The Auto Industry 2009 Wrapup: Apocalypse Now
December 22, 2009
The best thing that might be said about the year the auto industry - and an economically 
battered nation - is preparing to close: it probably can't get any worse.
The year 2009 brought two high-profile bankruptcies, billions of dollars in government bailouts and funding for Cash for Clunkers and thousands of lost jobs. Similar upheaval - though not as catastrophic as predicted - came to the tightly integrated supplier industry. Several historic brands were relegated to the archives.
And those are just the major stories.
As the books close on 2009, it will be remembered a rough ride for almost everybody - but not all.
The Hyundai Group emerged from the chaos as a new major player. Ford Motor Co., though not without its own troubles, shouldered past its Detroit rivals in the war for the hearts, minds and wallets of the American car-buying public. And the industry accepted new fuel-economy regulation it seems agreed was the right thing to do.
Tough Numbers In A Tough Year
But there's no painting 2009 as anything but bleak.
With just two sales weeks left in the year, Edmunds.com data analysts project 2009's total U.S. sales will be approximately 10,383,000 units, a 21.3-percent decline from last year - and the industry's lowest sales figure since 1970. Yes, 1970, as in first-term-of-Richard-Nixon-1970.
So the industry lost tons of volume. Four automakers lost tons of market share, "tons" definable as double-digit losses: Chrysler Group LLC (-18.7 percent); General Motors Co. (-10.6 percent); Mitsubishi Motor Corp. (-29.7 percent) and Suzuki Motor Corp. (-40.5 percent).
But where there are losers, there are winners. The can't-do-much-wrong Hyundai Group (Hyundai and Kia brands combined) piled on a heady 40.4 percent of share, from 2008's 5.2 percent of the market to 7.3 percent share this year.
But Fuji Heavy Industries Inc.'s suddenly mighty Subaru send out a smackdown message to even the industry's heavyweight makers, steamrolling its way to a 2.1-percent share of the market, a near-50-percent gain over 2008 - and at the end of November, Subaru and its miniscule 5-model lineup was leading preparing-to-conquer-the-planet Volkswagen by 512 sales.
Other notable market-share gainers include VW's Audi of America (+20.8 percent); VW itself gained 23.3 percent share (from 1.7 percent to 2.1 percent); Mercedes-Benz gained 10 percent and Ford posted a 6.1-percent gain.
The domestic automakers collectively lost 7.3 percent of market share in 2009, compared with a 41.8-percent gain for South Korean makers, a 1.8 percent gain for Japanese makers and a 7.7-percent gain for European automakers.
By segment, the market's biggest losers were premium sports cars, ceding 61.5 percent of share in 2009, followed by vans (-18.4 percent), premium luxury cars (-12 percent) and, most dangerously for U.S. makers, a 10.5-percent market-share plunge for large trucks.
The market upheaval produced several winning segments, including compact SUVs (and crossovers), which posted a 28.7-percent market-share gain in 2009, as well as a 21.8 percent hike for sports cars and a 12 percent climb for subcompact cars, to 4.3 percent of the U.S. market.
Cash for Clunkers Buoys Year
Regardless of whether the government's so-called Cash for Clunkers program was the right thing to do or not, 2009 undoubtedly would have been far worse for car sales without it.
During 2009's first half, the industry struggled to hit a 10-million Seasonally Adjusted Annual (SAAR) of sales. Then came the officially named Car Allowance Rebate System (CARS) resulted in heady July and August sales. July came in at a pace of 12.5 million; August at 14.1 million.
But then came the September hangover of well under 10 million again. Since then, sales have edged higher.
The usual sales giants - Honda and Toyota - as well as automakers like Ford, Hyundai and Subaru who already were gaining traction in 2009 were the biggest beneficiaries of Cash for Clunkers. Many of the vehicles bought from clunker trades already were the industry's bestsellers. GM and Chrysler, freshly emerged from Chapter 11 bankruptcy proceedings, didn't have the footing to take advantage of the program.
Little Change in Bestseller List
Despite major upheaval in the market, the bestseller list anticipated by Edmunds.com for 2009 is little changed from 2009, only the order of some models has been flipped. In fact, the top 10 bestsellers represented near identical share of total industry sellers at about 22 percent for both 2008 and 2009.
The Toyota Camry looks like it will be the industry's bestseller in 2009, after losing a close race with the Honda Accord in 2008 for the top spot.
