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Big Three Automobile Manufacturers

In the automotive industry of the United States of America, the term Big Three refers to the country's three largest automobile manufacturers: General Motors, Ford, and Fiat Chrysler (FCA US)[1]. Germany's Big Three are Volkswagen AG, Mercedes-Benz (Daimler AG) and BMW.[2]Japan's Big Three are Toyota, Nissan, and Honda.[3]France's Big Three are Renault, Peugeot and Citroën although the latter is part of the PSA Group along with Peugeot.

United States

General Motors, Ford Motor Company, and Fiat Chrysler Automobiles US are often referred to as the "Big Three", being the largest automakers in the United States. They were for a while the largest in the world, and two of them are still a mainstay in the top five. The Big Three are also distinguished not just by their size and geography, but also by their business model. All three have their headquarters in the Detroit area.[4] The majority of their operations are unionized with the United Auto Workers and Canadian Auto Workers.

Ford has held the position of second-ranked automaker for the past 56 years, being relegated to third in North American sales after being overtaken by Toyota in 2007. That year, Toyota produced more vehicles than GM although GM still outsold Toyota that year. At that time, GM had 77 consecutive calendar years of top sales. For the first quarter of 2008, Toyota finally overtook GM in sales.[5][6] In the North American market, the Detroit automakers retained the top three spots, though their market share is dwindling.[7] Honda passed Chrysler for the fourth spot in 2008 US sales.[8][9] Since then, because of Toyota's controversy surrounding their recent unintended acceleration recall, Toyota has fallen back to fourth place in sales, with Honda trailing in fifth place, allowing the Detroit Three to reclaim their Big Three title.

Union labor can result in higher labor costs than other multinational automakers, including those with plants in North America.[10] The 2005 Harbour Report estimated that Toyota's lead in labour productivity amounted to a cost advantage of $350 US to $500 US per vehicle over American manufacturers.[11] The UAW agreed to a two-tier wage in recent 2007 negotiations, something which the CAW has so far refused.[12]Delphi, which was spun off from GM in 1999, filed for Chapter 11 bankruptcy after the UAW refused to cut their wages and GM is expected to be liable for a $7 billion shortfall.[13][14][15]

In order to improve profits, the Detroit automakers made deals with unions to reduce wages while making pension and health care commitments. GM, for instance, at one time picked up the entire cost of funding health insurance premiums of its employees, their survivors and GM retirees, as the US did not have a universal health care system.[16] With most of these plans chronically underfunded in the late 1990s, the companies have tried to provide retirement packages to older workers, and made agreements with the UAW to transfer pension obligations to an independent trust.[17] In 2009, the CBC reported that the non-unionized Japanese automakers, with their younger American workforces and fewer retirees will continue to enjoy a cost advantage over the Big Three.[11]

Despite the history of their marques, many long-running cars have been discontinued or relegated to fleet sales,[18][19][20] as the Big Three shifted away resources from midsize and compact cars to lead the "SUV Craze". Since the late 1990s, over half of their profits have come from Sport utility vehicles, while they often could not break even on compact cars unless the buyer chose options. [21] Ron Harbour, in releasing the Oliver Wyman's 2008 Harbour Report, stated that many small "econoboxes" of the past acted as loss leaders, but were designed to bring customers to the brand in the hopes they would stay loyal and move up to more profitable models. The report estimated that an automaker needed to sell ten small cars to make the same profit as one big vehicle, and that they had to produce small and mid-size cars profitably to succeed, something that the Detroit three had trouble doing.[22]

SUV sales peaked in 1999 but have not returned to that level ever since, due to high gas prices. The Big Three have suffered from perceived inferior initial quality and reliability compared to their Japanese counterparts, which has been difficult to overcome. They have also been slow to bring new vehicles to the market, while the Japanese are also considered the leader at producing smaller, fuel-efficient cars.[11]

