About a decade ago, Detroit’s big three, Ford Motor Company (NYSE:F) , General Motors Company (NYSE:GM) , and Chrysler, were in bad shape. Even while their business models where shaky, one thing was set in stone: Detroit owned the truck market. Not until 2006-2007, when Detroit’s profits were non-existent, did Toyota Motor Corporation (NYSE:TM) see an opportunity to swoop in and get its foot in the door of the immensely profitable U.S. truck market.
Toyota’s attempt would have had a chance to succeed had Detroit not been able to press the “reset” button to restructure with huge loans and government bailouts. Detroit’s second life, however, doesn’t mean Toyota has surrendered, as it prepares to unveil the new look Tundra at this week’s Chicago Auto Show. But just because Toyota hasn’t given up doesn’t mean it’s making any progress.
Let’s take a look at historic sales trends, how January shaped up, and what the future holds for the most profitable vehicle segment in modern history.
Now, one thing you see is that the Detroit automakers started to decline in 2006-2007 while the Tundra nearly doubled its sales. Then the financial crisis hit and everything was thrown out the window. Since the recession and the following resurgence of the U.S. auto market, Detroit’s Big Three took a sharp turn upward while Tundra sales have remained flat. When the dust settled after the recession, the Big Three emerged refocused and arguably in the best shape in over a decade.
Here’s how January sales wrapped up and two reasons why Detroit dominates the U.S. market and will continue to do so.
|Jan ’13 Unit Sales||%Chg from Jan ’12||Rank in Top 20 Vehicle Sales|
Ford still ranks as the top-selling vehicle in January. However when combining the Silverado and Sierra, GM barely tops Ford in January sales. Chrysler’s Ram pickup is gaining some momentum and holds its spot in the top 10. Toyota boasted impressive percentage increases in its conference call, but couldn’t break into the top 20 in vehicle sales. Let’s face it: The barrier to the U.S. truck market isn’t easily breached. It takes an immense amount of consumer knowledge and loyalty, which Detroit has on lockdown. Let’s take a better look at those two factors.
Knowledge is power
Consider this; Detroit has been making trucks since the 1930s. While Toyota had been in the U.S. market for some time, it didn’t branch out and make a full-size truck until the 1990s. That’s a huge gap of time where Detroit had figured out how generations of consumers used their vehicles and what they needed. It’s a priceless wealth of information, which will provide a competitive advantage for quite some time.