U.S. automakers reported big sales gains in September, and industry analysts say they expect continued growth for the rest of the year.
The “Big 3” Detroit automakers all revved up sales last month, with G.M., Ford, and Chrysler reporting 20 percent, 9 percent, and 27 percent sales growth respectively.
Curt Grimm, the Dean’s Professor of Supply Chain and Strategy at UMD, said the U.S. government’s bailout of the automotive industry just two years ago has contributed largely to success in Detroit.
“The bailouts required major changes in their operations which significantly improved efficiency and reduced costs,” Grimm said. “Facilities were closed and rationalized and the auto industry has been a lot more ‘leaner and meaner.'”
The U.S. automakers’ biggest competitors in the market are foreign brands centered in Asia. In March, Japan suffered thousands of casualties and billions of dollars in damage after a 9.0-magnitude earthquake rocked the region. Japanese automakers are still reeling from the effects of the disaster, and this difficulty is reflected in recent sales numbers. Toyota reported a September sales decline of 18 percent, while Honda reported an 8 percent loss.
“The earthquake severely disrupted Japanese automaker production, both in Japan and U.S.,” Grimm said. “Companies like Toyota and Honda who produce cars in the U.S. for our markets had major problems getting parts from Japan.”
So what makes certain cars more attractive than others? Is it the innovation, the marketing campaigns, or the industry’s scale of production?
According to Grimm, branding and reputation are the largest factors that contribute to increased sales. A memorable Chrysler commercial premiered at last year’s Super Bowl was instrumental in altering Chrysler’s brand image. In it, Detroit’s own Eminem dives the new Chrysler 200 around the city to his song, “Lose Yourself.” The commercial fades out with the words, “Imported From Detroit.”
However, reputation still plays a large role in customers’ car preferences. Junior biology major Reuben Bor said U.S. makers still have to lure him in, as he’s always preferred Japanese cars. “I think a lot of it has to do with the reputation of the brand. It’s also determined by what your parents drove, just like who you vote for.”