Falling sales and market share have resulted in the Big Three's plants operating below capacity (GM's plants were at 85% in November 2005, well below the plants of its Asian competitors), leading to production cuts, plant closures and layoffs. They have been relying heavily on considerable incentives and subsidized leases to sell vehicles. which was crucial to keeping the plants running, which in turn drove a significant portion of the Michigan economy.[23] These promotional strategies, including rebates, employee pricing and 0% financing, have boosted sales but have also cut into profits. More importantly such promotions drain the automaker's cash reserves in the near term while in the long run the company suffers the stigma of selling vehicles because of low price instead of technical merit. Automakers have since been trying to scale back on incentives and raise prices, while cutting production. The subprime mortgage crisis and high oil prices in 2008 resulting in the plummeting popularity of best-selling trucks and SUVs, perhaps forcing automakers to continue offering heavy incentives to help clear excess inventory.[11][24]

The Big Three sued California Governor Arnold Schwarzenegger to prevent a tailpipe emissions requirement. In response, Governor Schwarzenegger told the Big Three to "get off [their] butt".[25]

In 2008, with high oil prices and a declining US economy due to the subprime mortgage crisis, the Big Three are rethinking their strategy, idling or converting light truck plants to make small cars.[10][26][27][28] Due to the declining residual value of its vehicles, Chrysler has stopped offering leases on its vehicles.[29]

In 2009, General Motors and Chrysler filed for and emerged from Chapter 11 restructuring in the United States. General Motors of Canada did not file for bankruptcy. The United States and Canadian government control are reported as temporary. On June 10, 2009, Chrysler Group LLC emerged from a Chapter 11 reorganization bankruptcy and was sold to the Italian automaker Fiat.[30][31] On June 3, 2011, Fiat bought out the remaining U.S. Treasury's stake in Chrysler for $500 million, increasing its ownership of the automaker to 53%.[32] On January 21, 2014, Fiat bought out the remaining stake in Chrysler Group that it did not already hold from the United Auto Workers' employee medical benefit retirement trust.[33]

Due to the corporate structure of Fiat Chrysler Automobiles, which is no longer owned or controlled by US investors, some media sources now list Detroit as having a "Big Two" (GM and Ford) as opposed to a "Big Three".[34] Some media sources are now including Tesla in the "Big Three" because it is the third-largest US owned automobile manufacturer with a valuation ($34.16B), much higher than FCA ($9.05B).[35][36]

Japan

Japanese automakers Toyota, Nissan, and Honda, among many others, have long been considered the leaders at producing smaller, fuel-efficient cars.[11] Their vehicles were brought to the forefront, due to the 1973 oil crisis which had a major impact on the automotive industry. For instance, the Honda Civic was considered superior to American competitors such as the Chevrolet Vega and Ford Pinto. The Civic is the best-selling car in Canada for 12 years in a row.[11]

As well, the Nissan 240Z was introduced at a relatively low price compared to other foreign sports cars of the time (Jaguar, BMW, Porsche, etc.), while providing performance, reliability, and good looks. This broadened the image of Japanese car-makers beyond their econobox successes, as well as being credited as a catalyst for the import performance parts industry.

Before Honda unveiled Acura in 1986, Japanese automobiles exports were primarily economical in design and largely targeted at low-cost consumers. The Japanese big three created their luxury marques to challenge the established brands. Following Honda's lead, Toyota launched the Lexus name with the LS 400 which debuted at $38,000 in the U.S. (in some markets being priced against mid-sized six cylinder Mercedes-Benz and BMW models),[37] and was rated by Car and Driver magazine as better than both the $63,000 Mercedes-Benz W126 and the $55,000 BMW E32 in terms of ride, handling and performance.[38] It was generally regarded as a major shock to the European marques; BMW and Mercedes-Benz's U.S. sales figures dropped 29% and 19%, respectively, with the then-BMW chairman Eberhard von Kuenheim accusing Lexus of dumping in that market.[38] Nissan's Infiniti became a player on the luxury market mostly thanks to its popular Q45. The vehicle included a class-leading (at the time) 278 hp (207 kW) V8 engine, four wheel steering, the first active suspension system offered on a motor vehicle, and numerous interior luxury appointments. These made it competitive against the German imports like Audi, BMW and Mercedes-Benz, which by the time of Infiniti's release had overtaken Cadillac and Lincoln in dominating the luxury segment of the American market. In 1990, four years after the debut of the Legend and Integra, Acura introduced the NSX, a midship V6 powered, rear-wheel-drive sports car. The NSX, an acronym for "New Sports eXperimental", was billed as the first Japanese car capable of competing with Ferrari and Porsche. This vehicle served as a halo car for the Acura brand. The NSX was the world's first all-aluminum production car, and was also marketed and viewed by some as the "Everyday Supercar" thanks in part to its ease of use, quality and reliability, traits that were unheard of in the supercar segment at the time.[39]

