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Big Three automobile manufacturers
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The Big Three automobile manufacturers may refer to:
- The three major United States automakers: General Motors, Ford, and Chrysler, also known as the "US Big Three" or "Detroit Big Three".
- The three major Japanese automakers: Toyota, Honda, and Nissan, also known as the "Japanese Big Three" or "Tokyo Big Three".
- The three major South Korean automakers: Hyundai, Kia, and Daewoo, also known as the "South Korean Big Three".
- The three major German automakers: BMW, Mercedes-Benz, and Volkswagen, also known as the "German Big Three".
- The three major French auto brands: Peugeot, Citroen and Renault, Peugeot and Citroen are both part of PSA Peugeot Citroen
- The big three former British brands: Austin, Morris and Rover which all ended up under the British Leyland banner.
- The three major transit bus makers in North America; Gillig, New Flyer, and Orion Bus Industries.
United States and Canada
General Motors, Ford and Chrysler are not only by far the largest automakers in North America, they were for a while the largest in the world and are still a mainstay in the top ten. Ford has held the position of second-ranked automaker for the previous 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, though GM still outsold Toyota that year, giving GM 77 consecutive calendar years of top sales. For the first quarter of 2008, however, Toyota overtook GM in sales as well.
In the North American market, the Detroit-Windsor automakers retained the top three spots, though their market share is dwindling. Honda recently passed Chrysler for the fourth spot in 2008 US sales.
The Big Three are also distinguished not just by their size and geography, but also by their business model. The majority of their operations are unionized (United Auto Workers and Canadian Auto Workers), resulting in higher labor costs than other multinational automakers, including those with plants in North America. The 2005 Harbour Report estimated that Toyota's lead in labour productivity amounted to a cost advantage of $350 US to $500 US per vehicle over North American manufacturers. The UAW agreed to a two-tier wage in recent 2007 negotiations, something which the CAW has so far refused. 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.
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. With most of these plans chronically underfunded in the late 1990s, the companies have tried to provide retirement packages to older workers, and made agreements with the UAW to transfer pension obligations to an independent trust. Nonetheless, non-unionized Japanese automakers, with their younger American workforces (and far fewer American retirees) will continue to enjoy a cost advantage.
Despite the history of their marques, many long running cars have been discontinued or relegated to fleet sales
, 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 light trucks and SUVs, while they often could not break even on compact cars unless the buyer chose options.
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 have not yet done.
SUV sales peaked in 1999 but have not returned to that level ever since, due to high gas prices. The Big Three have suffered from perceived inferior initial quality and reliability compared to their Japanese counterparts, which has been difficult to overcome. They have also been slow to bring new vehicles to the market, while the Japanese are also considered the leader at producing smaller, fuel-efficient cars.
Falling sales and market share have resulted in the Big Three's plants operating below capacity (GM's plants were at 85% in November 2005, well below the plants of its Asian competitors), leading to production cuts, plant closures and layoffs. They have been relying heavily on considerable incentives and subsidized leases to sell vehicles. which was crucial to keeping the plants running, which in turn drove a significant portion of the Michigan economy. 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 trying to scale back on incentives and raise prices, while cutting production. The subprime mortgage crisis and high oil prices in 2008 resulting in the plummeting popularity of best-selling trucks and SUVs, perhaps forcing automakers to continue offering heavy incentives to help clear excess inventory.
The Big Three sued California Governor Arnold Schwarzenegger to prevent a tailpipe emissions requirement. In response, Governor Schwarzenegger told the Big Three to "get off their butt".
In 2008, with high oil prices and a declining US economy due to the subprime mortgage crisis, the Big Three are rethinking their strategy, idling or converting light truck plants to make small cars. Due to the declining residual value of their vehicles, Chrysler and GM have stopped offering leases on the majority of their vehicles.
It was revealed on October 10, 2008 that GM may exchange its remaining 49% stake in GMAC to Cerberus for Chrysler, potentially merging two of the Big Three automakers.
Japan
Japanese automakers Toyota, Honda, and Nissan, among many others, have long been considered the leaders at producing smaller, fuel-efficient cars. Their vehicles were brought to the forefront, due to the 1973 oil crisis which had a major impact on the auto industry. For instance, the Honda Civic was considered superior to American competitors such as the Chevrolet Vega and Ford Pinto.,
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 LX 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), and was rated by Car and Driver magazine as better than both the $63,000 Mercedes-Benz 420 SEL and the $55,000 BMW 735i in terms of ride, handling and performance. 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. 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.
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-unioned (save for NUMMI), so they have lower wage expenses and do not face the risk of strikes. The VER was lifted in 1994 upon agreement of all members of General Agreement on Tariffs and Trade (GATT). Establishing US production facilities was also a significant step in improving public relations, along with philanthropy, lobbying efforts, and sharing technology. Europe has still largely maintained its protectionism policies against Japanese cars, though their varies considerably.
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.
Nissan was formerly in second place, until financial difficulties in the late 1990s caused it to lose its place to Honda. Honda is Japan’s second largest automaker and ranks sixth in the world, behind Toyota, GM, Volkswagen, and Ford. Mitsubishi and Mazda are in a distant fourth and fifth place compared to the Japanese Big Three.
Toyota, Honda, and Nissan are all in the BusinessWeek magazine's The 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.
South Korea
The first Korean "halo vehicle" that made a good reputation to the global automotive industry is the Hyundai H-1 group, specifically the Hyundai Starex. It changed how the world perceived Korean-made automobiles.
The success of the Korean automakers contributed greatly to their economy. The automotive industry, and other related major industries, form millions of jobs in South Korea.
Hyundai has always been South Korea's largest automaker, and it recently became the fifth largest automaker in the world, passing Honda Motors in both production and sales in late 2007. While Kia is South Korea’s second largest automaker and ranks sixteenth in the world, behind Toyota, GM, Volkswagen, Ford, Hyundai, Honda, and others. Hyundai and Kia are both owned by the same parent company, Hyundai Kia Automotive Group
Hyundai, Kia, and Daewoo are all in the BusinessWeek magazine's The 100 Top Global Brands by dollar value, as ranked by leading brand consultancy Interbrand.
See also
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