Automotive industry to take on additional giants


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The U.S. automotive industry - dominated for decades by Big Three manufacturers General Motors ( GM ), Ford ( F ) and Chrysler - finds itself becoming more diversified as a result of two years worth of shaky economic times, bankrupticies and comebacks from insolvencies, the Wall Street Journal reports .

Those automakers will survive but four additional manufacturers with strong performances and market shares of at least five percent will come aboard to complete the Gang of Seven. Toyota ( TOYOF ), Nissan ( NSANF ), Honda ( HMC ) and Hyundai (HYMTF), which is very close to and soon expected to pass that five percent mark, help create a new dynamic where one automaker no longer can target only one other rival.

"I think it's fair to say we are entering a new era," Jim Press, an automotive consultant and formerly an executive with Toyota and Chrysler, told the publication. "You have a completely different situation when you have six or seven companies that are all established, with a significant customer base. It's not like the old days when it was the Big Three and then all these little guys."

General Motors, Ford and Chrysler suffered enormous losses in 2008 and 2009 forcing them to declare bankruptcy. In 2010, Ford and Chrysler rebounded to capture market share while GM slimmed down, conducted an initial public offering of its stock and is likely to report strong sales profits.

"There's much less margin for error now," Michael J. Jackson, chief executive of AutoNation Inc. (AN), a large chain of auto dealerships based in Fort Lauderdale, Florida. "If you don't give the customer exactly what he wants, he's got a wide range of other places to go."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Business
Referenced Stocks: F , GM , HMC , NSANF , TOYOF

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