Big Three (automobile manufacturers)

In the automotive industry, the term Big Three is used for a country's three largest motor vehicle manufacturers, especially indicating companies that sell under multiple brand names.

The term originated in the United States, where General Motors was the first to form a large, multi-brand, motor-vehicle corporation (in the 1910s), followed by Ford Motor Company, and the Chrysler Corporation, all before World War II.

The term "Big Three" has since been sometimes used to refer to the following automakers:

United States

General Motors, Ford Motor Company, and Chrysler Stellantis North America are often referred to as the "Big Three", being the largest automakers in the United States. They were for a while the three largest in the world, with GM and Ford remaining as mainstays in the top five. The Big Three are also distinguished not just by their size and geography, but also by their business model. All three have their headquarters in the Detroit area;[3] the majority of their operations are unionized with the United Auto Workers and Unifor.

Ford has held the position of second-ranked automaker for the past 56 years, being relegated to third in North American sales after being overtaken by Toyota in 2007. That year, Toyota produced more vehicles than GM although GM still outsold Toyota. At that time, GM had 77 consecutive calendar years of top sales. For the first quarter of 2008, Toyota finally overtook GM in sales.[4][5] In their domestic American market, the major Detroit automakers have consistently retained the top three spots.[6] Honda passed Chrysler for the fourth spot in 2008 US sales.[7][8] Since then, because of Toyota's controversy surrounding their recent unintended acceleration recall, Toyota has fallen back to fourth place in sales , with Honda trailing in fifth place , allowing the Detroit Three to reclaim their Big Three title. Toyota overtook GM as the best selling automaker in the United States in 2021, marking the first time an American automaker has not led U.S. auto sales for a full year.

Union labor can result in higher labor costs than other multinational automakers, including those with plants in North America.[9] The 2005 Harbour Report estimated that Toyota's lead in labor productivity amounted to a cost advantage of $350 US to $500 US per vehicle over American manufacturers.[10] The UAW agreed to a two-tier wage in recent 2007 negotiations, something which the CAW has so far refused.[11] Delphi, which was spun off from GM in 1999, filed for Chapter 11 bankruptcy after the UAW refused to cut their wages and GM is expected to be liable for a $7 billion shortfall.[12][13][14]

In order to improve profits, the Detroit automakers made deals with unions to reduce wages while making pension and health care commitments. GM, for instance, at one time picked up the entire cost of funding health insurance premiums of its employees, their survivors and GM retirees, as the US did not have a universal health care system.[15] With most of these plans underfunded in the late 1990s, the companies offered and provided retirement packages to its elder senior workers, and made agreements with the UAW to transfer pension obligations to an independent trust.[16] In 2009, the CBC reported that the non-unionized Japanese automakers, with their younger American workforces, lower wages and fewer retirees would continue to enjoy a cost advantage over the Big Three.[10]

Despite the history of their marques, several long-running cars have been discontinued or relegated to fleet sales,[17][18][19] as the Big Three shifted away resources from midsize and compact cars to lead the "SUV Craze". Since the late 1990s, over half of their profits have come from Sport utility vehicles, while they often could not break even on compact cars unless the buyer chose options.[20] Ron Harbour, in releasing the Oliver Wyman’s 2008 Harbour Report, stated that many small “econoboxes” of the past acted as loss leaders, but were designed to bring customers to the brand in the hopes they would stay loyal and move up to more profitable models. The report estimated that an automaker needed to sell ten small cars to make the same profit as one big vehicle, and that they had to produce small and mid-size cars profitably to succeed, something that the Detroit three had trouble doing.[21]

Falling sales and market share at times have resulted in the Big Three's plants operating below capacity leading to production cuts, plant reductions, closures and layoffs. Market incentives and subsidized leases were implemented to help sales which was crucial to keeping the plants operating at capacity, which in turn drove a significant portion of the Michigan economy.[22] These promotional strategies, including rebates, employee pricing and 0% financing, have boosted sales but have also cut into profits. More importantly such promotions drain the automaker's cash reserves in the near term while in the long run the company suffers the stigma of selling vehicles because of low price instead of technical merit. Automakers have since been reduced and scaled back on incentives and raise prices, while cutting production. The subprime mortgage crisis and inflated higher crude prices in 2008 resulted in the plummeting popularity of best-selling trucks and SUVs, led automakers to continue offering heavy incentives to help clear excess inventory.[10][23]

