Lang Aftermarket iReport: Detroit has lost U.S. market ‘forever’

“Just 25 years ago, the Detroit Three (then heralded as the Big Three) dominated the new vehicle market in the U.S., with a 75% sales share. All that has changed. The Detroit Three accounted for only 45% of 2018 new vehicle volume, and there are strong indications that U.S. nameplate sales share will sink even further in the next few years.

“Nameplate changes in the new vehicle market and the subsequent reshaping of the nameplate mix of vehicles in operation have significant implications for the aftermarket.”

— Jim Lang, publisher, Lang Aftermarket iReport

Sharp Market Share Decline

The Detroit Three captured 75% to 78% of new car volume each year between 1975 and 1995. Despite some ups and downs, the strength of the Detroit Three (GM, Ford, and Chrysler) remained relatively stable.

10 Years of Massive Change

The Detroit Three lost over one-quarter of its market share between 1995 and 2005, plunging from 75% to 56% of new car and light truck volume.

This downturn continued, with another one-fifth plunge in the Detroit Three’s market strength (from 57% to 45%) over the next five years.

Seven-Year Share Plateau

Foreign nameplates have averaged a dominant 55% of new car and light truck volume in the U.S. during the past seven years, while the Detroit Three plateaued at only 45% of the new light vehicle market.

40% Market Share Loss

The Detroit Three suffered a 40% market share loss between 1995 and 2018, falling from 75% to 45% of new car and light truck unit volume.

Their sales fell by a total of tens of millions of vehicles between 1995 and 2018 as a result of their sinking share. In 2018 alone, the Detroit Three sold a total of 7.7 million light vehicles, 3.7 million fewer than during 2000 when the new vehicle market was virtually the same size as last year.

One-Way Ticket

The shift in the nameplate share of new vehicle sales has been a one-way ticket. Not once, since the massive shift in new car sales share from domestic to foreign nameplates began in earnest, has the Detroit Three been able to push back the rising new vehicle share of foreign nameplates.

Big Aftermarket Impact

The dramatic nameplate shift in the new vehicle market and the resulting change in the nameplate mix of vehicles in operation (VIO) has had a significant impact on aftermarket product volume.

Lang Marketing estimates domestic nameplate aftermarket product sales have been reduced by a total of more than $100 billion as user-price between 1995 and 2018 as a result of the massive change in the mix of domestic and foreign nameplates on U.S. roads. Complete analysis of the changing domestic nameplate share of aftermarket product volume is provided in the just released 2020 Lang Aftermarket Annual.

Future Market Share Loss

Two decisions by the Detroit Three will further trim their market share during the next four years (2020 through 2023).

First, Ford, GM and Chrysler are virtually abandoning the passenger car market, with the Detroit Three cutting the number of car models they sell more than 80% by 2021.

Second, GM will discontinue manufacturing hybrid models in favor of fully electric vehicles. Hybrids currently account for nearly 0.4 million in annual U.S. sales.

With passenger cars representing approximately one-third of 2019 light vehicle sales in the U.S. and hybrids projected to represent a majority of electric vehicle sales in 2023, the abrupt shifts in the Detroit Three’s manufacturing mix could push their combine share of the new vehicle market to below 40% by 2023.

Six Major Takeaways

• The Detroit Three accounted for 75% to 78% of new vehicle volume each year between 1975 and 1995.
• Over one-quarter of the Detroit Three’s market share disappeared from 1995 to 2005 as it plunged from 75% to 56%.
• Detroit Three vehicle sales suffered a 40% loss of market share between 1995 and 2018.
• The Detroit Three lost a total of tens of millions in light vehicle unit sales from 1995 to 2018 as a result of the dramatic decline in annual share.
• Lang Marketing estimates domestic nameplate aftermarket product sales have been reduced by a total of more than $100 billion at user-price from 1995 to 2018 as a result of the changing VIO mix of domestic and foreign nameplates. This loss by domestic nameplates has been more than counterbalanced by the massive aftermarket product gain of foreign nameplate light vehicles.
• Lang Marketing projects the Detroit Three’s share of 2023 new vehicle volume in the U.S. could fall below 40% as a result of the dramatic reduction of car models that it will offer and GM’s decision to discontinue hybrid models in favor of fully electric vehicles.

Copyright 2019 by Lang Marketing Resources, Inc.

NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.