The Road to Recovery: How the Big Three are Coming Back and Continues to Grow

The automotive industry as a whole, and specifically Detroit’s own Big Three, faced a catastrophic economic crash in the Great Recession of 2008 and 2009, and many people question whether the Big Three ever fully recovered. After FCA and GM received government bailouts and Ford pulled itself up by the bootstraps, have the Big Three actually gotten back to their pre- recession glory? What have these companies done to re- invigorate the industry in Detroit and ensure a future crash doesn’t plague the market again? This article aims to briefly cover some of the milestones the Big Three have reached since the industry crash in 2008-2009 and gauge the current and future health of the companies.

If you live in the Midwest, and especially in and around the city of Detroit, you have to care about the health of the automotive industry whether you like it or not. The Big Three, as well as many other R&D, supply and distribution companies within the auto industry, are headquartered in the Midwest, or have major interests and assets within that region. These companies have been in the area so long that nowhere else can compete with the systems they have in place, so they’re here to stay. In fact, Honda reports that one of their plants in Ohio has such an efficient manufacturing and distribution system that components only spend about 45 minutes in their facility from start to finish. A system like this can’t be easily moved or replaced elsewhere, and disruption would cost a lot of time, money and production numbers. In short, the auto industry is here to stay, and the economy in Detroit and Michigan as a whole depend on it. Now, on to a check-up of the Big Three.

Bouncing Back

Not long after the initial economic crash and subsequent bailouts, the Big Three were already starting to bounce back into place. In a 2011 article from Forbes, U.S. sales for GM and Chrysler were reported to have increased by 23% in January compared to the previous month. Ford had managed to see a 13% increase in sales within the same timeframe. The companies achieved these noteworthy sales increases by finding a niche to specialize in; GM saw a heightened demand for SUVs and crossovers, Chrysler satisfied an increased consumer desire for trucks, and Ford focused on smaller vehicles that boasted incredible fuel economies. Specifically, Chrysler saw a 38% increase in their truck sales from the recession to that point, and Ford saw a 35% increase in the sales of their cars and sedans.

The Big Three continued to see growth over the next couple years. In fact, in 2013 the Detroit automakers saw enough growth to start investing more in Chinese markets. GM was proud to announce they owned 16% of the Chinese automotive market in 2013, and they were investing in more dealers and different production models. At the time, the Big Three controlled about 45% of the total U.S. market. Although it still wasn’t the 51% they saw in the years before the recession, it was still an 8% increase from 2010.

A Rough Patch

Unfortunately, it’s not all good news with the Big Three. An article from August this year reports that all three of Detroit’s automakers reported losses this year. Due to an increase in the cost of parts and new tariffs, Ford reports a decrease of $1.1 billion compared to last year. FCA saw a 14% decrease in sales and GM saw a 13% decrease in the same time period. The automakers also are reporting negative impacts on sales caused by international disputes and political problems in some of their major markets. Luckily, if history is to repeat itself, the Big Three could see a turn-around in the coming years. Earlier this year Ford announced its plans to discontinue most of its cars and focus on producing SUVs, crossovers and trucks. This correlates with an increased demand for larger vehicles from consumers- vehicles like trucks and SUVs that are perceived to be safer, can fit the entire family plus cargo and boast superior fuel mileage compared to SUVs from a few years ago. With any luck, by filling this niche and once again and focusing specifically on the consumer’s wants and needs, the Big Three may be able to see increasing sales in the near future.

Conclusion

The Big Three and Detroit have been seeing a steady comeback from the Great Recession in 2008 and 2009. Although the beginning of 2018 wasn’t the best start in terms of sales, the automakers are focusing on trimming down their product lines and improving the models most desired by consumers. In the past, this helped the Big Three achieve some of their best sales years since the economic crash; Hopefully in the next couple years Detroit will see more record-breaking sales numbers as the Big Three perfect their production.

Holbrook Auto Parts has been a part of the automotive industry since its birth. Located in Detroit since before the I-75 freeway was paved, we take pride in providing Detroit and its manufacturers with the parts they need to stay On the Move.

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