Year in Review: Still Waiting for that "Quiet Year"
Aaron Bragman, IHS Automotive


After the gas price spikes of 2008, 2009 was supposed to be the "quiet year of recovery."  Then after the collapse of the global auto market and bankruptcies swept the industry in 2009, 2010 was supposed to be the "quiet year of recovery."  That plan was thwarted by the unintended acceleration issues and recall at Toyota, and everyone looked to 2011 as the "quiet year of recovery."  That obviously did not happen either, with the tragic earthquake and tsunami that devastated northern Japan and sent many of the world's automakers scrambling to fill lost component supplies, shuttering assembly plants and seeing inventory plummet.  And just when the hardest hit Japanese automakers were about to get back on their feet, a second natural disaster in Thailand again slowed production around the world.

It has not been just one year of extraordinary events, but several now.  Many have wondered when the industry is likely to be allowed to catch its breath, when will things calm down and return to a point of normalcy, but it may be that the balance of things has changed significantly enough to warrant an examination of conditions. The troubles experienced by the Japanese manufacturers in the past year have been significant in that they have reshaped the way the North American market in particular looks.  The competitors to the Japanese OEMs could not have imagined a situation that could have worked more to their favor, despite the tragedy that sadly had to accompany the scenario's arrival.  Just as the American domestic automakers have newfound profitability thanks to restructuring and bankruptcy, their main competitors suffer from insufficient inventory to maintain their market share.  Part of the gains made by the Americans in 2011 can be attributed to this competitive stumble, but not all – it must be noted that the products themselves are significantly better than just about any time in the history of the American automakers, and the public is taking notice.

 This has also been the year of dramatic ascendancy for South Korean and German automakers.  Lexus has lost the luxury sales crown that it has worn for a decade to German automakers, and buyers who otherwise would have bought a Toyota or Honda have started looking at Hyundais and Kias in significant numbers.  While some Japanese automakers have found themselves with more capacity than demand, Hyundai has found that it cannot build vehicles fast enough to satisfy demand, bumping up against capacity constraints at its U.S. plant.

While this balance of power has shifted in the United States over the past year, one should not expect it to last. The brands that have suffered from the natural disasters of 2011 have been hurt, but also enjoy some of the highest owner loyalty rates in the industry.  Once the restoration of supply streams has been reestablished and production returns to normal rates, expect to see those Japanese brands mount a significant challenge to the resurgent Americans and the upstart Koreans.  That challenge however, will be a harder fight for the Japanese brands than it has ever been.  As such, it looks like we still will not see a "quiet year" for the industry in 2012, as the battle for share in the U.S. market and abroad only looks to heat up.

 Aaron Bragman can be contacted at Aaron.Bragman@ihs.com.