The New Big 3 Go Into Overdrive

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The returns are now in, and the verdict is clear: 2009 was a lousy year for the auto industry.

Old news, I know. But truth be told, it could have been worse. For some companies, 2009's last month looked pretty good, and there's some indication that we might finally be seeing signs of the long-hoped-for recovery.

According to industry watcher Autodata, overall U.S. sales of cars and light trucks in December 2009 were up 15.1% versus December 2008. Faint praise, given where consumers were in late 2008 (wherever they were, it wasn't at car dealerships), but a definite step in the right direction.

At least for some.

The haves, the have-nots, and the muddled middle
2009 was a year of epic change in the U.S. auto landscape, and December's trends follow the emerging pattern. While the "New Big Three" of Ford (NYSE: F  ) , Toyota (NYSE: TM  ) , and Honda (NYSE: HMC  ) saw huge gains over December 2008 -- 33.5%, 32.0%, and 24.5%, respectively -- General Motors and Chrysler saw declines of 5.6% and 3.7%, respectively.

The revival of Ford is one of the great business stories of 2009. But continued sales declines for the "Government Two" (as Detroit pundit Peter DeLorenzo has dubbed GM and Chrysler) aren't really a surprise. As I see it, GM is a company in transition. December wasn't a great month, but its market share is holding steady at 20%, and if one counts fleet sales, it remains the U.S. market leader, if only barely. The next six to 12 months will give us a clearer picture of GM's prospects.

Chrysler, on the other hand, is very clearly in deep trouble. December's numbers might not look awful, but the company's overall 2009 sales were at their lowest level since 1962, down a whopping 55% since 2007.

It gets worse. Chrysler, under new ownership for the second time in less than three years, doesn't have much in the way of a product pipeline at the moment. According to the company's product plan, we'll see a new Jeep Grand Cherokee this year and some trim-and-wheels freshening of other products. But the company's all-new-and-maybe-finally-competitive lineup of small and midsized cars won't be fully in place until 2014 -- an absolute eternity, given the industry's current rate of change.

Can they (and their dealers) hang on that long? I'm skeptical. But after the wild events of 2009, I'm inclined to think that anything could happen.

What do you think the future holds for the auto industry? Tell us in the comment space below.

Fool contributor John Rosevear owns Ford preferred shares. Ford is a Motley Fool Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 08, 2010, at 7:52 PM, baxnt wrote:

    Lee Iacoca got Chrysler out of financial trouble with his ability to give the public what they wanted at the times they needed it, and Ford is doing the same thing now, but GM & Chryslers federal ties are holding them back more than helping them at the moment, they need some one that can get the corporations to build a product that everyone wants at a fair price, granted the times are different but they need that special CEO and it isn't someone from the government to do it.

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