The Current Status of the United States Auto Industry

Rising gas prices fuel environmentally conscious consumer demands

American auto consumers are feeling the pain of rising fuel costs at the pump, and this is beginning to reflect in auto sales across the country. Earlier this summer, gas prices hit record highs at $3 per gallon. Jim Lentz, the US Executive Vice President for Toyota, explains that, “As fuel prices and consumer confidence rose, the industry saw a move to passenger cars.”

Asian carmakers make good in American market

Lentz’s Toyota appears to have benefited from the American move to passenger cars; overall sales are up by 10%. Toyota’s American car sales rose by 16.2%. Toyota’s Camry model saw the most improved sales among the company’s passenger cars. But the model that showed the most dramatic increase in sales proved to be the Prius, Toyota’s hybrid passenger car. In May of 2006, the company sold approximately 8,103 models. This year, the figure has jumped to a record high of 24,009—an astounding 300% increase. The company’s light trucks also did well, garnering a healthy 10.9% increase in sales.

Nissan is another Asian carmaker whose car sales are on the rise among American auto consumers. Like Toyota, the Nissan company has capitalized on the growing popularity of small-scale passenger cars. Thanks to the outstanding consumer demand for fuel efficient passenger cars, Nissan boasted a 7.4% increase in sales.

Ford suffers stagnant sales

Despite its status as the second largest auto maker in the US, the Ford company’s domestic auto sales actually declined this May. While Asian carmakers like Toyota and Nissan saw double-digit or near double-digit increases in auto sales, and even Daimler-Chrysler’s ailing enterprise in the US market claimed at least a 3.9% increase in car sales, Ford auto retailers actually reported a decline in overall sales.

Overall sales for Ford dropped by 6.9%, while car sales for Ford plummeted by 17.7%. The company reported that truck sales remained stagnant. When asked why Ford performed so poorly in the American market while competitors saw increases in their auto sales, the auto maker responded by blaming poor sales on the sinking popularity of its saloon cars. However, Ford is not in bad company: Honda, one of the most popular Asian car makers in the American market, also reported a drop in sales. The plunging sales of many automakers can at least partially be attributed to the repercussions of the credit crisis.

General Motors comes out on top

General Motors lead the American market in auto sales, recording a 12% increase in overall sales. The American-based company sold 371,056 light vehicles. Owing the increase in its profit margins to a renewed investment in smaller-scale, fuel-efficient passenger cars, General Motors was able to secure the number-one spot in the American auto industry for May. Whether or not General Motors can maintain this position depends largely upon the continued popular demand for passenger cars and GM’s ability to cater to that need.