The Ford Fusion, on course to set record sales, looks as if it will make the top 10 list in the No. 10 spot, replacing the Ford Focus, which seems to have slipped from the Top 10 despite a strong year of sales. 
Source: Edmunds.com
Incentives? Of Course
As might be expected in such a drastically downturned year, incentives assumed an inverse relationship to sales, even for the automakers that gained market share.
Each of the "Big 7" automakers increased incentive spending in 2009, according to Edmunds.com's proprietary True Cost of Incentives metric.
The range went from a average TCI increase of just $5 more for Ford ($3,365 in 2009 to $3,360 last year) to a high of $4,264 for Chrysler (compared with a TCI of $3,868 last year).
Hyundai, the phoenix that rose from 2009's ashes, increased its incentive spending the most of any of the Big 7 group, however. Hyundai hiked its average TCI from $2,132 in 2008 to $2,810 this year.
As a group, domestic makers' average TCI was $3,801, up 6.3 percent from 2008. The Europeans followed with an average TCI of $3,342 per vehicle sold, a large 19.5 percent increase.
As usual, Japanese makers hewed closest to MSRPs: their average TCI was $1,664 per vehicle sold in 2009, a 15.8-percent increase over last year. And the Korean makers juiced incentive spending by 31.8 percent in 2009, delivering an average TCI of $2,810 per vehicle sold. 
Source: Edmunds.com
Volume Tells Tales, Too
Sales volumes also demonstrate the depth and breadth of the industry's nasty year.
Chrysler's recent, hard decline is demonstrated starkly by the fact that 2009 will be the first time since 1962 the company fails to sell more than 1 million vehicles. In 2005, Chrysler sold more than 2.3 million vehicles.
GM will sell at least a half-million fewer vehicles this year than in 2008. Through November, Nissan Motor Co. Ltd. was trailing its 2008 total sales by nearly 200,000 units. Mitsubishi had sold 49,631 vehicles and Suzuki 36,810.
And through November, Toyota Motor Corp.'s sales were lagging 2008's total sales by more than 490,000 units, Honda's through-November total lagged its 2008 sales by more than 300,000 units.
Meanwhile, Subaru (there's that name again) was pacing to set an all-time sales record; its through-November sales of 193,578 exceeded such notables as Mercedes-Benz (184,134), Mazda (189,512) and Volkswagen (193,066). - Bill Visnic, Senior Contributing Editor
Posted by Michelle Krebs at 3:57 AM under Chrysler , Companies , Featured , Ford , GM , Toyota | Comments (2) | digg this | Seed Newsvine
"2009 undoubtedly would have been far worse for car sales without it. (cash for clunkers)"
That cannot be known. It's like saying the nation's economy would be worse without Obama's "stimulus" fiasco. That's a theory, and a specious one at that. There is much proof and logic to the contrary. The cash for clunkers scam just borrowed sales from future months and artificially inflated car prices while robbing the funds to pay for it from all of us.
This is what happens when sheep blindly hope for change.
Posted by: cwc1 | December 22, 2009 at 7:16 PM
The long range effect of "cash for clunkers" is no doubt a negative as productive cars were removed from service, tax payers will end up paying for it, and the effort/expense involved should also be considered.
As a former Saab owner, I'm saddened by it's apparent demise. GM never embraced Saab or took advantage of the company's strengths. GM's second mistake was closing Saturn as this was the only division whose dealerships understood how to treat customers. Again GM couldn't seem to appreciate differences from their old school methods. GM's third blunder was to shaft retired white collar workers (eliminated all retirement benefits). How did the federal government let that happen?
Chrysler needed to be "put down" for everyone's own good. Even the workers will rebound to become productive members of society, not part of a fully dysfunctional beast of its former self.
Too bad it takes bad times for the worst to be weeded out.
But the automotive industry is out of step. 40% of the new car price is put into marketing and even then most dealerships make the buying experience more painful than a root canal. Incredible efforts are put into expensive to build (and even more expensive to repair) sheet metal expressions of a designer's fantasy. And in case no one as heard, the planet is running out of petroleum while automotive engineers, oil executives, and government bureaucrats fiddle. All this while global warming and 2nd world (India and China) hunger for cars is becoming more real by the day. What we need are truly inexpensive, non-fossil fueled options. Hard times should produce lessons, but I don't see much real learning going on by the major stakeholders.
Posted by: mcmanus | December 26, 2009 at 6:32 AM