US Auto Industry

The market of the US auto industry consists of light vehicles and trucks. Light vehicles comprise passenger cars and light trucks, (light trucks being a collective for vans, pick-ups and utility vehicles). Trucks consists of medium and heavy-duty trucks.
The segmentation of automobiles in the US is based on body style, base price and size, see table 6. Purchase full report here.

Market size of the US auto industry

Light vehicles and truck sales in the US touched 16.93 million units in 2003 – this was the lowest sales figure for five years, but the highest globally. The Europe auto industry registered sales of 15.63m and the Japan auto industry had sales of 5.18m. Within Europe, the UK auto industry had sales of 2.94m units. Out of the most rapidly developing nations, the China auto industry had the largest amount of sales in 2003 at 4.44m units, and the India auto industry saw sales of 1.17m units.  

GDP and motor vehicle growth in the US auto industry

The automotive industry is the largest manufacturing sector in the US. New vehicle production and sales and other related automotive activities account for one out of every ten jobs in the US economy. The US auto industry directly employs more than 1.3 million people and indirectly supports another 12 million jobs.

Motor vehicle sales account for more than four percent of the US gross domestic product. However, the motor vehicle market has been declining for the last three years owing to saturation in the market, economic recession and political uncertainty. US vehicle growth has been lagging GDP growth since 1999, see figure 15. Purchase full report here.

Passenger vehicle and truck sales in the US auto industry

The share of light trucks in the US light vehicles market has been increasing over the last few years. In 2003, Light trucks made up 54 percent of the market, whereas cars accounted for 46 percent of the total market.

Consumers of the US auto industry consider light trucks to be versatile, comfortable and safe. Crossover models that combine Sports Utility Vehicles (SUV) and passenger car attributes lie behind this shift. Automotive industry companies spend an estimated USD13 billion every year on advertising light truck products as margins on these vehicles are higher than normal passenger vehicles. Even Japanese companies like Toyota (see Toyota profile) are planning to add light trucks to their product portfolio. To this extent, it is likely that the share of light trucks in the market will increase over the next few years.

The US passenger car market has declined from 8.7 million units in 1999 to 7.6 million units in 2003, as an increasing number of consumers switched to mini-vans or SUV’s. The share of mini-compact, two-seater mini-compact and two-seater cars fell steeply.. However, mid-size cars and large luxury cars continue to find favor with consumers, constituting 23 percent of the total light vehicle market in 2003.

The share of SUV’s and cross-over utility vehicles has been increasing at the expense of pick-ups, cars and vans, see figure 18. The shift towards cross-over vehicles has been due to better fuel economy, more cargo room and a car-like ride. For baby boomers, SUV’s offered a way to reconnect with their youth, and for the young they offered an escape from the confinement of an office, an urban home or a suburban existence.

US medium and heavy trucks sales fell between 2000 and 2002 due to a downturn in US economy, lower freight tonnage and higher insurance costs for trucking companies. New emissions standards for heavy truck engines and a marginal economic recovery helped demand pick up in 2003.

Sales of medium and heavy-duty trucks rose to 0.33 million units in 2003, up 2 percent on 2002. Over the years, Class 7 and Class 8 heavy-duty trucks have seen a steep decline due to economic stagnation and inventory build-up, see figure 20. Class 8 sales were down by 3 percent while Class 7 fell by 4 percent. Aggregate sales of medium duty trucks (Classes 4, 5, 6) increased in 2003.  Class 6 sales were up 13 percent, Class 5 about 20 percent and Class 4 by 5 percent.

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