Automobile Manufacture

The US automobile manufacturing industry includes about 200 companies with combined annual revenue of about $250 billion. Major companies are GM, Ford, and Chrysler (which is controlled by Italy's Fiat). The industry is highly concentrated: the eight largest companies account for more than 90 percent of revenue and the top 20 for more than 95 percent.

Besides the three main US-based automakers, the industry includes companies that only manufacture automotive chassis, and extremely small, boutique manufacturers. Auto parts manufacturers are covered in a separate industry profile.

COMPETITIVE LANDSCAPE

Demand is driven by employment and interest rates. The profitability of individual companies depends on manufacturing efficiency, product quality, and effective marketing. Large companies have economies of scale in purchasing and marketing; smaller companies can compete by focusing on specialized markets. The industry is capital-intensive: average annual revenue per employee is nearly $2 million.

US-based automakers compete with numerous foreign rivals, including companies such as Toyota, Honda, and Nissan that have extensive auto assembly operations in the US. Through stateside manufacturing capacities and exports to the US, foreign carmakers collectively have about half of the US market.

US auto manufacturers' financial positions have deteriorated dramatically in recent years. The "Detroit Three" (Chrysler, Ford, and GM) have suffered from import competition and high cost structures. High gas prices, few small car offerings, and near record-low consumer demand during the late 2000s recession drove Chrysler and GM into bankruptcy, ...