Market Forces: No Let Up

Sometimes there is a debate as to what an “American car” really is. After all, chances are the Camry you see driving by was built in Kentucky, and the Ford Fusion driving by was made in Mexico. So based on nameplates, you might be surprised at how the domestics are doing in the domestic market.


One of the things that doesn’t necessarily come to mind when one thinks about the sales numbers reported each month is the extent to which the market—still growing, mind you, spotty declines notwithstanding: when the numbers are black, we should celebrate them even if they’re single digit because financing isn’t as easy to get as it once was (arguably a good thing because what’s the point of selling a car or truck to someone who can’t afford a Schwinn?) and gas prices, as you’ve undoubtedly noticed, are climbing, averaging about $1/gallon more than had been last year—is the market share of the domestics versus the shares of the competition.

You may be surprised at how the market pie is sliced.

Autodata Corp. (motorintelligence.com), which puts out what I believe to be definitive stats, breaks it down as “Domestic Nameplates,” “Asian Nameplates,” and “European Nameplates.”  Certainly a reasonable separation, and which avoids the sort of quibbling that one might raise (e.g., the Honda Accord is built in Ohio; the Ford Fusion is built in Mexico).

For the calendar year through May, this is what Autodata reported:

  • Domestic Nameplates: 2,438,993; 46.2% of the market
  • Asian Nameplates: 2,384,348; 45.2% of the market
  • European Nameplates: 455,977; 8.6% of the market

A couple of things to note.  One is that if you add up the non-domestic nameplates you’ll see that the total is greater than the number of vehicles sold by the domestics.  The point here is that even though the domestics are doing well—compared with last year, GM, Ford, and especially Chrysler are gaining traction—and even though Toyota continues to take hard knocks and Honda is slipping—no one at the Domestics can afford to underestimate the level of competition that is out there, be it from Asia or Europe.  Nissan, Hyundai, Kia, Volkswagen, BMW. . .these and others are not taking anything for granted, and they’re moving in a forward direction.

The other point, something that may sort of be like the color of paint on the wall behind you (you know that it is painted a particular color, but familiarity breeds forgetfulness) is that the market is a global one, and it will continue to be so.  Consider the fact that more than half of the domestic market is not held by the Domestic Nameplates.  Does anyone think that the people in Stuttgart or Seoul or Tokyo or—perhaps sooner than some might like to think—Beijing or Shanghai are going to say, “Gee, do you know what?  We’ve probably sold enough cars in the U.S.  Let’s sell them elsewhere”?

Certainly not.

Yes, the U.S. market is coming back.  Yes, this is an absolutely good thing for OEMs and suppliers who make things in the U.S.

But again, consider things like this: On May 24, Volkswagen inaugurated its $1-billion assembly plant in Chattanooga, Tennessee, where it will be building the new Passat.  The plant has a capacity of 150,000 vehicles per year.  VW is on record stating that the VW Group will sell a million units in the U.S. by 2018.  And when Volkswagen of America announced its sales numbers for May, it pointed out that the 30,100 units moved were more than any month since August 2003 (and it is up 19% overall, year-to-date).

Think it is going to get any easier?  Think again.

But then again, no one is in this industry because it’s easy.  And anyone who thought that it was is now long gone.