The Ongoing Collapse of the Western Car Industry: Q1 2025, Part 2 North America
North America
United States
Wolf Richter has produced some very useful graphs at his site “Wolf Street” that provide a good understanding of the overall dynamics of the US light-vehicle market and individual manufactures. The one below shows the flat-lining of US new vehicle sales from 1986 to the present day. There were two peaks, in 2000 and 2016, but overall the US new vehicle market has been on an undulating plateau. Between 1986 and the present day, with foreign brands having taken an increasing share of the market; especially smaller vehicles, sedans and mid-sized SUVS. Increasingly, foreign brands such as Toyota, Honda and Hyundai-Kia have even moved into the full-sized SUV and truck markets. This has reduced the sales of the “big three” US manufacturers (GM, Ford and Chrysler), with Chrysler being swallowed up by Stellantis, and concentrated those sales in the higher margin full-sized truck and SUV segments.
The extreme profiteering of all brands (and their dealers) during the supply chain disruptions of the COVID era is evident in his graph below, with the average transaction price rising from about US$35,000 in 2019 to nearly US$48,000 in 2022; with only a small fall since then. Let’s remember that the big jump in Tesla profitability happened during this period, when Tesla’s prices jumped substantially. Tesla caught all the benefits of the price gouging, as it sells directly rather than through dealerships who took their share of the price gouging, so it is set to lose the most from any fall in prices.
The manufacturers seem to have become comfortable with less sales at higher margins, leaving many struggling to afford such purchase prices. In 1986 the US population was 240 million, while in 2024 its was 345 million, 50% higher while car sales remained the same! As Richter notes, what the US needs is lower car prices. But the biggest possible source of those lower prices, China, has been blocked by the US anti-China 100% EV tariffs (equalled by Canada). So the US population is now stuck with over-priced internal combustion engined (and even more expensive electric) vehicles rather than cheaper electric vehicles.
With North American vehicle production now recovered from the COVID supply chain disruptions, the result is an ever increasing amount of inventory on dealers’ lots; all of which the manufacturers count as sold (sold to the dealers), with more and more vehicles arriving on those lots. At some point the manufacturers will have to blink and start severely cutting prices (and/or cut production), and providing incentives to the dealers on the vehicles on their lots, as the dealers start refusing to take any more cars. Retail sales of vehicles may then recover somewhat, but it will take a long time to work off the extra inventory while profits collapse; as we are already seeing with Stellantis. The manufacturers will also have to get used to selling the cheaper versions of each model, rather than trying to force customers to buy more expensive versions through the unavailability of the cheaper ones. There will be no love lost for many of the dealerships who were happy to gouge customers with “market adjustments” in the tens of thousands of dollars during the COVID shortages. Even Mazda, a purveyor of relatively inexpensive cars, will have to drop prices substantially as its “cheap” cars now go for US$30,000 and up.
The slow-growing US EV market (10% growth in 2024) awaits the removal of the EV subsidies by the Trump administration. Unlike the views of the Teslabros, the reality is that such a removal will severely damage the sales and/or margins of Tesla in the US as ICEV cars will be competing on an even playing field with EVs. The US market is where Tesla makes the vast majority of its profits, with China sales unprofitable and European sales a lot less profitable. Also little noticed by the Teslabros has been the ongoing loss of US BEV market share by Tesla, 73% in 2021, to 64% in 2022, to 55% in 2023, to 47% in 2024; a steady drop of 8-9 percentage share points per year. This was masked by the growth in the overall BEV market until 2024, when Tesla US sales fell by 5% even with the CyberTruck, the Model 3 refresh, cheap financing deals and end of year sales incentives.
This loss of market share will only continue, or even intensify, as the other manufacturers increase offerings (e.g. the Chevrolet Equinox, Geely-Volvo EX30, Kia EV3) and fight over a BEV market with no protectionist-oriented (favouring domestic production) government incentives. The Equinox EV base price is US$35,000, with a longer range than a Tesla model 3 long range; interesting that GM EVs tend to out perform stated ranges, while Tesla EVs tend to do the opposite. The CyberTruck was actually something of a flop, being outsold by the Ford F150 Lightning in Q4 of 2024.
