While there is a contraction in the global automotive market, the US automobile market has become the new investment base of giant manufacturers with its high profit margins and demand for large vehicles. According to the Wall Street Journal, while the average price of a new car in the USA is approaching the $50,000 range, one in every five buyers is making monthly loan payments exceeding $1,000. This situation caused global automotive brands that wanted to increase their profitability to turn to the USA.
The more than 20 percent contraction in the Chinese market until September and the resulting idle production capacity, combined with the slowdown in demand in major markets such as Europe and Japan, increased the attractiveness of the US market even more. The prohibition of cheap Chinese-made electric vehicles with high tariffs and the Trump administration's relaxation of strict rules on electric vehicles create a significant competitive advantage for both domestic and foreign brands producing in the USA.
ASIAN GIANTS ARE INCREASING CAPACITY IN THE USA
Asian manufacturers who want to take advantage of the opportunities in the market are implementing investments worth billions of dollars. Toyota allocated $3.6 billion of its huge investment budget of $10 billion to the new factory it will establish to move the production of the mid-size pickup model Tacoma to the USA.
In addition to Honda, which will expand its manufacturing facility in Ohio, Hyundai also plans to introduce dozens of new or refreshed models to North America by 2030. Hyundai also states that it is at a disadvantage compared to its competitors in South Korea and Japan due to commercial agreements, and aims to get closer to Ford, which sits in third place in the US market, with its increasing investments.
Nissan, on the other hand, is preparing to revive its iconic SUV model Xterra and launch hybrid versions of its best-selling models in order to increase its market share from 6 percent to 7 percent. With this move, the company targets additional annual sales of 160 thousand units in the USA.
GERMAN MANUFACTURERS ARE ARRIVING WITH LARGE VEHICLES
High profit potential also attracts German automotive giants to the USA. Audi is establishing a giant $4 billion factory in Georgia where it will produce only large and upper segment SUV models. Mercedes-Benz and Volvo are also preparing to expand their production lines and product ranges in the USA. Volkswagen, on the other hand, aims to enter the pickup market, where competition is most intense and has been dominated by US giants for years; In this regard, it is claimed that it is negotiating a joint venture with Ford.
ADDITIONAL CAPACITY OF 1 MILLION BY 2030
The huge investment plans announced will create additional production capacity exceeding 1 million units annually in the USA by 2030. Although the average age of vehicles on US roads is 13 years old, indicating that renewal demand will remain strong, industry experts point out the risk of new factories remaining idle in the event of a possible decrease in demand.
In this intense competitive environment, US General Motors (GM) and Ford are also changing their strategies. While Ford is turning to more affordable models, including the electric pickup it calls "Fathom", in order to compete with its Chinese competitors; GM, on the other hand, focuses on new revenue streams such as software subscriptions, battery systems and defense industry projects. The company is also preparing to launch hybrid versions of its popular models.
