Who Are the Big Three Automakers?
The Big Three in the automotive industry is a reference to the three largest car manufacturers in the United States: General Motors Company (GM), Fiat Chrysler Automobiles (FCAU), and Ford Motor Company (F). The Big Three are sometimes referred to as the "Detroit Three." All three companies have production facilities in the Detroit area, so their performance has a significant effect on the city's economy. Employees of the Big Three are represented by the United Auto Workers (UAW) union.
The companies' major competitors include international automakers such as Toyota Motor Corp, Honda Motor Company, Hyundai Kia Auto Group, and Nissan Motor Company.
- The Big Three often refers to the three largest car manufacturers in North America: General Motors, Fiat Chrysler, and Ford Motor Company.
- After decades of dominating the U.S. and global markets, the Big Three have lost significant market share to automakers from Japan, South Korea, and Europe.
- Competitors of the Big Three automakers include Toyota, Honda, and Nissan, companies that have attracted a loyal customer base for their reliable, fuel-efficient cars.
- The Big Three have all invested heavily in the development of electric vehicles, hoping to gain back market share with their new lines of environmentally friendly cars.
Understanding the Big Three Automakers
For decades, the Big Three automakers dominated the U.S. and global markets. However, after the oil crisis of the 1970s and the subsequent run-up in gasoline prices, Japanese automakers began cutting into the Big Three's market share. Toyota, Honda, and Nissan attracted a loyal customer base seeking lower-priced, fuel-efficient cars. By the mid-1980s, the Japanese automakers continued their pressure on the Big Three, extending their brands into lines of luxury cars as well.
Since then, General Motors, Fiat Chrysler, and Ford have faced a wide array of other challenges, including poor management, labor disputes, and rising production costs. The profits (and losses) of the Big Three are thought to be an indicator of the state of the overall U.S. economy. During the financial crisis in 2009, Chrysler and GM both closed thousands of dealerships, filed for Chapter 11 bankruptcy, and were bailed out by the U.S. Treasury through a loan under the Troubled Asset Relief Program (TARP).
In the United States, the automotive industry contributes about 3% to the overall gross domestic product (GDP) of the country, manufacturing close to 10.88 million vehicles in 2019.
The Big Three by the Numbers
We can see how "big" the Big Three really are by reviewing some key metrics, such as market capitalization and market share.
Market capitalization (also called "market cap") refers to the total market value of a company's outstanding shares of stock. The market cap for a company is a simple calculation that multiplies the number of outstanding shares by the current price of the stock. As of September 30, 2020, General Motors had a market cap of $41.4 billion, Ford had a market cap of $27.3 billion, and Fiat Chrysler had a market cap of $24.7 billion.
The market cap calculation shows a company's worth as determined by the stock market. In comparison, Toyota's market cap for the same time period was a significantly higher $183.4 billion, an indication that the market values Toyota as a company more than the Big Three.
Market share is another interesting statistic to review because it shows the size of a company in relation to its market and its competitors. We can use the percentage of market share to compare the Big Three's sales to total industry sales.
In 2019, General Motors was the leading automaker by market share in the United States, capturing 16.9% of the car and light truck market. Coming in second was Ford with a 14.1% market share, closely followed by Toyota at 14%, and Fiat Chrysler at 13%.
However, when we take a look at the global market share, we get a much different picture of the Big Three. In 2019, Toyota ranked at the top of the list, capturing 10.2% of the global automotive market share by brand. Volkswagen came in second with a 7.6% market share, followed by Ford at 5.6%, Honda at 5.5%, and Nissan at 5.2%. Clearly, the Big Three—which once dominated the global markets—have faced strong competition, losing their market share to automakers from Japan, South Korea, and Europe.
The popularity of the Big Three's cars and trucks has faced continued opposition from other carmakers, especially as American buyers seek to purchase more "cross-over" vehicles and SUVs. Going forward, hybrid gasoline-electric and all-electric vehicles are expected to account for an increasing number of car sales.
This is particularly true as more governments enact mandates that require the switch to a higher percentage of electric vehicles (EV) on the roads. The Big Three have all invested heavily in electric vehicle development and production. The future success of the Big Three could rely on their ability to sway consumers to purchase their cars over EV manufacturer Tesla Motor Inc., their biggest rival in the EV marketplace.