The success of the Japanese automakers contributed to their American counterparts falling into a recession in the late 1970s. Unions and lobbyists in both North America and Europe put pressure on their government to restrict imports. In 1981, Japan agreed to Voluntary Export Restraints in order to preempt protectionism measures that the US may have taken, where it be tariffs or import quotas. Consequently, Japanese companies responded by investing heavily in US production facilities, as they were not subject to the VER. Unlike the plants of domestic automakers, Japanese plants are non-unionized (save for NUMMI), so they have lower wage expenses and do not face the risk of strikes.[40] The VER was lifted in 1994 upon agreement of all members of General Agreement on Tariffs and Trade (GATT).[41] Establishing US production facilities was also a significant step in improving public relations, along with philanthropy, lobbying efforts, and sharing technology.[42] Europe has still largely maintained its protectionism policies against Japanese cars, though their varies considerably.[38]

Toyota has always been by far Japan's largest automaker, and it recently overtook perennial world leader GM in both production and sales by early 2008. As the most aggressive of Japan's companies when it came to expanding into light trucks and luxury vehicles, this proved largely successful. Their high-end brand Lexus became the top-selling luxury marque worldwide in 2000, despite being only started up in 1989. Consequently, Toyota's stock price has traded at a much higher premium than other automakers.[43] Nissan regained its position on second place, financial difficulties in the late 1990s caused it to lose its place to Honda before. Nissan is Japan's second largest automaker and ranks sixth in the world, behind Toyota, GM, Volkswagen, Ford, and Hyundai. Suzuki, Mazda, and Mitsubishi are in a distant fourth, fifth, and sixth place compared to the Japanese Big Three.[44]

Toyota, Honda, and Nissan are all in the BusinessWeek magazine's The 100 Top Global Brands by dollar value, as ranked by leading brand consultancy Interbrand. The Toyota marque was valued at US$22.67 billion, ranking it ninth among all global brand names - automotive or non-automotive, edging out that of Mercedes-Benz.[45][46] 2010 end of year production figures from the International Organization of Motor Vehicle Manufacturers shows that Toyota holds the number 1 spot, Nissan number 6, and Honda number 7.[44]

Germany

The German trio Audi, Mercedes-Benz and BMW are often referred to as "Germany's Big Three",[47] although the actual major automobile manufacturers are the Volkswagen Group (producer of Audi), Daimler AG (producer of Mercedes-Benz), and BMW.

Other major German manufacturers are Opel and Ford-Werke, but are not considered as part of this grouping, although they are among the top selling brands in Europe - they are both foreign-owned (Opel is a subsidiary of Groupe PSA, whilst Ford Werke is a wholly owned subsidiary of Ford Motor Company), and are largely Germany based and carry out much of their research and development in the nation.

Volkswagen Group has long been the largest automaker in Europe. As of 2007 it edged out Ford to rank third in the world after General Motors and Toyota. It is also the parent group of Audi, Porsche, SEAT, ?koda, Bugatti, Lamborghini and Bentley.

Daimler AG holds major stakes in other automakers including Mitsubishi Fuso.

BMW also produces Mini branded vehicles, and has been the parent company of Rolls-Royce Motor Cars since 1998.

BMW, Mercedes-Benz and Audi make up about 80% of the global luxury market.[47]

France

Renault , Peugeot and Citroën are often referred to as France's Big Three although the latter is part of the PSA Group along with Peugeot.