It is not a single competitor that is eating away at Tesla’s US market share, but a whole host of competitors which are each growing their sales rapidly from relatively small bases. But as time progresses, they take greater and greater amounts of market share away from Tesla. In a slow growing BEV segment, as in 2024, that means that Tesla’s US sales will fall. In a possibly no growth market, as may be the case in 2025 with all the government incentives removed, that means a more rapid fall in Tesla sales and most probably margins as it struggles to maintain those sales. Tesla’s pure focus on the BEV market segment, with no offerings for the plug in hybrid segment, may also become a very significant handicap with respect to its competitors; not just in the US.
Here, the colossal effort put into the Cybertruck can be seen as a huge strategic error as sales of the Cybertruck disappoint and the lack of a more affordable car model is greatly felt. The Cybertruck may also damage Tesla’s previous brand image of producing environmentally-friendly and safe vehicles given its gargantuan size, high lethality for pedestrians, and the inability to break the windows for trapped occupants. This will only add to Musk’s obvious destruction of his relationship with his previous core sales demographic of progressive-leaning environmentally-aware consumers. Even his new MAGA friends may now be turning on him as he extols the virtues of replacing US workers with H1-B visa temporary foreign workers.
The video below provides a very interesting take on the future of Tesla under Musk. It argues that the Model S and Model 3 were products of the long term plans of the founders of Tesla that were forced out by Musk. With the Model X and Model Y simply being derivatives of those two platforms. The CyberTruck is the first new car produced under Musk’s vision and oversight, one utterly out of touch with the needs of Tesla to expand its product line into cheaper cars and misaligned with the previous image of the brand.
For the other manufacturers, the US market is becoming more and more central to their success and survival as their sales in other markets shrink - especially for the US “big three” of GM, Ford and Chrysler (owned by Stellantis and now actually sixth best seller in North America), and the Japanese and South Korean manufacturers. With many of the Japanese manufacturers increasingly becoming North American car companies with a Japanese “home” market offshoot.
Excluding its minority stake in the SAIC-GM-Wuling (SGMW) joint venture, GM sold 4.8 million cars globally in 2023 of which 2.6 million were in the US, 268,000 were in Canada and 184,000 were in Mexico; just over 3 million in North America. 869,000 of the remaining 1.6 million were in China (SAIC-GM), 271,000 in Brazil, 30,000 in Argentina; with approx. another 100,000 in the rest of South America. In 2024, GM became even more concentrated on the North American region as Chinese sales fell 23% to 673,000 while North American sales grew slightly. Globally, 4.55 million sales, with 2.71 million in the US, 295,000 in Canada and 205,000 in Mexico; 3.21 million in North America. Only 673,000 in China (SAIC-GM), about 260,000 in Brazil, and 24,000 in Argentina with sales in the rest of South America falling slightly.
Another great graph from Wolf Richter, showing how GM sales in the US have not fully recovered from the COVID-related falls; not surprising with the price-gouging still in place.
For comparison, GM sold 4.5 million cars in the US in 1986, nearly 5 million in 1990, and then “went to shit in the 90s” as CleanTechnica puts it in part 1 and part 2 of its article on GM; as complacency and the bean counters won out. In the 2010s, GM also went for cost savings with the Bolt which was basically an ICE design with a battery; as discussed in part 3 of that article. GM has started to build some EVs from the ground up and is having some success in the EV space in North America; for example with the Equinox EV shown above, and the Cadillac Lyriq and the Chevy Blazer EV below. GM delivered 114,000 BEVs in 2024 in the US, up 50% for the year and 125% in Q4. That is still only about 4% of sales though.
Ford global sales in 2023 were 4.4 million, with 2 million in the US, 233,000 in Canada and 48,000 in Mexico; 2.3 million in North America. Of the remainder 518,000 were in Europe, 233,000 in China (Changan Ford). As Ford continues its exit from the European market (in the mid-2010s Ford sold over a million cars in Europe), and its sales in China are further pressured it will increasingly become a NA manufacturer. In 2024 Ford’s US sales were up slightly to 2.08 million, about 240,000 in Canada and 51,500 in Mexico; 2.4 million in North America out of about 4.2 million globally. Sales in Europe were down to around 450,000 and in China down to 211,000. Ford sold 98,000 BEVs in the US in 2024, under 5% of sales, with the F150 Lightning outselling the CyberTruck in Q4 2024. As this graph from Wolf Richter shows, Ford’s US sales are still well below the peak of 2.6 million in 2016; in 1986 Ford sold 2.06 million vehicles in the US.
