Big Three market share steadily running toward empty
The Big Three's dwindling market share is no secret. We've heard about it for years. But The Plain Dealer in Cleveland took a closer look at the numbers and was surprised at just how rapidly domestic automakers have been overtaken. For example, GM, Ford and Chrysler shared 74 percent of U.S. auto sales in 1997. Now, ten years later, they find themselves squabbling over just 57 percent. The reasons for the decline are as obvious and well known as the loss in market share. The Big Three failed to innovate, failed to create quality products that customers wanted and didn't plan far enough into the future to protect sales. We know all that. The Plain Dealer spoke to several analysts, though, who pointed to some very specific examples of where market share was basically frittered away.
In 1996, the Ford Taurus sold 400,000 cars to be the best selling car in America. In 1997, Toyota took the top spot. In a brilliant plan to overcome Toyota's onslaught, Ford chose not to significantly change the Taurus for another 10 years. Which, as you might expect, did little to entice customers into the showroom.
The newspaper also took a look at where the market share erosion occurred, and weren't all that surprised to see the decline began on the coasts. An interactive map on the paper's Web site shows California, Oregon, Massechusets and New York as being the only states in 1997 where domestics had less than 70 percent of sales. But watch the map change in three-year increments and you can clearly see the imports creeping into the heartland.
Looking to the future, the story says all might not be lost. Analysts are quoted as saying U.S. automakers must simply do two things to survive: Build great cars, and wait for customers to notice.
Reader Comments (Page 1 of 2)
Stéphane Dumas 5:41PM (10/23/2007)
A bit intriguing to see this article posted around the same moment then Toyota get a bumpy road with CR and the Tundra
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Peter 5:44PM (10/23/2007)
They post these every month. One has nothing to do with the other.
Desertnate 4:59PM (11/17/2007)
The trend is not focused on one make or model. That is a a very short sighted view on the report. It isn't about Toyota and a redesigned model that's hardly been in the market for a year. The problem was the big three didn't inovate fast enough, missed key opportunities, and were hammered when gas prices soared because they put all their efforts into trucks/SUV's.
The report didn't even get into the quality issues of the past, which by now is a dead horse. That in itself has put a black cloud over thier reputations that is hard to remove, and will continue to eat at them as entire generations of new drivers come into the market having little to no contact with American cars because their parents long gave up on US products. I am one of those disenfranchised parents. Twice now I have turned to US products when I needed inexpensive, reliable transportation. What I got both times were nothing but headaches and misery. My import experiences were very positive and the cars were far more entertaining.
Lithous 10:14PM (10/23/2007)
Peter thinks this is the monthly sales report just because of the image at the top.
No, this is not a typical post every month.
It is Tutors brain-washedness. They failed to innovate? The problem is that GM has been too innovative, too early.
How may horse power did the EV-1 have vs, say the RAV4 electric?
Onstar anyone? Both lexus and acura have licensed it and it is something that a Cobalt can get.
Hydrogen fuel cells. Hmm, didn't the Equinox go like 300 or 400 miles without refueling or something.
Oh, wait, the dual mode hybrid system that GM doesn't have to license jack crap from Toyota that has been on buses in America for years.
Night vision on Cadillacs.
Cylinder deactivation attempts early on before microprocessors could be used effectively.
GM's solar powered cars did well in competitions for years.
The skateboard platform.
It is brain washed clueless Americans that can't go beyond one level deep in thought that don't understand good choices from bad choices.
Losing 450K or more jobs simply because no one taught them in school that 32K Toyota jobs appearing at the loss of 450K GM jobs is not "creation" of jobs.
But whatever. We all don't "know" what you think you know Tutor.
psarhjinian 10:31PM (10/23/2007)
How many of those GM innovations actually made mass production? Other than the EV-1 (which barely qualifies as a regular, production vehicle) and the Corvette, GM hasn't put anything even remotely class-redefining in decades. Ford perhaps (the Focus) and Chrysler certainly (the minivan, the LH cars, the PT, the LX cars, the Viper) but GM shovelled mediocrity from about 1975 onwards.
At the same time GM was showing the HyWire, Toyota was _selling_ the first-gen Prius at a loss and in volume all over the world. What was GM selling--actually selling in volume-- that was even remotely as important? This was hip-deep in "The Cavalier Company" days.
I'm sorry, but GM deserves their current state. I'll make a case for Chrysler deserving better (excellent production packages, miserable QA and arrogant management) or Ford (brilliant chassis work, no money to follow through) but GM was in the business of making piss-poor appliances on wheels for a quarter century. The few bright spots (Saturn) were knifed on the cost-cutting altar.