The Big Three filed a lawsuit against California Governor Arnold Schwarzenegger because of earmarked impending tailpipe emissions requirement. In response, Governor Schwarzenegger told the Big Three to "get off [their] butt".[24]

In 2008, with relatively high energy prices, a stagnant and declining economy and an overall tense market situation due to the subprime mortgage crisis, the Big Three were re-strategizing and adapting their operations idling or converting light truck plants to passenger vehicle cars.[9][25][26][27] Due to the declining residual value of its vehicles, Chrysler has stopped offering leases on its vehicles.[28]

In 2009, General Motors and Chrysler filed for and eventually successfully emerged from Chapter 11 restructuring in order to restructure and liquidate burdensome corporate assets in the same year. General Motors of Canada did not file for bankruptcy. The United States and Canadian government control are reported as temporary.

On June 10, 2009, Chrysler Group LLC emerged from a Chapter 11 reorganization bankruptcy and its stake was subsequently bought by the Italian automaker Fiat.[29][30] On June 3, 2011, Fiat bought out the remaining U.S. Treasury’s stake in Chrysler for $500 million, increasing its ownership of the automaker to 53%.[31] On January 21, 2014, Fiat bought out the remaining stake in Chrysler Group that it did not already hold from the United Auto Workers' employee medical benefit retirement trust.[32][33][34]

Due to the corporate structure of Fiat Chrysler Automobiles, which is headquartered in the United Kingdom for taxation purposes and the Italian Agnelli family as the major shareholders, some media sources now list Detroit as having a "Big Two" (GM and Ford) as opposed to a "Big Three".[35] Chrysler has become part of multinational auto giant Stellantis after FCA Group merged with the largely pan-European PSA Group) in 2021.[36]

Japan

Japanese automakers Toyota, Nissan, and Honda, among many others, have long been considered the leaders in the segment of small fuel-efficient cars.[10] A major contributing factor to their success was when their vehicles benefitted from the 1973 oil crisis which at the time drastically changed market situations and had a major impact on the automotive industry. For instance, the Honda Civic was the best-selling car in its segment in Canada for 22 years in a row.[10][37]

As well, the Nissan 240Z was introduced at a relatively low price compared to other foreign sports cars of the time (Jaguar, BMW, Porsche, etc.), while providing performance, reliability, and good looks. This broadened the image of Japanese car-makers beyond their econobox successes, as well as being credited as a catalyst for the import performance parts industry.

Before Honda unveiled Acura in 1986, Japanese automobiles exports were primarily economical in design and largely targeted at low-cost consumers. The Japanese big three created their luxury marques to challenge the established brands. Following Honda's lead, Toyota launched the Lexus name with the LS 400 which debuted at $38,000 in the U.S. (in some markets being priced against mid-sized six cylinder Mercedes-Benz and BMW models),[38] and was rated by Car and Driver magazine as better than both the $63,000 Mercedes-Benz W126 and the $55,000 BMW E32 in terms of ride, handling and performance.[39] It was generally regarded as a major shock to the European marques; BMW and Mercedes-Benz's U.S. sales figures dropped 29% and 19%, respectively, with the then-BMW chairman Eberhard von Kuenheim accusing Lexus of dumping in that market.[39] Nissan's Infiniti became a player on the luxury market mostly thanks to its popular Q45. The vehicle included a class-leading (at the time) 278 hp (207 kW) V8 engine, four wheel steering, the first active suspension system offered on a motor vehicle, and numerous interior luxury appointments. These made it competitive against the German imports like Audi, BMW and Mercedes-Benz, which by the time of Infiniti's release had overtaken Cadillac and Lincoln in dominating the luxury segment of the American market. In 1990, four years after the debut of the Legend and Integra, Acura introduced the NSX, a midship V6 powered, rear-wheel-drive sports car. The NSX, an acronym for "New Sports eXperimental", was billed as the first Japanese car capable of competing with Ferrari and Porsche. This vehicle served as a halo car for the Acura brand. The NSX was the world's first all-aluminum production car, and was also marketed and viewed by some as the "Everyday Supercar" thanks in part to its ease of use, quality and reliability, traits that were unheard of in the supercar segment at the time.[40]