Chrysler (Stellantis US) is the North American arm of the troubled Stellantis, with 1.5 million US sales, 100,000 Mexican sales and 158,000 in Canada in 2023; 1.758 million in North America. 2024 was extremely difficult for Chrysler with sales dropping by 15%, with the Chrysler and Dodge brands being hardest hit. There is much talk of cutting US brands from a Stellantis which recently had its CEO forced out and is to all intents and purposes two (three?) separate car companies; one overwhelmingly focused on North America (with about 230,000 South American sales) and the other predominantly focused on Europe and MENA (with about 750,000 locally produced South American sales of models specific to that region).
Price gouging in NA was the main driver of Stellantis profits (greatly aided by COVID-19 related supply chain issues), which destroyed the brand/price equation of the NA vehicles; especially when Chrysler was historically seen as the cheaper brand of the “big three”. Stellantis was trying to charge premiums for what had always been seen as a non-premium brand. That approach has now become non-tenable; especially when combined with falling quality. The result is now very high inventories and increasing pricing incentives, removing the short-term non-sustainable NA profits. As shown in the graph below, the fall of the Stellantis in the US has been in a nearly straight line since 2019.
The company is now looking at deep cuts to the MSRP (manufacturers suggested retail price, the price that the company proposes to its dealers) for its new vehicles, which will result in even bigger cuts on all the vehicles sitting on dealers’ lots. Horrendous for Stellantis profits for quite a few quarters until they work off all the inventory, and lower per vehicle profits ongoing. A future that the rest of the industry will have to accept, given that North America is not a fast growing market.
Stellantis does have significant sales in South America, 879,000 in 2023 and with continued growth in 2024. The majority of those sales are by its Fiat brand though, using localized production - with 475,000 sales in Brazil, 55,000 in Argentina, and 6,500 in Uruguay; 542,000 in total. The remaining were mostly Jeep, Ram (US brands) and Peugeot (another European brand, 104,000 sales) vehicles. But South America has not built an anti-China EV tariff wall and will very much be an increasing target of the Chinese brands in 2025; with BYD completing a manufacturing plant in Brazil this year. In future updates, I will dig deeper into the South American EV market.
The documentary below covers how the drive for profits through cost cutting while also raising prices within Stellantis has destroyed the Jeep brand, but it could be about any part of Stellantis and to some extent Ford and GM. In the short-term this strategy boosts profits, but in the medium term it destroys the brand in the eyes of consumers; Stellantis is now experiencing the medium term.
Another documentary on the destruction of the US Stellantis brands as a whole over the past years. Chrysler is now only the sixth biggest selling car manufacturer in the US, and its position is continuing to fall.
Toyota has been incredibly successful in the US, becoming the 2nd biggest selling manufacturer with 2.25 million sales in the US in 2023; plus 196,000 in Canada and 150,000 in Mexico. That’s 2.6 million sales in North America vs. 1.1MM in Europe, 1.6MM in Japan, 1.7MM in China, 221,000 in India and 192,000 in Brazil; out of 11.23 million globally. In 2024 Toyota managed to keep its fall in Chinese sales to about 10%, but as the ICEV segment in China continues to collapse that rate of fall will rapidly accelerate; while its sales in other markets such as Asia and South America are already being threatened by Chinese manufacturers. The end result will be that Toyota is concentrated on the slow growing and protected and predominantly ICEV markets of North America, Japan and Europe.
Toyota’s US sales grew to 2.33 million in 2024, with its sales only slightly below its 2015 peak of 2.5 million; with Toyota vehicles tending to be in lower price points than the “big three” vehicles. But Toyota is far behind in BEVs, reflecting its senior management’s negative attitude toward electric vehicles until recently.
Hyundai-Kia has also been extremely successful in the US market, now the number four seller of cars in the US with 1.58 million sales in 2023, together with 196,000 Canadian sales and 143,000 Mexican sales; 2 million sales in North America. That compares to 7.5 million globally (of which 516,000 were BEVs), with 1.45 million in South Korea (where H-K dominates the home market), 1.1MM in Europe, 860,000 in India, 500,000 in MENA, 445,000 in China and 150,000 in Australia; showing a high level of regional diversification. The majority of its sales though are in markets dominated by ICEVs; it needs success in China to be part of the rapid growth of EVs in the biggest global car market. But China sales were mixed in 2024, with Hyundai down 40% in 2024 while Kia was up 60%. Even without such success though, Hyundai is out-performing its non-Chinese competitors - including Tesla - with respect to new EV model introductions. For example with their own version of the mythical ever coming soon Tesla “Model 2”; that is already in production.
