The 10 Auto Brands That Bounced Back Fastest After the Last American Auto Sales Collapse, and the Seven That Didn't
Sales fell 27 percent. Brands such as Chrysler, Infiniti, Jeep, and GMC were in torments; shedding volume as demand withered. Subaru showed signs of relative strength, however, as did the Toyota RAV4. Passenger car market share was on the rise and…
Wait a second — we’re clearly not talking about the frightening first quarter of 2020. Scan the auto sales reports from 11 years ago and aside from a few familiar patterns, the U.S. light vehicle market of 2008 and 2009 did not resemble the U.S. light vehicle market of 2020.
Year-over-year, 2009 volume plunged 27 percent in the United States as a global recession melted home equity, eliminated jobs, and sent some of the biggest automakers in the world into a tailspin. Over the course of two years, auto sales actually dropped 35 percent, a loss of 5.7 million units.
Yet by 2012, three years after the collapse and three years into a recovery that would eventually produce record annual volume, 17 major auto brands (more than 100,000 U.S. sales/year) were selling in greater levels than they had in 2008. Meanwhile, seven other auto brands had yet to fully bounce back.
Of all the unifying characteristics that link the post-recession’s five fastest-growing auto brands, singularly powerful breakout hits stand out as the most obvious. Not coincidentally, the auto brand that posted the biggest 2008-to-2012 improvement, Kia, launched a trio of powerful models that shot the brand through the roof.
Prior to the 2009 collapse, Kia’s U.S. market share was a modest 2.1 percent, little better than half what the brand managed in 2019. Yet in 2009, the first-generation Soul was ready to make an instant impact. By 2012, the third of what would become six consecutive years of growth, Soul sales totaled 115,778 units. Adding a 100K+ car to the range certainly helps, but in the same time period, Kia turned the Sorento from a body-on-frame SUV averaging 43,000 sales per year (2003-2008) into a mass-market unibody worth 112,000 annual sales (2010-2012.) That wasn’t enough, so the third-generation Optima flipped the switch on the also-ran midsize nameplate. No longer was the Optima car producing fewer than 40,000 sales per year. The new Optima quadrupled that with 152,399 sales in 2012.
The result was a brand that more than doubled its volume between 2008 and 2012 during a period in which total sales grew just 9 percent.
Although Kia jumped 104 percent on the backs of three models, other brands generated wild growth rates thanks to new car launches. The sixth-generation Jetta that Volkswagen launched in late 2010 was largely to thank for Volkswagen’s 94-percent sales jump between 2008 and 2012. The Jetta shattered its own sales records with 177,360 sales in 2011; 170,424 more in 2012. Volkswagen Passat sales, meanwhile, shot up to an all-time record of 117,023 units in 2012, six times stronger than its four-year average. (Passat sales have declined every year since, plunging 88 percent between 2012 and 2019.)
At Subaru, where 2012 volume soared 79 percent beyond 2008 levels, Subaru benefited from its famously small but balanced lineup. The Outback, however, was not surprisingly a major factor in the surge. By 2012, Subaru was in its second year of 100K+ annual sales of the fourth-gen Outback – Subaru has now produced nine consecutive such years – after selling roughly half that many in the lead-up to the collapse. Subaru, like Hyundai and Kia, also managed to sell more vehicles during the 2009 free-fall than in 2008.
At Hyundai, which boosted its volume by 75 percent between 2008 and 2012, the memory of a sixth-generation Sonata that reset the midsize segment is strong. A decade ago, America’s intermediate sedan category was healthy, and the Sonata gobbled up market share with heaps of style and an exclusively four-cylinder engine lineup. Hyundai sold 130,000 Sonatas per year in the U.S. during the half-decade leading up to the recession; 215,000 per year in the half-decade following. It did no harm to release a new Elantra that sold 113-percent more often in 2012 than in 2008.
Audi produced the greatest growth among premium brands following the 2009 meltdown. Sales at the upmarket Volkswagen Group outlet jumped 59 percent between 2008 and 2012. Prior to 2010, Audi had only once topped the 90,000-unit sales mark (in 2007) and consistently earned around 0.5 of the market. Audi’s second SUV, the Q5, arrived during the crisis in 2009 and by 2012 accounted for 28,671, or one-fifth, of Audi’s 139,318 sales. The Q5 now accounts for 30 percent of the brand’s volume.
By 2012, numerous other brands were attracting far more buyers than they had in the lead-up to the recession: Jeep, Buick, Mercedes-Benz, Ford, Nissan, GMC, and BMW all reported double-digit percentage growth through that phase.
Hampered by the lingering effects of 2011’s Tōhoku earthquake and tsunami, Honda, Mitsubishi, Toyota, Lexus, and Scion were selling fewer new vehicles in 2012 than they had in 2008. Cadillac, Chrysler, and Lincoln were in the same boat for different reasons.
Yet sudden as the cratering of Lehman Brothers seemed in September 2008, there was a certain level of gradual decline to the U.S. auto industry. Moreover, at no point did demand virtually disappear, as we witnessed across great swaths of the country in late March and early April of 2020. Are there Q2 and Q3 auto launches this year that can mimic the Soul, Sonata, and Jetta launches of a decade ago in order to spur demand?
No, we’re dealing with an entirely different set of issues today, and the new vehicle launches – if “launch” is even a term that can be used – of 2020 are minor contributing factors to what may or may not be a revitalized market.
Nevertheless, there will invariably be some automakers that perform well above average if and when the market recovers. And there will be others, caught like deer in the headlights at the moment, that fail to ready themselves for the unique challenges of the next phase.
Perhaps it’s no coincidence that Hyundai, a significant recipient of extra market share after the last recession, is intent on performing similarly during a potential exit from the current phase. Quoted by Automotive News, Hyundai Motor America CEO Jose Muñoz fought back against internal pressure in March and re-instituted the automaker’s job-loss protection incentive. “There were several options, and there were some within the company who didn’t see the need to develop such a program,” Muñoz says.
Beyond no-interest financing and four months of payment deferrals, neither of which could stymie March’s slowdown, Hyundai believes the very nature of the automaker’s lineup will be a boon following this public health crisis. Hyundai still markets affordable cars. Expecting a sharp rebound, Hyundai wants dealers to have strong inventory levels in preparation for a revival.
“When we come out of this,” COO Brian Smith says, “it’s likely to be a pendulum swing; there’s going to be a lot of pent-up demand.”
If Hyundai and partner brand Kia are correct, it’s quite possible that the Korean duo will once again be near the top of a new list of auto brands that bounce back fast.
[Images: Audi, Subaru, Hyundai, Volkswagen]
Schmitt trigger on Apr 24, 2020
I once attended an economics lecture, and the lecturer gave a good analogy of what a recession means for the marketplace: Imagine you are playing a game of chess. Some of your pieces will be at an advantage, if your opponent doesn't notice it, in a move or two you could make a break-thru move that will definitively put you ahead. On the other hand, there will be pieces that are in a vulnerable position. You have to think very hard whether to sacrifice those positions to take advantage of the pieces which show promising leads. Forethought, analysis and tough decisions, to wisely choose between short and long term goals: that is what is identical between chess and businesses. Now, imagine someone comes and bangs on the table. Hard. The pieces will be re-arranged. Some positions will remain essentially the same. Some will improve, some will deteriorate. Your adversary will suffer a similar fate. The thought here is: One *cannot* continue playing with the same strategy as the one being followed previous to the event. The landscape has changed, for you and your opponent. The key giveaway? Whoever *adjusts* his strategy the fastest to the new conditions, is the one who will win.
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