Sunday, January 29, 2023

Is the battle for market share over in the automotive sector?

  • Car makers have spent decades fighting each other for market share.
  • But the pandemic changed shopping habits and long-standing dynamics.
  • Companies like Ford and GM know they don’t need to dominate to make money.
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The pandemic unleashed the auto industry’s brutal old battle for market share, which was seen as a key to success before Covid.

General Motors (GM) and Ford have traditionally dominated the US auto market in this sector: GM held the top spot from 1931 until 2021, when Toyota took the crown. However, the firm reclaimed its title last year as it grew in key market segments such as trucks and SUVs, as well as electric vehicles.

Following the advent of COVID-19, automakers have been able to drive sales and profits even in a challenging pandemic market, which was filled with a battle of new and used cars and inventory.

This meant that they didn’t need as many cars to make money.

Now the auto market is re-evaluating its approach

“Sustained market share comes at a cost,” Kristin Dziczek, a policy adviser at the Federal Reserve Bank of Chicago, said at the company’s annual Auto Information Symposium in Detroit. “A huge cost.”

Wards principal analyst Haig Stoddard said the market share of several companies, including Ford, GM, Stellantis (parent company of Fiat Chrysler and French conglomerate PSA) and others, is unlikely to return to their pre-pandemic levels.

Certainly these companies are starting to get a healthy level of inventory on their dealer lots compared to the last two years. However, they have said that they will not go back to the 60-day supply of vehicles that used to be standard.

Lower volume may mean that they sell fewer vehicles and perhaps have a lower market share.

Falling auto market share doesn’t worry GM and Ford

However, longtime industry leaders Hyundai and Tesla (10.6% and 3.8%, respectively, in 2022, according to Kelley Blue Book) aren’t worried about their rising market share, and that could mean a drop in market share. La Battle is up.

Automakers such as GM and Ford remain profitable even with declining market share. They had 16.3% and 13.3% of the market respectively in 2022, with Toyota in the middle at 15.2%.

For context, GM once had half the US market, and Ford hovered at less than 30%.

Because consumers have indicated they will wait, and pay more, for vehicles that don’t necessarily have what they want, these auto companies know they have to fight discount car buyers or No need to encourage.

“GM and Ford, especially Stellantis too, prefer not to have sales at the end of the summer and even at the end of December,” Stoddard said at the symposium.

Companies should focus on the most profitable cars

As long as Ford and GM focus on profitable vehicles, it won’t necessarily be bad for them if they don’t bounce back, although they should still focus on vehicles that are profitable for them outside of popular trucks and SUVs. . United States, experts say.

For car buyers, this dynamic could affect those accustomed to certain annual sales, incentives and low-cost vehicles.

“There will be more focus on those high-reward types of vehicles,” Stoddard said. “The plan is, at least strategically, to stay away from that little stuff.”

now read: It’s becoming increasingly clear that Tesla is just another car company

Read also: Electric cars don’t solve the mobility problem, efficient public transport does

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Nation World News Desk
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