And also the Kia EV3, as well as the smaller upcoming Kia EV2. All of the Hyundai group new models are very bad news for their competitors in the North America and Europe; with Hyundai group already becoming the 2nd best seller of BEVs in the US in 2023. The company’s US sales grew through 2024, including a rapid growth in BEV sales. As Tesla US BEV market share fell below 50% in 2024, Hyundai Group’s jumped above 10%.
This was helped also by bigger vehicles such as the Hyundai Ioniq 9, and Kia EV 6.
Here is some background on the growth of the Kia brand in the US.
Hyundai-Kia increased sales slightly in the US in 2024 to 1.63 million, with sales well above the 2016 levels. Its EV sales were up 53% to 101,000; 7% of total sales.
Honda has also enjoyed historical success in the US, and is currently the number five seller of cars there with 1.3 million sales in 2023, together with 113,000 in Canada and 38,000 in Mexico; a total of 1.45 million sales in North America. Compared to global sales of 4.1 million, with 1.23 million in China, 594,000 in Japan and 61,000 in Europe. In 2024, Honda sales in China crashed at a rate of over 25% with a continuation of that trend highly probable in the next couple of years. The end result will be a North American car company with a further concentration of sales in Japan; with the much lesser sales in Asia and South America also being challenged by Chinese manufacturers. Honda sales in the US in 2024 did increase by 8.8% in 2024, to 1.42 million, but sales were still over 10% down from the 2016 level. Sales in Canada and Mexico may have jumped by nearly 20% in 2024. Like the other Japanese manufacturers, Honda has no real presence in BEVs.
Nissan is the number 7 seller of cars in the US with 899,000 sales in 2023, plus 91,000 in Canada and 241,000 in Mexico (the Nissan Versa was the best selling car in Mexico); 1.23 million in North America. Compared to 3.4 million globally, with 794,000 in China, 481,000 in Japan and 293,000 in Europe. Nissan’s Chinese sales have fallen to under 700,000 in 2024, while Japanese and European sales have remained relatively stable, and look to follow the same fate as those of Honda’s. Nissan would then have half its sales in North America, a fifth in Japan and just over a tenth in Europe; all slow growth ICEV dominated markets. Unfortunately for Nissan, the US has been a sales disaster for it in the past few years; with sales falling from a peak of 1.6 million in 2017 to only 920,000 in 2024 (a small increase from 2023).
Even that small sales increase was achieved with deepening discounts.
Making cars that are unnecessarily complex and expensive to repair, using a bad transmission (CVT), and reducing overall quality does not help with sales.
Subaru is the number 8 seller of cars in the US with 632,000 in the 2023 (13% up on the previous year), plus 55,000 in Canada and 4,000 in Mexico; 691,000 sales in North America. Compared to 976,000 global sales, with 106,000 in Japan, 46,000 in Australia. A North American car company, with much smaller sales in Japan and Australia; with the latter being flooded with Chinese competitors. It enjoyed moderate sales growth in North America in 2024 with US sales up 5.6% to 668,000 and Canadian sales up 6%.
VW is the number 9 seller of cars in the US with 329,000 sales, plus 64,000 in Canada and 150,000 in Mexico (543,000 in North America) in 2023, but this represented a small share of the company’s global sales which are concentrated in Europe (3.8 million) and China (3.2 million). Like Toyota, VW has managed to limit its 2024 drop in China sales to about 10% in 2024, but that drop will rapidly accelerate given the accelerating shrinkage of the Chinese ICEV market. Even after a 15% jump in US sales in 2024, VW’s North American sales will still represent only about 9% of its global sales.
BMW sold 362,000 cars in the US in 2023, 35,000 Canada, 41,000 Mexico; 438,000 North America. Out of 2.55 million global sales - NA is 17% of global sales (of which 925,000 in Europe and 825,000 in China). BMW is experiencing success in increasing its EV sales in North America in 2024 (up 2.5% in the US in 2024), while its China sales are down about 20%; the start of a probable inevitable collapse. Leaving BMW as a European seller of cars, with a significant North American offshoot.
