How Auto Industry Shake-up Affects You
Asian and European brands will recover better than U.S. brands.
June 09, 2009— -- General Motors shareholders--set to lose their value upon the company's impending delisting from the Dow Jones Industrial Average--aren't the only consumers facing serious change in the wake of the American auto industry shake-up.
How and why buyers purchase a car and the ways in which luxury brands market themselves to such consumers are shifting. What's more, used cars are becoming more tolerable.
Perhaps the biggest change on the global landscape is the shift in market share and sales from Detroit to Europe and Asia. According to forecasting from R.L. Polk, Volkswagen will soon follow Toyota's lead and pass GM this year to become the second-largest global automaker in the world. European and Asian brands are set to gain U.S. market share by more than 1% and at least 2%, respectively. European brands currently hold 8.5% of the market in the U.S.; Asian brands hold 47.2%. Detroit's market share in the U.S. is expected to drop from 48% in 2008 to 41% by 2012.
That strength comes from an astute sense of timing. While the domestic automakers focused in the 1990s and 2000s on pickup trucks and SUVs, European brands focused largely on extreme luxury and performance. Asian automakers developed affordable hybrid and economy vehicles and engineered clever payment protection plans that resonate well with current consumer sentiment.
Tim Longnecker, an automotive industry executive for global marketing firm Acxiom, says he expects an "enhanced level of competitiveness" to be one of the signatures of the U.S. auto market in the next year, not to mention one of GM's main challenges. Its plan? To focus on four core brands--Chevrolet, Cadillac, Buick and GMC--and reduce its workforce by 22%.
Up-and-Comers Make Their Move
The shuffle at the top also gives lesser-known brands space to shine in the eyes of American consumers. As of last month, Hyundai cars, Kia light trucks and Subaru light trucks were the only brands to increase sales (1.5%, 9.8% and 31.3%, respectively) and market share (up 2.3%, 1.5% and 0.9%) over 2008 year to date.
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