United States Autos Report Q3 2009

The US automotive industry has undergone some of the most radical change in its history during the year so far. Two of the three major domestic carmakers, General Motors (GM) and Chrysler, have filed for bankruptcy, with the latter emerging from its Chapter 11 status to be taken over by Italy's Fiat. GM, meanwhile, will be majority owned by the US government, which has injected a further US$30bn into the company, taking GM's total government funding to date to US$60bn. Meanwhile, GM's Hummer brand, symbolic of the oversized gas-guzzlers that contributed to the company's downfall, has been sold to a Chinese heavy industry firm Tengzhong Heavy Industrial Machinery, underlining the growing significance of the emerging markets in the sector.

In sales terms, the market shows no sign of a complete return to health any time soon, with BMI retaining its forecast for a 21% decline to 10.4mn units in 2009. However, monthly sales for May were up by 6% compared with April, according to seasonally adjusted data, which showed the annualised rate for sales climbing from 9.32mn to 9.91mn units. There is also good news on the production side, as Ford Motor and Toyota Motor have both announced increases in US output after working through excess inventories.

Investment in the development of electric vehicles (EVs) has also been boosted by tax breaks offered by the state of Michigan for automotive battery plants.

Although the US still ranks highly in BMI's Business Environment Ratings, this is largely due to its high scores for Country Structure and Country Risk as one of the more stable markets. Where the market falls down in relation to developing economies is its lack of growth potential. Vehicle ownership is much higher and the market more saturated as a result. The production side of the industry, meanwhile, comes under threat as carmakers find it cheaper to produce overseas. GM has already proposed importing foreign-built cars to the US as part of its restructuring strategy.

Despite its problems, GM was still the country's leading carmaker in unit sales terms for 5M09, although they were down by 41.8% year-on-year (y-o-y), giving it a market share of 19.6%. Toyota Motor, which also suffered a 39% drop in sales for the period, remains a threat in second with 16.2%, while Ford Motor, which has survived without government funding, takes third with 15.7%. Chrysler has fallen out of the top three as a 46% decline in sales took the company down to fifth below Honda Motor. A performance worth noting is that of Hyundai and affiliate Kia Motors. If their market shares are combined, the group overtakes Nissan for sixth place with 7.6%. Kia's sales have been boosted by a 10.6% increase in light truck sales over the period, suggesting that the segment is not entirely dead.