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U.S. Carmakers Trail Rivals in Profits
All carmakers face growing product and technology costs.
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All carmakers face growing product and technology costs. But U.S. manufacturers are generating comparatively less profit than their competitors with which to pay for such spending, according to AlixPartners LLP.
Managing Director Mark Wakefield tells The Wall Street Journal that Detroit-based carmakers generated about $82 billion in profits between 1995 and 1999 compared with $48 billion for Asian and European producers.
But the balance shifted sharply in 2010-2014. During that period, Detroit's $78 billion in income compared with $329 billion for overseas carmakers.
Put another way, the proportion of the global auto industry's profits contributed by the Big Three plummeted from 63% in the late 1990s to 19% in the past five years. The swing, Wakefield declares, "points to a new world order."
The shift also means Detroit carmakers must generate better returns to match the ability of their rivals to meet fuel economy and technology challenges, the Journal says.
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