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Friday, August 1, 2014

Auto manufacturers are back in the driver's seat

In 2014, U.S. auto sales are forecast to exceed 16 million vehicles.  Crossovers, large vehicles and large trucks have led the way per the Wall Street Journal. In the wake of the  General Motors Company and Chrysler Group bankruptcies, bailouts and restructurings, both these vehicle manufacturers, in addition to Ford Motor Company, have seen their revenue streams increase substantially. Yet even with positive industry data, the U.S. auto industry has had to bounce back from significant commercial obstacles. One such example is the vast amount of auto recalls GM has made in the recent past.

Industry

In the first five months of 2014, monthly domestic retail auto sales have consistently been above 400 thousand units per month per the St. Louis Federal Reserve Bank. Year-over-year sales were 4.3% higher than the first half of 2013 according to Forbes. By comparison, in 2009, there were months were the number of units sold were under 300 thousand units. Toyota and General Motors are still the largest auto manufacturers in terms of global market share and sales of  electric vehicles have also been increasing indicating a trend toward fuel efficiency and a lower carbon footprint.

Electric vehicle sales
Electric vehicles produce lower carbon emissions and are more fuel efficient

Competition

In the U.S. pickup trucks are a money maker for auto producers per Forbes. Despite strong competition from international companies, global auto industry sales from GM, Ford and Chrysler has averaged 44.45 percent of total global auto manufacturing market share since 2008 per Motor Trend. In 2014, GM and Ford hold approximately 34.5% of global market share. Moreover, of the five largest auto manufacturers, both Toyota and Honda have lost .6 percent more market share than U.S. manufacturers since 2008. However, combined U.S. Japanese and U.S. market share shrank from 74.6 percent in 2008 to 64.8 percent in 2011.

Turnover

In terms of the transportation trends among Americans, people are driving their cars for longer and drivers are seeking alternatives methods of transportation. For example,  in 2011, scooter sales rose 11.8 percent according to the Motorcycle Industry Council, and Q1, 2012 motorcycle and scooter sales rose 8.8 percent per the L.A. Times. Additionally, the average length of time passenger cars are driven rose to 11.1 years in 2011, from 8.4 years in 1995 per R.L. Polk and Co.

Economy

Employment in the vehicle manufacturing industry has shrunk even though hiring has increased since 2009. For instance, according to the Bureau of Labor Statistics, in February 2000, 1.33 million workers were employed in the motor vehicle and parts industry, whereas by May 2012 the number was 770 thousand. Automotive industry statistics also indicate the non-automotive components of the economy are growing at a slower rate. This is because the declining U.S. automotive industry in terms of market share has only declined 1.43 percent as a portion of total retail sales between January 2008 and May 2012 per the Commerce Department.

Image license: Mariordo; CC BY-SA 3.0