Lithous 11:45PM (10/24/2007)
"How many of those GM innovations actually made mass production?"
Most of them. I forgot to mention plastic body panels on economy cars - unheard of.
"Other than the EV-1 (which barely qualifies as a regular, production vehicle) and the Corvette, GM hasn't put anything even remotely class-redefining in decades."
Possibly the Suburban. But when the Series hybrid comes out that will be. Anything on the skateboard platform. So, what have you done that is class-redefining in any genre ever? Toyota is just class-redefining all the time aren't they? The Taurus redefined the Camry and Accord segment in the 1980s so they can't claim that. Wait, the original FJ, no that was a Jeep copy. You're right though, Toyota and Honda keep redefining the small cars and SUVs America wants (by making them BIGGER AND BIGGER every year)
"Ford perhaps (the Focus) and Chrysler certainly (the minivan, the LH cars, the PT, the LX cars, the Viper) but GM shovelled mediocrity from about 1975 onwards."
How about the SSR, the G6 hardtop convertible, the Aurora was 50 times more stylish than any Honda/Toyota at the time. The Camaro when it came out in 93 was basically a 4 seat Corvette. The GNX. Envoy XUV. Fiero (OK ties with MR2). Cutlas Supreme Convertible. Saturns with plastic body panels. Cars from 1975 on, right? If you are going to present specialty cars like the Viper then that opens it up. My moms 2000 Buick Le Sabre screams beautiful COMPARED to the Camry of the time and with the rebates of $3K back that put it in the V6 Camry category.
"At the same time GM was showing the HyWire, Toyota was _selling_ the first-gen Prius at a loss and in volume all over the world."
The HyWire is much better than the Prius from a design point of view. Most of the time better designs (HyWire) come after worse (Prius) designs, it happens that way.
"What was GM selling--actually selling in volume-- that was even remotely as important?"
Important? The Prius is not an end point but a way point in the world of auto design. Asbestos tile were probably considered important at one time too but it was short lived. The Prius won't seem very important in less than 10 years. Because it is really a gas engined car with some assist. Not that important when a real viable gas alternative is developed.
"The few bright spots (Saturn) were knifed on the cost-cutting altar."
Yeah, because Saturn never made GM money for more than 15 years and cost multi-billions. That happens when you put out a reliable, innovative car like the Saturns (lost foam casting, plastic body panels, steel space frame, no haggle, with a return policy out lasting state mandated buyers remorse buy many days, etc., etc.) and people can't see past the K-Car looking (at the time), rust bucket Camry. Yes, GM lost lots of money and cut cost though they didn't cut the $600 or more cost per car plastic body panels until recently.
Don 1:54PM (10/26/2007)
Intriguing or not, it's true...and we needed this kick in the pants instead of resting on our "America's Great!" laurels.
UH2L 5:49PM (10/23/2007)
Scary chart. It's like the reverse of the obesity epidemic.
Don't forget how the number of serious competitors also increased. Hyundai and KIA were jokes back in 1997 but now they command serious volume. And fleet sales declined heavily for the Big 3. No excuses, just facts.
However, with respect to this statement, "The Big Three failed to innovate, failed to create quality products that customers wanted and didn't plan far enough into the future to protect sales.", I would disagree with the first part because the quality gap decreased during this time. The second part is iffy. Customers did want the types of products that the Big 3 sold, but their execution was inconsistent. The third part is spot on. Ford and GM at least have no excuse for not having had full product portfolios to protect for market shifts. They and Chrysler put too much stock in trucks.
UH2L
http://www.thingsivenoticed.com
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Reality Check 5:54PM (10/23/2007)
Did you get paid to write this? We get the idea, you write the same thing every other month..... When you have 3 American companies and 20 imports you will loose market share, I hope you still live at home with all that insight........................
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jthorner 5:54PM (10/23/2007)
The 1997 Taurus sales disaster was a consequence of a dismal redesign Ford released that year. Rather than fix the screw up they simply walked away from the table.
Can you imagine what would happen if Toyota did a Camry redesign and that new version tanked in sales? Sitting on their hands wouldn't happen.
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Brett- BMW Advocate 5:56PM (10/23/2007)
The BIG THREE went as long as they could on the rubbish they had, squeezing as much money as possible out of their dated technology. I reckon now that new innovations and alliances will occur and at least two of the big three, Ford and GM, will prosper.