The success of the Japanese automakers contributed to their American counterparts falling into a recession in the late 1970s. Unions and lobbyists in both North America and Europe put pressure on their government to restrict imports. In 1981, Japan agreed to Voluntary Export Restraints in order to preempt protectionism measures that the US may have taken, where it be tariffs or import quotas. Consequently, Japanese companies responded by investing heavily in US production facilities, as they were not subject to the VER. Unlike the plants of domestic automakers, Japanese plants are non-unionized (save for NUMMI), so they have lower wage expenses and do not face the risk of strikes.[41] The VER was lifted in 1994 upon agreement of all members of General Agreement on Tariffs and Trade (GATT).[42] Establishing US production facilities was also a significant step in improving public relations, along with philanthropy, lobbying efforts, and sharing technology.[43] Europe has still largely maintained its protectionism policies against Japanese cars, though theirs varies considerably.[39]

Toyota has always been by far Japan's largest automaker, and it recently overtook perennial world leader GM in both production and sales by early 2008. As the most aggressive of Japan's companies when it came to expanding into light trucks and luxury vehicles, this proved largely successful. Their high-end brand Lexus became the top-selling luxury marque worldwide in 2000, despite being only started up in 1989. Consequently, Toyota's stock price has traded at a much higher premium than other automakers.[44] Nissan regained its position on second place, financial difficulties in the late 1990s caused it to lose its place to Honda before. Nissan is Japan’s second largest automaker and ranks sixth in the world, behind Toyota, GM, Volkswagen, Ford, and Hyundai. Suzuki, Mazda, and Mitsubishi are in a distant fourth, fifth, and sixth place compared to the Japanese Big Three.[45]

Toyota, Honda, and Nissan are all in the BusinessWeek magazine's "100 Top Global Brands" by dollar value, as ranked by leading brand consultancy Interbrand. The Toyota marque was valued at US$22.67 billion, ranking it ninth among all global brand names - automotive or non-automotive, edging out that of Mercedes-Benz.[46][47] 2010 end of year production figures from the International Organization of Motor Vehicle Manufacturers shows that Toyota holds the number 1 spot, Nissan number 6, and Honda number 7.[45]

Germany

The German trio Audi, Mercedes-Benz and BMW are often referred to as "Germany's Big Three",[48] although the actual major automobile manufacturers are the Volkswagen Group (majority owner of Audi AG), the Mercedes-Benz Group, and BMW.

Other major German manufacturers are Opel and Ford-Werke, but are not considered as part of this grouping, although they are among the top selling brands in Europe - they are both foreign-owned (Opel is a subsidiary of Stellantis since 2021 and had been owned by PSA Group and General Motors before that, whilst Ford Werke is a wholly owned subsidiary of Ford Motor Company), and are largely Germany based and carry out much of their research and development in the nation.

Volkswagen Group has long been the largest automaker in Europe. As of 2007 it edged out Ford to rank third in the world after General Motors and Toyota. It is also the parent group of Audi, Porsche, SEAT, Škoda, Bugatti, Lamborghini and Bentley.

Daimler AG holds major stakes in other automakers including Mitsubishi Fuso.

BMW also produces Mini branded vehicles, and has been the parent company of Rolls-Royce Motor Cars since 1998.

BMW, Mercedes-Benz and Audi make up about 80% of the global luxury market.[48]

France

Renault, Peugeot and Citroën are often referred to as France's Big Three although the latter two are subsidiary brands of Stellantis N.V. Originally, Groupe PSA were the owners of Peugeot and Citroën until the merger with Fiat Chrysler Automobiles in 2021, forming Stellantis.

France is home to two major automaking companies:

  • Stellantis (owner of the Peugeot, Citroën, DS and Opel/Vauxhall brands as well as other auto brands in Italy and the U.S.) although the newly merged company is headquartered in the Netherlands.
  • Renault Group (owner of the Renault, Alpine, Dacia, Lada, Renault Samsung Motors brands and 15% of Nissan) the 3rd-largest automaker in Europe and the 9th-largest of the world in 2016.

