【正文】 y is faced with more petition, greater price transparency, rising customer expectations and quality improvements, making the pressure even greater on price. ? In the US, incentives like 0% financing or money back have kept volume up but have also pressured prices. While incentives are expensive, whenever automakers push prices back up their volumes collapse. BUSINESS INTELLIGENCE GROUP Global Automotive Industry is on a Gradual Slide ? Aside from product issues, The Big 3 have underfunded pension liabilities and healthcare benefits for retirees. Ford is losing cash and their bonds have been downgraded to junk status. ? If the US market continues to slide a largescale petitive restructuring could occur. European carmakers, like Fiat, which is laden with debt and production issues, could be purchased by other panies like GM (that owns 20%), or eventually be bought out by the state. ? The industry upsides for the Big 3: ? General Motors will continue to pursue its growth strategies in order to remain petitive. ? Daimler Chryslers is in the midst of its improved cost structure, allowing it to better pete with GM. ? Ford is spending a lot of money on capital expenditures. If the pany does not execute, it may be in crisis. ? The Big 3 products have higher quality than ever, although the perception of quality is not as high as it should be. Company Pension Healthcare General Motors $19,300 $51,000 Ford $7,300 $22,741 DaimlerChrysler 163。3,100 163。12,113 Pension and healthcare source: MSDW, Based on Mmgt. Discussions Total US Pension Fund and Healthcare Liability (in MM) BUSINESS INTELLIGENCE GROUP US Automotive Market: Slowing, but Still the Largest The US auto industry is the most important one to the global industry since there were registrations in the United States in 2020 (down by more than 3% from the all time high in 2020). The US market for light trucks and SUVs ( registrations in 2020) surpassed the car market in 2020 ( registrations). ? The low level of US fuel taxes boosted SUV sales far more than in any other country, although rising oil prices and environmental legislation could reduce sales. ? In 2020, roughly onefifth of the cars, light trucks and SUVs registered in the United States were foreign. California has the highest rate of passenger car purchases, accounting for roughly 13% of the total. ? The US industry, regardless of its high numbers, is currently saturated. The stock of passenger cars per head was the ninth largest in the world in 2020. With nearly 500 cars per 1000 of the population, the US has more cars per head than the United Kingdom, but slightly fewer than Italy and Germany. ? Car usage is extremely high in the United States over other countries in the world. The average person in the United States travels about 9,000 km per year, pared to 6,000 km in Western Europe and 4,000 km in Japan. BUSINESS INTELLIGENCE GROUP Big 3 Continue to Lose Market Share to Japan As the automotive industry gets more petitive, American consumers are buying more Japanese automobiles due to their reputation for quality and value. Toyota, Honda and Nissan increased their . sales and market share in the first half of 2020, while the Big Three manufacturers (GM, Ford, DaimlerChrysler) saw their sales decline despite spending heavily on incentives. This trend started in 1998, when domestic manufacturers started to lose nearly 10 points of share, and the Japanese gained nearly 5. ? Industrywide, car and lighttruck sales were down % through June, to . However, the three biggest Japanese manufacturers sold 100,000 more vehicles, and the domestic Big Three sold 200,000 fewer. ? Market share for all Japanese brands is at an alltime high of %, and domestic brands have shrunk to a historic low of %. ? The economic downturn has favored automakers like Toyota since consumers have bee more stingy and discriminating with their purchases, thus favoring quality and value, which are the major selling points for most Japanese automakers (versus, for example, luxury autos). ? The Japanese continue to grab bigger chunks of the market despite record spending on incentives by their domestic rivals. At the beginning of June, incentives for Chrysler, Ford and GM averaged $3,389 per vehicle, versus $1,062 for Japanese brands. Korean makes averaged $1,371 and European brands averaged $1,945. 0102030405060701996 2020D e tr o i t39。 sB i g 3J a p a n 39。 sB i g 3US Car/Truck Share 1996 vs. 2020 Source: The Economist, June 2020 BUSINESS INTELLIGENCE GROUP Big 3 Continue to Lose Market Share to Japan ? The Big 3‘s incentives (14% of sale prices) are likely unsustainable. Their dependence on increasingly large incentives to offset the lower resale value of US cars reflects perceived problems with their longterm quality and durability. For example, Toyota and GM cars can be virtually identical (sometimes made on the same assembly line as part of a GMToyota joint venture), but because GM sells in the usedcar market for 1520% less than Toyota,2GM routinely offers purchase incentives of $1,000 a car, four times more than Toyota‘s ? The Big 3 continue to concentrate their testing efforts on the defect rates of product ponents. However, this focus doesn‘t increase the likelihood of producing a more appealing car. For the Big 3, tests rate the car‘s ponents but with less emphasis on the performance of the entire car as measured by the desired attributes (such as quietness). Conversely, Japanese automakers are particularly effective at testing for the attributes that excite their target customers. The Honda Civic, for example, is tested extensively for three key attributes: fuel efficiency, initial product quality, and durability. The resulting vehicle is more than a collection of defectfree subsystems。 it