So for the next 10 years they may climb back to the top only to plateau and then decline, which once again, they will pick up and do the same for hundreds of years to come... if the world is still around.
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nom de plume 6:19PM (10/23/2007)
Who cares? Only those stupid enough to buy their products and those big three employees who have not found new jobs. Such is capitalism!
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Matt 10:12PM (10/23/2007)
Your name has a French connotation. Figures.
Louis Duran 11:15PM (10/23/2007)
I think it has more than a French connotation. It IS in French. Not sure if that "figures" though.
Adrian 6:30PM (11/07/2007)
GM is on the right track with cars like the new CTS, Crossovers, Solstice/Sky, Malibu, and G8, yes?
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Russell 6:48PM (10/23/2007)
Notice the 'other' category increasing substantially over the same time period? I'd guess a lot of that is Hyundai/Kia, and despite all of the press Toyota gets for taking sales away from the big 3, I think the Korean twins are even more responsible for the decline.
I think the domestic companies largely adopted a strategy that effectively ceded most of the upper-medium part of the market to the imports who generally charged a higher price anyway. By playing the value card, they could get away with not having to compete directly with the Japanese on quality and keep volumes up. However, the Koreans show up and quickly become the value leader. Now Joe Average Customer is faced with three choices:
1) Buy Japanese and pay a little more for quality, or
2) Buy Korean and get the most bang for the buck, or
3) Buy American because you or your parents always used to
Obviously there are exceptions to this scenario, and things are quickly changing with GMs resurgence, Toyota's recent CR ratings, and Hyundai producing $30k+ vehicles, but I think the Koreans don't get enough credit for delivering a severe if not knockout blow to the domestic manufacturers.
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zakudomgoog 6:50PM (10/23/2007)
"failed to innovate"...surely you jest. what about the pontiac aztec huh?
hahahahahahahahahahahaha!!!
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Marvelous 6:55PM (10/23/2007)
Here my theory on the Big Three's market share lost, we all know they had inferior cars for a while, but I think the biggest factor was the generation gap. When Fast and the Furious caught, I was 19, just joined the military and I was also looking for a car. I wanted perfomance and Mustangs and Camaro werent cutting it. So what can get me in the game. RSX, Civc , Eclipse, Impreza..etc. What did The Big Three have to offer hmmmn Cavalier, Neon, Focus(Good), and nothing else. They couldnt get anything out quick enought to get in on the game and today with high gas prices, everything in their portfolio is affected not just small cars.
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volvfan88 7:25PM (10/23/2007)
This is so true, my opinion is that the American big 3 have so many resources at their hands that they really and truly dont care at times. It is clear to see that they suffered from poor build quality, but they are trying to overcome that. What really needs to be differentiated with these companies is the products that they offer. For instance, GM has the remarkable ability to build one SUV/truck and then put a Saturn/Cadillac/Chevy/Saab/and Pontiac badge on it and expect the public to ust buy the exact same vehicle at different price brackets. That is one of the problems with GM. Ford needs to work on something, be it product type, marketing, or something. Ford makes some very excellent vehicles, the Explorer, F-150, Fusion, Edge, Five Hundred/Taurus, and Focus hatch. For some strange reason Ford sales are just still struggling, and Ford does a great job on exploiting and differentiating different vehicles across Jag, Rover, Volvo, Mazda, Lincoln, and Ford. Ford needs to pay complete attention to the domestic market to make sure they see any gaps that need to be filled inorder to bing back up sales.
Chrysler is like the lowest of the three, but in my opinion has some of the best products. They do the best job of differentiating amongst the group brands. They have excellent vehicles. merceds helped them out immensly before the majority divestment from the alliance. Chrysler has one of the biggest question marks as to why they are failing. Great products, quality, safety, and variety.
At the end of all of this it just sames that many Americans today prefer the overseas vehicles especially from Europe, and Japan ( Korea too). But in Europe American vehicles are few and far apart.
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Rususeruru 8:34PM (10/23/2007)
You pointed out GM marketing the same vehicle with a different badge but this isn't unique to GM by any means. Ford, Lincoln and Mercury products are often the same at different (occasionally nonsensical) price points. Generally speaking a the pricing goes Ford < Mercury < Lincoln for the same vehicle much like Chevy Truck < GM Truck even similarly loaded. And if you can't see it in the Ford produced SUVs certainly you can in the Ranger and Mazda B-Series mid-size trucks.