They also note that the upheavel of 2008 allowed some considerable changes to the heavily unionised part fo US production (GM, Ford, Chrysler) to put it on a more even playing field with the foreign owned sector of US production.
The 2008 crash allowed Detroit to push through changes that had long been blocked by unions and timid management. Capacity was cut drastically: Ford alone closed 17 factories and reduced employee numbers by over 40%. GM ditched brands such as Hummer and Saturn to focus on Chevrolet, Buick and Cadillac, while Ford got rid of all brands except Ford and Lincoln. Health care for company pensioners, long a millstone, was transferred to union-run trusts. New workers can now be hired at lower rates than those ramped up by the United Auto Workers during the boom years. Alan Mulally, Ford’s chief executive, reckons his company can compete on price with factories opened in weakly unionised southern states by Japanese, South Korean and German carmakers. Ford may have made as much as $10 billion in profit last year.
The Big Three have changed, but their home market has changed even more. GM may still be the market leader; Ford’s trusty F-150 pickup is still the bestselling vehicle. But Detroit no longer dominates its backyard. For the Big Three now read the Magnificent Seven. Toyota, Honda and Nissan have been joined by Hyundai and its sister brand Kia in a fragmented market where seven manufacturers each have more than 5% of the market (see chart). And an eighth is trying to join the club.The graphic below on US car sales shows that GM and Ford still lead, closely followed by Toyota, Honda, Chrysler and Nissan. The Koreans are making headway while Volkswagen and other European carmakers all see the US market as important but only make up at most 13 per cent.
One can only wonder what this left graphic will look like in 2020, with the entry of the Chinese into the market. The Chinese need to avoid the mistakes of Hyundai when it entered Western markets with low quality cars tarring later high quality models with the same brush. Despite doing well in all categories of service and quality for many years many people still see Hyundai as a 'cheap' model car. My mechanic told me when I was buying a new car "buy anything except a Korean car, they are hopeless". But according to quality surveys this doesn't seem to be the case.
After sales quality matters a lot with Toyota taking a big hit in recent years with several recalls battering its quality image.
It seems likely that the Chinese will dominate the lower cost segment of the market in coming years. Whether they will then easily be able to move up the quality ladder in subsequent years is more difficult to foretell. It is clear that Chinese authorities want to develop a strong car industry through acquisition of foreign companies, joint venture and increasingly local brands.
Getting cheap, efficient and long-running electric cars to market will also be a major battleground over the next 20 years and will probably be essential in the Chinese and Indian markets (as well as elsewhere in crowded developing countries.
Another problem as noted in another article in the Economist is over production:
The American rescues averted catastrophe, but they—along with continued European subsidies—have exacerbated the overcapacity that has dogged the sector for years. The car industry can produce 94m cars a year, against global demand of 64m. Unless that changes, it will never return to health.