France is home to two major automaking companies :

- PSA Group (owner of the Peugeot, Citroën, DS and Opel/Vauxhall brands) the 2nd-largest automaker in Europe and the 10th-largest of the world in 2016.

- Renault Group (owner of the Renault, Alpine, Dacia, Renault Samsung Motors brands and 43% of Nissan) the 3rd-largest automaker in Europe and the 10th-largest of the world in 2015.

France was a pioneer in the automotive industry and is the 11th-largest automobile manufacturer in the world by 2015 unit production and the third-largest in Europe (after Germany and Spain). It had consistently been the 4th-largest from the end of World War II up to 2000.

The France-based Renault Trucks is a major producer of commercial vehicles and is owned by Volvo AB. Both PSA and Renault produce a large number of vehicles outside France.

Notes

  1. ^ Bill Vlasic, Once Upon a Car: The Fall and Resurrection of America's Big Three Auto Makers--GM, Ford, and Fiat Chrysler, William Morrow, ISBN 0-06-208860-2
  2. ^ Speedmonkey. "Why the German Big Three could become the European Big Five". Oppositelock.kinja.com. Retrieved . 
  3. ^ Dvorak, Phred (2013-11-21). "Japan's Big Three Car Makers Show Different Corporate Styles - Japan Real Time - WSJ". Blogs.wsj.com. Retrieved . 
  4. ^ Palmer, Brian (2012-02-29). "Why are all the big American car companies based in Michigan?". Slate.com. Retrieved . 
  5. ^ Bunkley, Nick (2008-04-24). "G.M. Says Toyota Has Lead in Global Sales Race". The New York Times. Retrieved . 
  6. ^ "Toyota Claims World's Best-Selling Automaker Title". U.S. News Rankings & Reviews. 2008-04-24. Archived from the original on 29 October 2008. Retrieved . 
  7. ^ "Big Three automakers retain U.S. positions". MSNBC. 2005-01-04. Retrieved . 
  8. ^ Ohnsman, Alan; Mike Ramsey (2008-09-04). "Honda Passes Chrysler as Asia Brands Widen U.S. Share". BloomBerg.com. Retrieved . 
  9. ^ "'Big Three' automakers not so big". The Age. Melbourne. 2008-09-04. Retrieved . 
  10. ^ a b Van Praet, Nicolas (2008-06-04). "CAW Girds For War". Financial Post. Archived from the original on February 16, 2009. Retrieved . 
  11. ^ a b c d e f "The not-so-Big Three". CBC News. CBC. 2008-06-03. Archived from the original on 2 July 2008. Retrieved . 
  12. ^ "CAW says "no two-tier wages" in bargaining". CanadianDriver. 2008-03-27. Retrieved . 
  13. ^ Carty, Sharon (2007-03-02). "Delphi files Chapter 11 after union, GM talks break down". USA Today. Retrieved . 
  14. ^ Shepardson, David (2007-04-09). "Parting shot: Delphi exec Steve Miller blasts UAW in new book". Detroit News. Retrieved . 
  15. ^ Welch, David (2005-08-25). "Bankruptcy Is Delphi's Trump Card". BusinessWeek. Archived from the original on 7 October 2008. Retrieved . 
  16. ^ "German auto union head suggests GM cut US costs". Wsws.org. Retrieved . 
  17. ^ "UAW, General Motors Temporarily Table Health Care Trust Negotiations After Five-Day Deadlock on Issue". Kaiser Daily Health Policy Report. Kaisernetwork.org. 20 September 2007. Retrieved . 
  18. ^ "Storied Ford Taurus reaches end of line". Detroit News. 2006-10-23. Retrieved . 
  19. ^ Final Ford Taurus interview. ABC News. 2007-07-26. 
  20. ^ "So long, friend. Ford producing last Taurus next week". Autoblog. Retrieved . 
  21. ^ "Ford Taurus: Oedipus Wrecks". The Truth About Cars. Retrieved . 
  22. ^ ALISA PRIDDLE. "Chevrolet Volt and Aveo, Pontiac G3 Among Small Cars That Need Big Profits - Car News/Latest News & Reviews/Car Shopping/Hot Lists/Reviews/Car and Driver - Car And Driver". Caranddriver.com. Retrieved . 
