As expected early this 2012 year, automakers posted some very optimistic sales numbers for the United States marketplace for 2011. A place where consumers still love their cars, 2011 provided an excellent year for North American car fans. No other time in the North American auto industry has motorists been able to explore so much freedom and choice.
In only three years, the American auto industry has turned from forecasted shambles to a rosier, settled environment. Hitting Chrysler and General Motors in the most severe manner, no major auto company was truly immune to the economic troubles started in late 2008. Similar to reaction from the global banking and financial sector, it wasn’t until a key period where the public truly understood until bankruptcy papers were being filed.
The combination of troubled business models and customers losing access to money or car loans needed for purchases led to a disappointing start of the 2009 calendar year. Between seven major automakers selling vehicles in the United States (GM, Ford, Chrysler, Nissan, Honda, Toyota and Hyundai/Kia), auto sales amounted to 9,124,380 cars in all of 2009 (5,145,746 units lower than just two years prior). It was only through a United States government sponsored new car purchase program that the tides began to reverse. Known as “Cash for Clunkers,” motorists were able to trade in an old vehicle for a guaranteed trade-in credit.
After the 12 months of 2011, the same seven automakers have steadily performed better than the disastrous 2009 auto sales year. When the 2011 year ended, 10,987,403 were sold by the seven high volume automakers in the United States. Up 20.4 percent from 2009, the 2011 results continued the gains made after 2010 as some elements of the economy recuperated. Recognizing there is so many reasons to celebrate the improvement of the North American motor vehicle industry, the recent auto sale numbers indicating positive momentum from dismal 2009 figures have shown that the current car business is far from past glory.
The Detroit Three
For automakers Chrysler, Ford and General Motors, six years have seen once-proclaimed Big Three transform into the more modest moniker Detroit Three. In 2005, General Motors led United States car sales handsomely with 4,454,385 vehicles. Thanks to declining sales due to a changing economy and the doom of bankruptcy, 2009 vehicle sales dropped 53.2 percent for GM at just 2,084,492 units. Recovering with auto sales reaching 2,503,820 vehicles after 2011, the improvement comes with the loss of brands Pontiac and Hummer as well as the offloading of the now troubled Saab. The major source for General Motors’ traction in the United States automotive marketplace remains the Chevrolet division with 1,775,812 products sold last year. In 2011, the Chevrolet Cruze accounted for 231,732 of Chevrolet’s sales becoming a star for the auto industry.
In the case of Chrysler Group, a sales drop of 59.6 percent from 2005 to 2009 indicated a particularly volatile presence not seen since the 1979 bankruptcy. Over the past six years, Chrysler was separated from Daimler-Benz, sold to a private equity group, filed bankruptcy and was partly rescued by Italian auto giant Fiat Group. As Chrysler’s 1,369,114 unit sales recovery in 2011 is still almost one million vehicles short of 2005 levels. Chrysler will be relying on vehicles like the 2013 Dodge Dart to entice consumers while also attempting to lure commercial vehicle contracts with the Ram brand that should include at least one new work van in the near future.
While Ford Motor Company escaped the need for government assistance, the past six years has taken the Blue Oval car company on a wild ride. Selling 3,168,156 vehicles in 2005, Ford Motor Company posted 2,148,806 in 2011 sales. As Ford devoted their business back to cars, truck sales have taken a sizable hit. Despite a reduction in truck sales, the Ford F-150 and Ford Escape remain the top-selling vehicles by the carmaker in 2011. Losing Mercury and still struggling to bring Lincoln back to the luxury car forefront challenges Ford’s total recovery. A reborn Ford brand line-up that includes the 2013 Taurus and Fusion sedans plus the 2013 Escape crossover are future vanguards for healthy auto sales.
Some people (even the same ones who originally wished the US government to protect financial institutions with taxpayer dollars) wanted to allow General Motors and Chrysler to succumb to liquidation. Led first by former president George W Bush’s administration with emergency financial aid and later by Barack Obama’s White House directing the needed loans through GM and Chrysler’s bankruptcy, both car companies survived. Wanting to be relieved of the public taunting of phrases such as “Government Motors”, GM and Chrysler paid back the emergency assistance late in 2011. Regardless of political leaning or perhaps free of such constraints, government intervention of the two American auto companies stabilized what could have been a much harsher industry-wide events. What if many more autoworkers would be out of the job? What if the 100th year of Chevrolet had been marred with a giant production blackout continuing to this day? Those and other questions can be answered hypothetically.
US Auto Market for Import Brands
While the mighty Detroit Three restructured their business model, many would believe the Japanese automakers Honda and Toyota have finally entered prime position to eat drastically eat away at the market. However, just like the American based companies, the Japanese carmakers have been suffering similar sales slippage from 2005 levels. Toyota Motor Corporation 2011 auto sales of 1,644,661 units is 27 percent lower than the 2005 year (Toyota fell just short of Chrysler with yearlong sales in 2005). Honda’s United States auto sales have also been noticeably lower at 21.5 percent over 2005 numbers. Third place in US sales among the Japanese carmakers is Nissan. Suffering a drop of about 230,000 vehicles from 2005 to 2009, Nissan pulled an enviable achievement recovering all but around 34,000 units in US sales delivering 1,042,534 vehicles to customers during 2011.
Bucking the trend of the economic hardships felt by leading auto companies was the South Korea’s Hyundai/Kia. In 2009, Hyundai/Kia actually posted a modest growth. Still emerging as a trustworthy company in the United States in 2005, the South Korean entity of Hyundai Motor America and sister group Kia Motors were able to benefit from a slimmer market profile. Kia and Hyundai brands have steadily sailed forward in American auto sales that totalled 1,131,183 vehicles after the 2011 calendar year. Increasing annual sales by 400,000 cars and crossover vehicles 2005 through 2011, records a sensational 54.77 percent increase in sales.
The US Auto Sales Recovery to Date
Despite successes and disappointments, the results of these seven top auto companies (totalling 10,987,403 units in 2011) shows that recovery is not yet a full recuperation to previous years. The point of observing this six-year span of sales numbers in the United States paints a picture of a different time in the auto industry on a continent. From the buzz at the upcoming auto shows, with all the uncertainty that recalls, the latest in advanced propulsion technology, the lessons of the past pushes a stride to former glory or even to a greater future.
Information source: Chrysler Group, Ford Motor Company, General Motors, American Honda Motors, Hyundai Motor America, Kia Motors, Nissan Americas, Toyota Motor Corporation
Photo source: Chris Nagy, Chrysler Group