France was a pioneer in the automotive industry and is the 11th-largest automobile manufacturer in the world by 2015 unit production and the third-largest in Europe (after Germany and Spain). It had consistently been the 4th-largest from the end of World War II up to 2000.

The France-based Renault Trucks is a major producer of commercial vehicles and is owned by Volvo AB. Both Stellantis and Renault produce a large number of vehicles outside France.

See also

Notes

  1. Speedmonkey. "Why the German Big Three could become the European Big Five". Oppositelock.kinja.com. Archived from the original on October 12, 2016. Retrieved February 22, 2017.
  2. Dvorak, Phred (November 21, 2013). "Japan's Big Three Car Makers Show Different Corporate Styles - Japan Real Time - WSJ". Blogs.wsj.com. Retrieved February 22, 2017.
  3. Palmer, Brian (February 29, 2012). "Why are all the big American car companies based in Michigan?". Slate.com. Retrieved February 22, 2017.
  4. Bunkley, Nick (April 24, 2008). "G.M. Says Toyota Has Lead in Global Sales Race". The New York Times. Retrieved October 26, 2008.
  5. "Toyota Claims World's Best-Selling Automaker Title". U.S. News Rankings & Reviews. April 24, 2008. Archived from the original on October 29, 2008. Retrieved October 26, 2008.
  6. "Big Three automakers retain U.S. positions". NBC News. January 4, 2005. Retrieved October 26, 2008.
  7. Ohnsman, Alan; Mike Ramsey (September 4, 2008). "Honda Passes Chrysler as Asia Brands Widen U.S. Share". BloomBerg.com. Retrieved October 26, 2008.
  8. "'Big Three' automakers not so big". The Age. Melbourne. September 4, 2008. Retrieved October 26, 2008.
  9. Van Praet, Nicolas (June 4, 2008). "CAW Girds For War". Financial Post. Archived from the original on February 16, 2009. Retrieved October 28, 2008.
  10. "The not-so-Big Three". CBC News. CBC. June 3, 2008. Archived from the original on July 2, 2008. Retrieved August 8, 2008.
  11. "CAW says "no two-tier wages" in bargaining". CanadianDriver. March 27, 2008. Retrieved October 28, 2008.
  12. Carty, Sharon (March 2, 2007). "Delphi files Chapter 11 after union, GM talks break down". USA Today. Retrieved October 28, 2008.
  13. Shepardson, David (April 9, 2007). "Parting shot: Delphi exec Steve Miller blasts UAW in new book". Detroit News. Retrieved October 28, 2008.
  14. Welch, David (August 25, 2005). "Bankruptcy Is Delphi's Trump Card". BusinessWeek. Archived from the original on October 7, 2008. Retrieved October 28, 2008.
  15. "German auto union head suggests GM cut US costs". Wsws.org. Retrieved November 1, 2008.
  16. "UAW, General Motors Temporarily Table Health Care Trust Negotiations After Five-Day Deadlock on Issue". Kaiser Daily Health Policy Report. Kaisernetwork.org. September 20, 2007. Retrieved July 9, 2009.
  17. "Storied Ford Taurus reaches end of line". Detroit News. October 23, 2006. Retrieved August 14, 2007.
  18. Final Ford Taurus interview. ABC News. July 26, 2007.
  19. "So long, friend. Ford producing last Taurus next week". Autoblog. Retrieved July 26, 2007.
  20. "Ford Taurus: Oedipus Wrecks". The Truth About Cars. September 2006. Retrieved April 5, 2008.
  21. ALISA PRIDDLE (June 6, 2008). "Chevrolet Volt and Aveo, Pontiac G3 Among Small Cars That Need Big Profits - Car News/Latest News & Reviews/Car Shopping/Hot Lists/Reviews/Car and Driver - Car And Driver". Caranddriver.com. Retrieved November 1, 2008.
  22. John D. Stoll; Liz Rappaport & Matthew Dolan (July 30, 2008). "GM, Ford Scale Back Car Leases as Era Ends - WSJ.com". Wsj.com. Retrieved November 1, 2008.
  23. "The discounting treadmill - BusinessWeek". Businessweek.com. Archived from the original on September 14, 2008. Retrieved November 1, 2008.
