Detroit automakers doing well....sort of

 
The other day in the USA TODAY, a headline in the Money Section caught my eye and made me smile.  It’s been a long time since I’ve seen a headline in the newspaper proclaiming, “Detroit leads March auto sales.” 

As a dyed-in-the-wool domestic automaker defender – some say apologist – it gives me enormous pleasure to read the monthly sales figures out of Detroit and see that the Domestic Three (GM, Ford and Chrysler Group) are slowly but surely gaining sales and even respect.

I am a realist, however.   The improving Domestic Three automakers will never be a dominant force and become known as the BIG Three again.   Presently the best market share that GM, Ford and Chrysler Group could muster in March was 16.9 percent, 16.2 percent and 11.8 percent of U.S. sales respectively.

Back during my college days in the early 1960s, the leading auto news story was rather the U.S. Justice Department’s antitrust division would pursue its goal of breaking up GM because of the giant company’s overwhelming, monopolistic 60 percent vehicle share in the early 60s.  Apparently the government felt that dividing GM into two companies – one made up of Chevrolet and the other selling Pontiac, Olds, Buick and Cadillac – would give competitors Ford and Chrysler Corporation a more level playing field.

Well, as we know, the playing field got leveled all right, and it wasn’t the outcome of an antitrust suit but rather unexpected competition from imports; first from Europe, then from Asia later in the century.

It’s seems almost unimaginable when reflecting on it today that GM once briefly held over 60 percent of the U.S. market, followed by Ford’s typical 25 – 30 percent share and Chrysler’s 10 – 15 percent take.  I recall as a young man how easy it was to remember the size of each American automaker’s market share.  Take GM’s typical 50 percent figure, divide it by 2 to get Ford’s figure and divide again by 2 for Chrysler’s.

My, how times have changed.   Back in the day when the Big Three dominated, the U.S. auto-making triplets garnered almost 100 percent of the market.   Now, as sales figure from last month show, their total U.S. share amounts to a measly 44.7 percent.  My 50-25-12 sales formula of old doesn’t work any more – by a long shot.

Also showing just how different things are, Chrysler is now only a few percentage points behind Ford in market share and the Blue Oval brand is only a tick or two behind perennial sales leader GM. 

Not only did Chrysler survive the severe recession and emerge as a partner with Italy's Fiat, the company managed to revive its dated automotive lineup with a slew of freshly restyled and very successful products. None represented their efforts better than the mid-size 200, a revamp of the unloved Sebring, which was successfully introduced by rapper Eminem at the 2011 Super Bowl. 

From the sales figures, one could assume that Detroit is in one heap of trouble.  But sales share don’t tell the whole story.   A better barometer of company’s health is how profitable it is.   I’m please to report that the Domestic Three are now lean and mean money machines and the future looks pretty good indeed.

Following the hurtful economic implosion of 2008 – with GM and Chrysler emerging from bankruptcy – all of the automakers used the business meltdown to close under-used factories, shed a large number of workers and eliminate hundreds of millions of legacy costs that had been weighing them down for decades.

While the domestic automakers are only a shadow of their formal selves, they are financially healthy and record or near profits are the norm again.  Gone are costly incentives and over-production.  Now the companies wisely sell only what they build.   Too, after working hard to catch up, the quality of U.S.-made vehicles is equal to or maybe even better than those built by the foreign automakers.

The aforementioned USA TODAY article pointed out that the “Detroit automakers ruled the March sales charts, parlaying their truck and SUV expertise into solid gains while Asian rivals – except for Honda – lagged.”  I swelled with pride when I read that lead off statement.

USA TODAY’s auto writer ended his column by noting the following auto trends and I paraphrase.

- The strong uptick in pickup sales will benefit the U.S. automakers because they still dominate the full-size pickup market.   With the improving housing market resulting in more houses being built, homebuilders will be replacing pickups and that spells good news for Detroit.  It has been reported that automakers can earn up to $10,000 to $15,000 net profit on each truck sold!

- SUVs are still popular and those expensive models are cash cows for the Domestic Three as well.  GM recently freshened its three middle priced SUVs, the Chevy Traverse, GMC Acadia and Buick Enclave.  All three experienced robust sales increases in March.  Happily, GM will be replacing its full-size and popular Suburban, Tahoe and Yukon models later in the 2014 model year.  Ford’s Explorer had its best March since the current model was introduced in 2010.  Chrysler’s Dodge Durango/Jeep Grand Cherokee were also recently freshened and are gaining many new buyers.

- While Toyota, Nissan, Hyundai and Kia all experience either flat sales or declines, Honda managed a 9.4 percent increase in sales in March, thanks to brisk sales of its all-new Accord and CR-X and the freshened Civic.

So it is a good time to be a Detroit Three adherent.  The domestic automakers have not only dodged another economic bullet, but have emerged in pretty fine shape to face another day.  I couldn’t be happier.

  

Sports car enthusiasts are grateful that GM's bankruptcy troubles in 2009 didn't postpone too long the introduction of the 7th generation Chevy Corvette Stingray.  A huge crowd pleaser at every auto show, the Bow Tie division appears to have hit a home run and will offer a true world beater in the competitive sports car market, starting later this summer.

    

Ford weathered the Great Recession and now offers a line-up of winners including the Focus, Fusion and Explorer.  Needing a lot of work is the Blue Oval's luxury brand, the Lincoln.   Arriving now at dealerships - be it belatedly - is the all-new MKZ luxury sedan (shown).  Next up is the smartly styled MKX crossover based on the popular Ford Escape, introduced as a concept at the January Detroit auto show.