Detroit’s Big Three automakers — General Motors ( ), ( ) and — may be able to leverage the latest production problems affecting Japanese rivals such as Toyota Motor ( ) and Honda ( ) to build on gains in the U.S. market share. Thailand’s worst floods in almost 70 years have disrupted manufacturing facilities in the southeast Asian nation, with Japan’s car makers being hit hard. The estimates that the companies may lose 6,000 units of production daily.  Both Toyota and Honda have withdrawn their sales and earnings guidance for the year to March until they are able to assess the impact of the floods on supply.
- The 2018 Chevrolet Traverse Has Potential To Boost GM’s Profitability
- Earnings Review: GM Caps Off A Strong 2016 With A Strong Fourth Quarter But Challenges Ahead
- Why The New GMC Terrain Model Could Help Boost GM’s Bottom Line
- GM Ends The Year As The Leading Vehicle Seller In The U.S.
- Earnings Preview: GM Had An Extremely Strong FY2016
- GM’s November Truck Sales Rally Didn’t Last Long
The latest disruptions come just as Japanese car makers were ramping up U.S. production and offering aggressive incentives to recover market share lost after the March earthquake and tsunami in Japan. Japanese-owned facilities in the U.S. saw production gains of 20% in the third quarter, according to Scotiabank’s October Global Auto Report. That still leaves them with inventory levels some 18% below normal levels. 
The setback gives General Motors, Ford and Chrysler an opportunity to consolidate gains in market share this year at the expense of the Japanese producers.
Deceleration Fears at GM, Ford Overdone
This may be especially important for GM, which has shown signs of slowing momentum in October with sales growth of just 2%. That lagged industry growth of about 8%, according to 3] Ford fared better with sales growth of 6% while Chrysler jumped ahead with growth of 27%.. [
Although Trefis estimates that the Chinese market is the biggest driver of GM’s value, the U.S. market still contributes nearly 30%.
Through October, GM has gained almost one percentage point of the U.S. market share year-to-date to 19.8% while Japanese rivals struggled to overcome production shortages. Toyota’s share slid 2.6 points to 12.6% and Honda’s share dropped 1.5 points to 9.1%. Ford’s market share is largely flat while Chrysler’s share increased 1.2 points to 10.7%. 
As we enter the final months of the year, investors are eagerly watching auto sales figures as GM’s recent earnings disappointed the market, which led to a 10% dip in its market price. Ford’s sales figures have been slow. The main fear is that an economic recession would lead to a contraction in auto sales; however, we don’t see this as an immediate risk. Certainly a weakness in the European auto market is a concern, but Ford sales figures indicated that demand in the U.S. and China – the two largest markets – is holding up.
So as Japanese automakers struggle, the Big Three might gain additional market share in this time of weakness that could offset potential weakness in the overall auto industry.Notes: