Auto on Info  May 2004

Australia May Reach Natural Market Share Eight Years Sooner Than U.S.

If the pace of change from 1995 to the present is maintained, the market share of the Big Three - General Motors, Ford, and Chrysler - should fall to .11, and that of the Top Four - Toyota, Honda, Subaru, and Nissan - should rise to .56, eight years sooner in Australia than in the U.S. Australia should attain these market shares in about eighteen and a half years, based on change from 1995, while the U.S. should attain the same in about twenty-six and a half years.

The following two tables were used to do the computations.

Table I: Market Shares of the U.S. New Passenger Vehicle Market for the Top Four - Toyota, Honda, Subaru, and Nissan - and the Big Three - General Motors, Ford, and Chrysler - for Calendar Year 1995 and Year-to-Date 2004, as of April 30, 2004, Natural Market Share Estimates, Distances to Natural Market Shares, and Distances Traversed from 1995
Group	1995	YTD 2004	Natural Market Share Estimate*	Distance to Natural Market Share as of December 31, 1995	Distance to Natural Market Share as of April 30, 2004	Distance Traversed from 1995
Top Four	.18	.27	.56	.38	.29	.09
Big Three	.74	.59	.11	-.63	-.48	-.15
The Top Four are named such by their high reliability; the Big Three are named such by their 1960s size.
*The Natural Market Share Estimate is the fractional share of new registrations of passenger vehicles in New Zealand in 1996. New Zealand was chosen in order to remove from the decision-making process, or at least reduce the influence of, such factors as old name recognition, repetitive buying patterns, and normatively motivated attitudes. The intent was to obtain an estimate as to what share each manufacturer would be able to attain in an environment of rational decision-making, as best each individual is able. The year 1996 was chosen as it is the most recent year in American Automobile Manufacturers Association's 1998 edition of World Motor Vehicle Data.

 

Table II: Market Shares of the Australia New Motor Vehicle Market for the Top Four - Toyota, Honda, Subaru, and Nissan - and the Big Three - General Motors, Ford, and Chrysler - for Calendar Year 1995 and Year-to-Date 2004, as of April 30, 2004, Natural Market Share Estimates, Distances to Natural Market Shares, and Distances Traversed from 1995
Group	1995	YTD 2004	Natural Market Share Estimate*	Distance to Natural Market Share as of December 31, 1995	Distance to Natural Market Share as of April 30, 2004	Distance Traversed from 1995
Top Four	.26	.35	.56	.30	.21	.09
Big Three	.42	.32	.11	-.31	-.21	-.10
The Top Four are named such by their high reliability; the Big Three are named such by their 1960s size.
*The Natural Market Share Estimate is the fractional share of new registrations of passenger vehicles in New Zealand in 1996. New Zealand was chosen in order to remove from the decision-making process, or at least reduce the influence of, such factors as old name recognition, repetitive buying patterns, and normatively motivated attitudes. The intent was to obtain an estimate as to what share each manufacturer would be able to attain in an environment of rational decision-making, as best each individual is able. The year 1996 was chosen as it is the most recent year in American Automobile Manufacturers Association's 1998 edition of World Motor Vehicle Data.

 

To do the computations, the absolute values of the values in the final column of each table were added, and each sum was divided by 8 1/3 years. This gives the rate of change per year. Then the absolute values of the values in each column entitled "Distance to Natural Market Share as of April 30, 2004" were added and divided by the respective rate of change per year. The results were the rounded 26.5 years required for the U.S. and the 18.5 years required for Australia.

As may be seen from the columns entitled "Distance to Natural Market Shares as of December 31, 1995," Australia had advanced much closer to the natural market shares of the Top Four and the Big Three by the end of 1995 than had the U.S. So, many U.S. consumers were rather asleep at the wheel in the 1980s and the early 1990s. And although the U.S. consumers are playing catch-up earnestly, they are still dumping the Big Three and choosing a Top Four product at a rate that is only about 26% greater than that of the Aussies. This accounts for the eight-year time lag in achieving natural market shares for the U.S. However, Americans tend to be a competitive lot and only the future will tell whether they embrace quality sufficiently quickly to beat the Aussies to the natural market finish line.

Source for 1995 U.S. market shares: "Auto Sales Data," Wall Street Journal, January 5, 1996, p. B10

Source for year-to-date 2004 U.S. market shares: "In the U.S. in April 2004, At the Upper End of Quality, Toyota, Nissan, and Mazda Sales Have Double Digit Growth; At the Opposite End of the Spectrum, General Motors and Chrysler Sales Gains Are Minimal," Auto on Info

Source for 1995 Australian market shares: 1998 edition of World Motor Vehicle Data, p.182

Source for year-to-date 2004 Australian market shares: "VFACTS Industry Summary - April 2004," available at http:www.autoweb.com.au/cms/A_101419/newsarticle.html