Could Japanese Automakers’ Troubles Mean the “Renaissance” of Detroit’s Big 3?

What a difference two years have made for the automotive industry. In 2009, Toyota was the undisputed leader in global sales and perceived value of its products. Meanwhile, General Motors Company, Chrysler Group LLC and Ford Motor Company were hanging on by a thread.

Less than two years after emerging from bankruptcy reorganization, GM is awash in profits and Chrysler Group has just reported its first profitable quarter in over five years. Ford, which declined the federal bailout offer, has also seen a dramatic turnaround in its fortunes.

Japanese automakers including Toyota, Honda and Nissan were already on a downward trajectory when they were dealt a devastating blow by the 8.9 earthquake and tsunami on March 11th. The resulting collapse in production has prevented them from fully capitalizing on the recovering U.S. economy.

U.S. automakers, on the other hand, are poised to reap huge rewards. AutoNation CEO Mike Jackson said, “The renaissance of the Detroit 3 is well on the way,” and predicts, “The profit results, product lineup and consumers’ opinion will allow the domestics to have market share growth for the second year in a row. We will see a remarkable recovery in market share as the domestics drive toward 50 percent.”

Last month, sales by Detroit’s Big 3 automakers accounted for 46.5 percent of the total market. Japanese automakers controlled 35.5 percent of the U.S. market in April, down 3.4 percent.

Japanese brand dealers are running low on inventory and Toyota Motor Corporation and Nissan Motor Company have both announced that they expect to lose money for at least the next six months.

Japan’s No. 2 automaker, Honda Motor Company, is also feeling the ongoing effects of the March earthquake. In a letter sent to dealers last week, American Honda executive vice president John Mendel warned, “Overall production volume will be at significantly reduced levels as we continue production adjustments through the summer months.”  He went on to encourage dealers by saying, “You have overcome significant challenges throughout the years and yet, in the long run, you have all prospered. We will work our way through this difficult time and we will all be stronger in the end.”

German and Korean automakers are also benefiting from Japanese automakers’ current troubles. BMW is now the top-selling luxury brand in the U.S. – a title held by Toyota’s Lexus brand for the last decade.

Hyundai and Kia have also seen dramatic increases in market share in the U.S. Hyundai sold 22,000 Elantras in the U.S. last month, outselling the popular Ford Fiesta by nearly 13,000 units.

Kia’s U.S. sales have increased 42 percent this year and Hyudai’s domestic sales have climbed 31 percent.

There are those who see the current picture as an anomaly that will be corrected in time. For his part, General Motors Company’s North America boss Mark Reuss intends to make the best of the opportunity for as long as it lasts. “What we need to do is really make sure that the quality, reliability and durability of our cars is an unexpected surprise for people,” he said. “It’s sort of a once-in-a-lifetime opportunity for us to get people into our cars and trucks and have them experience the excellence of the product that they may not have given us consideration for in the past.”

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