  24. Arnold Schwarzenegger at LA Auto Show 60 Minutes Interview Energy Green - YouTube video
  25. Krisher, Tom (July 3, 2008). "Why Honda is growing as Detroit falls behind". San Francisco Chronicles. Retrieved October 30, 2008.
  26. Isidore, Chris (June 3, 2008). "GM: Trucks out, cars in". CNN Money. Archived from the original on October 25, 2008. Retrieved October 30, 2008.
  27. White, Jerry (May 27, 2000). "GM, Ford idle 1,365 workers—auto industry layoffs signal coming downturn in US economy". World Socialist Website. Archived from the original on September 28, 2008. Retrieved October 30, 2008.
  28. Bunkley, Nick (July 26, 2008). "Plummeting Resale Values Lead Chrysler to End Leases". The New York Times.
  29. "Court Approves Sale of Chrysler LLC Operations to New Company Formed with Fiat". News.prnewswire.com. Archived from the original on March 22, 2012. Retrieved June 6, 2009.
  30. "Fiat May Increase Chrysler Stake to 51% Before IPO". Bloomberg BusinessWeek. Archived from the original on January 6, 2011. Retrieved January 4, 2011.
  31. Higgins, Tim; Welch, David (June 3, 2011). "Fiat Buys some of U.S.'s Chrysler Stake, Right to UAW Shares". Business Week. Retrieved June 4, 2011.
  32. Healey, James (January 21, 2014). "Done deal: Fiat owns Chrysler". USA Today. Retrieved June 8, 2016.
  33. Bill Vlasic, Once Upon a Car: The Fall and Resurrection of America's Big Three Auto Makers--GM, Ford, and Fiat Chrysler, William Morrow, ISBN 0-06-208860-2
  34. "Your favorite car companies are about to look very different". NBC News. Retrieved December 22, 2018.
  35. Clothier, Mark (October 12, 2014). "Fiat Chrysler Moves to NYSE in Challenge to Detroit Two". Bloomberg.
  36. Piovaccari, Giulio. "After long journey, Fiat Chrysler and PSA seal merger to become Stellantis". Reuters. Thomson Reuters. Retrieved May 15, 2022.
  37. "Canada's 10 best-selling vehicles in 2019's first three quarters".
  38. "Lexus LS 400, LS 430 and LS 460 Generations: Setting the Standard in the Most Comfortable Way Possible". Edmunds.com. March 13, 2003. Archived from the original on April 1, 2007. Retrieved April 8, 2007.
  39. Detroit, S.C. Gwynne (September 17, 1990). "Zen and the Art of Automotive Maintenance". Time. Archived from the original on October 13, 2007. Retrieved April 29, 2007.
  40. The Legend was built on the Accord platform, and the Integra was built on the Civic platform. Acura History page > timeline
  41. Nicolas Van Praet. "Caw Girds For War". Financialpost.com. Archived from the original on February 16, 2009. Retrieved November 1, 2008.
  42. "PERC - The Property and Environment Research Center: Voluntary Export Restraints on Automobiles". Perc.org. Archived from the original on February 16, 2009. Retrieved November 1, 2008.
  43. "Why Toyota Is Afraid Of Being Number One". Bloomberg Businessweek. Archived from the original on July 8, 2012. Retrieved November 1, 2008.
  44. "About | Press Release Articles". Lexus.com. Archived from the original on December 10, 2008. Retrieved November 1, 2008.
  45. "World Motor Vehicle Production: World Ranking of Manufacturers Year 2010" (PDF). OICA. Retrieved August 12, 2011.
  46. "Toyota Named World's Top Automotive Brand - AutoWeb News". Autoweb.com.au. Archived from the original on October 23, 2009. Retrieved November 1, 2008.
  47. "BusinessWeek Reports Interbrand's Annual Ranking of the 100 Top Global Brands in August 2nd Issue. Most Successful Companies on This Year's List Are Building Communities Around Their 'Cult Brands'". Prnewswire.com. Archived from the original on January 3, 2009. Retrieved November 1, 2008.
  48. "Global Luxury Car Market Report 2017 - Research and Markets". Retrieved October 17, 2017.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.