue scooping them up, no matter how many better options there may be.
“I think the Emperor’s New Clothes have been revealed. The interiors of Honda and Toyota aren’t up to US cars.”
Statements like these always crack me up. For years, domestic fans used to stomp their feet and insist interior quality wasn’t important. Now that Detroit has stopped using lowest-bidder plastics and mouse fur upholstery, the interior is all that matters.
Can’t have it both ways. Based on the recent sales numbers, you guys were right the first time.
And even if modern US cars have better interiors than their japanese ‘competition’, they will still probably only steal sales from the Europeans, which used to have a monopoly on these ‘important’ features. Adn the US manufacturers have probably done right in attacking a part of the market where they at least have a chance at competing on reliability.
As another poster said, who made money? Regardless of marketshare who made money in the US and who made money world wide?
I see two possible scenarios.
One is that 2012 will be a real snap shot of market share trends. No market distortions due to natural disasters for the Japanese players. Detroit has their new comeback models. Korea keeps pushing ahead. No more excuses.
The other scenario is an OIL PRICE SHOCK from either Iran issues or Arab springs. That will totally change the game until oil prices stabilize again.
Yep, agree on the possible gas price spikes, and that’s one of the reasons I finally decided that 2012 was the year to move back into a more fuel efficient vehicle – and did a little sooner than expected due to my truck dying.
I expect that if they DO spike, that they could hit upwards of $5 a Gal, but I don’t foresee them dropping much below where they are now, ever again – if they drop this low in the future.
Unless Big 3 have to design their cars because of negatives reviews of the media like Toyota Camry freshen up and Honda’s response to negative Civic reviews and every other year redesign of Acura TL, Big 3 can rest on their laurels most of the year. Just tweak truck sales.
Besides money is not being made here but in developing countries like more cars sold in China than US. Mexico is the place to go to setup manufacturing anyways.
Why is ttac and others so narrowly focused?
The domestics will probably give up some of the share to Hyundai and some back to Toyota and Honda but it may not be as much as predicted. Domestic cars have been getting better for the past 5 years and Japanese brands have not. Adding to their problems is a very strong Yen which is making Japanese cars and parts more expensive (even if they assembled here). This will take some time to translate into market share but it may slow their rebound this year. Hyundai’s growth maybe be limited by capacity this year but in the medium term they are definitely the ones to watch when it comes to grabbing domestic market share.
Toyota and Honda are already showing gains since rebuilding after the tsunami. They should both show gains for the year, although those could come at the expense of margin, so that won’t be entirely good.
Hyundai and VW seem intent on taking on Honda and Toyota, and may also gain some share in the process.
The losers in the Honda-Toyota-Hyundai-VW wars will probably be marginal brands such as Mitsubishi and Mazda. They may take a hit to share, although they have little share to lose.
Ford seems intent of building margin with their retail sales, at the expense of retail volume. I would expect them to remain pretty flat overall, although fleet sales should remain high.
Chrysler may gain a bit, barring a surge in oil prices, with the Jeep brand vehicles and the new Dart.
I don’t see GM gaining for the year. Nothing in the current line up stands out as having much potential for sales gains beyond their current levels. They might slide a bit, although knowing GM, they’ll move the excess volume to fleet in order to maintain the sales numbers.
Pch101 – Just wanna mention that you’re probably my favorite commenter on TTAC. Rational, clear & concise, no bias. You ever think of contributing articles to car sites? (Or perhaps you already do!)
Since we already have troops in Japan and Korea I suggest Japan and Korea to join Union as 51st and 52nd states. Then HK and all Japanese companies become American companies and viola – America is a manufacturing superpower again! As another plus Democrats will become unbeatable since Koreans and Japanese always vote for Demos.