  23. ^ John D. Stoll; Liz Rappaport & Matthew Dolan (July 30, 2008). "GM, Ford Scale Back Car Leases as Era Ends - WSJ.com". Wsj.com. Retrieved . 
  24. ^ "The discounting treadmill - BusinessWeek". Businessweek.com. Archived from the original on 14 September 2008. Retrieved . 
  25. ^ Arnold Schwarzenegger at LA Auto Show 60 Minutes Interview Energy Green - YouTube video
  26. ^ Krisher, Tom (2008-07-03). "Why Honda is growing as Detroit falls behind". San Francisco Chronicles. Retrieved . 
  27. ^ Isidore, Chris (2008-06-03). "GM: Trucks out, cars in". CNN Money. Archived from the original on 25 October 2008. Retrieved . 
  28. ^ White, Jerry (2000-05-27). "GM, Ford idle 1,365 workers--auto industry layoffs signal coming downturn in US economy". World Socialist Website. Archived from the original on 28 September 2008. Retrieved . 
  29. ^ Plummeting Resale Values Lead Chrysler to End Leases. 27 July 2008. Nick Bunkley. 26 July 2008.
  30. ^ "Court Approves Sale of Chrysler LLC Operations to New Company Formed with Fiat". News.prnewswire.com. Retrieved . 
  31. ^ "Fiat May Increase Chrysler Stake to 51% Before IPO". Bloomberg BusinessWeek. Archived from the original on January 6, 2011. Retrieved . 
  32. ^ Higgins, Tim; Welch, David (2011-06-03). "Fiat Buys some of U.S.'s Chrysler Stake, Right to UAW Shares". Business Week. Retrieved . 
  33. ^ Healey, James (2014-01-21). "Done deal: Fiat owns Chrysler". USA TODAY. Retrieved . 
  34. ^ Clothier, Mark (2014-10-12). "Fiat Chrysler Moves to NYSE in Challenge to Detroit Two". Bloomberg. 
  35. ^ Parker, Tim (1969-12-31). "The Sad Story Behind The Rumored Chrysler IPO - General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F)". Benzinga. Retrieved . 
  36. ^ Cafariello, Joseph (2014-10-02). "Comparing America's New Big 3 Automakers". Seeking Alpha. Retrieved . 
  37. ^ "Lexus LS 400, LS 430 and LS 460 Generations: Setting the Standard in the Most Comfortable Way Possible". Edmunds.com. 2003-03-13. Archived from the original on 1 April 2007. Retrieved . 
  38. ^ a b c Detroit, S.C. Gwynne (1990-09-17). "Zen and the Art of Automotive Maintenance". Time Magazine. Retrieved . 
  39. ^ The Legend was built on the Accord platform, and the Integra was built on the Civic platform. Acura History page > timeline
  40. ^ Nicolas Van Praet. "Caw Girds For War". Financialpost.com. Archived from the original on February 16, 2009. Retrieved . 
  41. ^ "PERC - The Property and Environment Research Center: Voluntary Export Restraints on Automobiles". Perc.org. Retrieved . 
  42. ^ "Why Toyota Is Afraid Of Being Number One". Aol.businessweek.com. Retrieved . 
  43. ^ "About | Press Release Articles". Lexus.com. Archived from the original on 10 December 2008. Retrieved . 
  44. ^ a b "World Motor Vehicle Production: World Ranking of Manufacturers Year 2010" (PDF). OICA. Retrieved . 
  45. ^ "Toyota Named World's Top Automotive Brand - AutoWeb News". Autoweb.com.au. Retrieved . 
  46. ^ "BusinessWeek Reports Interbrand's Annual Ranking of the 100 Top Global Brands in August 2nd Issue. Most Successful Companies on This Year's List Are Building Communities Around Their 'Cult Brands'". Prnewswire.com. Archived from the original on January 3, 2009. Retrieved . 
  47. ^ a b "Global Luxury Car Market Report 2017 - Research and Markets". Retrieved . 

See also


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