US car manufacturers from Detroit are losing market share to Asian competition

The companies from the former car stronghold of Detroit are more unsuccessful on the domestic market than ever before. Despite Trump's combustion policy, expensive gasoline is driving customers to the competition.

New York. At the end of July, Donald Trump celebrated at the General Motors test site near Detroit. With him on stage was CEO Mary Barra, the audience in the hall chanted “USA”. “We are building more car factories and more plants than ever before in the history of our country,” Trump said. Around two months later, the sales figures show a different picture.

According to manufacturer information and data from the US statistics agency BEA, the Detroit-based corporations GM, Ford and Stellantis together accounted for around 37 percent of the US new car market in the third quarter. That is about as low as in the summer of 2021, when delivery bottlenecks slowed sales. Market researcher Cox Automotive speaks of the lowest value since records began. However, the relegation has not yet been conclusively proven. The data from other competitors is still missing.

It's not the fault of the market: Americans continue to buy cars, but they are turning away from the Detroit companies. One reason for the weakness of traditional manufacturers is a turnaround in the US market: for a long time, US buyers mainly bought large combustion SUVs. But that is increasingly changing in view of rising fuel prices.

A gallon of gasoline recently cost an average of around $4.47 (the equivalent of around 1.04 euros per liter), significantly more than the year before. Many buyers are therefore increasingly turning to hybrids. Here in particular, the Detroit companies have a smaller offering than many Asian competitors.

Ford lost the most. The company sold almost 510,000 vehicles in the third quarter, 6.6 percent less than a year ago. GM had around 671,000 cars, a decrease of 5.5 percent. Stellantis at least maintained the previous year's level with just over 324,000 vehicles.

Now consumers are more likely to migrate to hybrids and sedans, says Charlie Chesbrough, senior economist at market researcher Cox Automotive. These are “segments in which Asian manufacturers have clear advantages”. The Detroit companies, on the other hand, tend to rely on classic combustion engines.

Asian brands accounted for more than half of the market for the second quarter in a row, Cox said. At Toyota, around 57 percent of the cars sold in the third quarter had a hybrid or electric drive, and at Hyundai, hybrids accounted for 28 percent of sales.

The US government has even relaxed the requirements for emissions and consumption of combustion engines. In February of this year, the Environmental Protection Agency (EPA) lifted federal limits on greenhouse gas emissions from cars and trucks. At the end of September, the Ministry of Transport also lowered the remaining consumption targets until the 2031 model year.

The new specifications for the 2031 model year only provide for a fleet average of around 35 instead of 49 miles per gallon, which translates into around 6.7 instead of 4.8 liters per 100 kilometers. According to a model calculation by the ministry, Americans will consume a total of 4.6 percent more gasoline by 2050 than under previous guidelines.

So more gasoline at a time when the conflict with Iran is putting pressure on the oil market. Since the fighting began, oil exports from the Middle East have fallen significantly, partly because traffic through the Strait of Hormuz is restricted.

According to data from the US Energy Agency EIA, a barrel of North Sea Brent cost an average of $91 in August, a good third more than a year earlier. Most recently, fuel prices in the USA were more than 40 percent higher than the previous year.

Ford was only just able to avoid a symbolic decline. Cox had expected the Hyundai Group to overtake the traditional American manufacturer in the third quarter. In the end, the South Koreans with their brands Hyundai, Kia and Genesis were less than 1,200 vehicles behind Ford, according to calculations by the business portal Quartz.

Trump primarily promotes domestic car manufacturers. On the day of his appearance in Milford in the summer, the White House highlighted the billions in investments by GM, Ford and Stellantis in a statement. About foreign competition in pickup trucks, Trump said: "They finished us off with trucks, and now we're finishing them off."

However, the figures are only a limited setback for Washington's industrial policy, as many of the Asian winners build in the USA. “Toyota, Hyundai and others are moving their production back to the USA,” Trump said in Milford. Hyundai operates plants in Alabama and Georgia and plans to invest a total of $26 billion in the USA by 2028.

The Detroit companies explain their performance in the third quarter differently. Ford refers to the planned phase-out of the compact SUV Escape and the Lincoln Corsair. Without the two models, sales remained practically stable. “Customers continue to choose our trucks, SUVs and performance models,” says Ford division boss Andrew Frick.

GM attributes the decline to the significantly smaller market for electric cars and discontinued models. Business is going very well, says North America boss Duncan Aldred.

At Stellantis, the Ram pick-up brand almost completely offset the decline at Jeep. The company has brought back the V8 engine in the Ram 1500. The model is making gains in a segment that, according to Cox, is actually shrinking this year: large pickup trucks for around $70,000. New car buyers are now wealthier and therefore perhaps less affected by price increases than other consumers, says Cox economist Chesbrough.

The Detroit companies cannot hope for quick relief. The US Energy Agency EIA expects the price of oil to remain at around $90 per barrel until the end of the year and only fall next year. Cox expects the shift in market share to continue throughout the rest of the year.