Mercedes sold 352,000 cars in the US in 2023, 36,000 Canada, 10,000 Mexico; 400,000 North America. Out of 2 million global sales of cars (excluding vans) - NA is 20% of global sales (of which 738,000 in China, 660,000 in Europe and 24,000 Australia). It is having difficulty with its move to EVs, critical to the Chinese market, and its China sales declined about 15% in 2024. As with BMW it may very well become a European seller of cars, with a significant North American offshoot (where sales increased about 9% in 2024). As with BMW, its issue may be that it no longer has the scale to fund the development of new models; perhaps requiring a merger with another manufacturer to survive.
Mexico
The Mexican light vehicle market had 1.36 million sales in 2023, an increase of 24.4% over 2022. In 2024 sales grew by another 10%. Sales are dominated by Nissan (17% market share), GM (14% share), VW (12%), Hyundai-Kia (10.5%), and Toyota (8%), with 7% for Mazda, 6% for Stellantis, 4.5% for Ford, and 4% for SIAC-MG; 83% of the market. Mexico represents a market without anti-China EV tariffs, and a possible production base for Central and Southern America; although the US has shown its resistance to Mexico being used as a manufacturing source by the Chinese for US sales.
The top selling cars in Mexico are the Nissan Versa and the Nissan NP300 Navara, together with the Chevrolet Aveo, Kia K3 and VW Virtus.
Mexico is a much poorer nation than the US, with a GDP per capita of US$14,000 at market exchange rates and US$22,400 at PPP; not that much different than China. Therefore, it would be expected that the best selling cars would be smaller and less expensive ones than in the US. Both the Hyundai Creta and MG 3 have seen sales increase substantially in 2024.
Most of the brands have increased sales with the growing Mexican market, with sales accelerating toward the end of the year. With the US and Canada 100% anti-China EV tariffs, and the EU anti-China EV tariffs, we can expect the Chinese to focus on more open markets such as Mexico; with a much bigger presence from the likes of SAIC (especially impacted by the EU tariffs). Chery Mexico sales rocketed nearly 350% in 2023 (it only entered the Mexican market in 2022), but they have fallen by about a quarter in 2024 and the automaker is restructuring its Mexican operations for better sales success. BYD is planning on building a factory in Mexico, and plans to sell a 100,000 vehicles there in 2025. Geely entered Mexico in late 2023, and is expanding its product line. It looks like 2025 may be the year when the Mexican “Chinese invasion” will start to be felt.
Canada
With 100% anti-China EV tariffs, there will be no “Chinese invasion” in Canada. In 2023 1.66 million light vehicles were sold in Canada, a number that increased by about 10% in 2024. With the moves to rapidly reduce the number of short term immigrants after the massive increases of previous years, there may be somewhat of a stagnation in car sales given the large net emigration envisaged for the next few years (i.e. millions).
The best selling car list somewhat mirrors that of the US, dominated by trucks (Ford F150, RAM Pick Up, GMC Sierra, Chevrolet Silverado, Hyundai Tucson) and SUVs (Toyota RAV-4, Honda CRV, Nissan Rogue, Hyundai Kona) with only one sedan (Honda Civic). The Stellantis brands have been just as heavily hit in Canada as in the US.
The large distances without a properly functioning public transport infrastructure (although better functioning than in the US) work against the adoption of EVs, somewhat offset by the grouping of the Canadian population into a small number of urban conurbations (Greater Vancouver, Greater Toronto and Greater Montreal). BEV market share is about 12%, with a small additional amount of plug in hybrids.
The Canadian government does now seem to be backing off from the ridiculous industrial policy of throwing money at the also-rans of the EV battery industry to set up in Canada that I described in “Canada's EV Industrial Policy: Picking Losers And Building A Wall”. With one of the corporations now in bankruptcy (Northvolt), two others in financial trouble (Stellantis NA and Honda), another non-committal (Ford), and the final one (VW) with no real experience of building large-scale battery plants, the whole “industrial policy” may turn out to be a stillborn fiasco. That’s what happens when you decide to keep out the world-leading Chinese EV manufacturers and EV battery manufacturers (CATL and BYD etc.). Even just the threat of tariffs by Trump will also create a more negative environment for EV battery investments in Canada.