A fundamental transformation is taking place in the US auto industry as Asian automakers increase their domestic production and market share while General Motors (GM) Corp and Ford Motors Co continue to shrink.
The shift began 21 years ago when Toyota opened its first US manufacturing plant, and it was highlighted again on Monday when both Toyota Motor Co and Hyundai Motor Co subsidiary Kia Motors Corp announced plans to open new assembly plants.
"There's no doubt the footprint is shifting and the players are shifting," said Michael Robinet, an auto analyst with CSM Worldwide.
The same advantages that fueled the growth of Asian automakers in the 1980s are helping them again today: a strong focus on fuel-efficient vehicles and lower production costs.
Japanese automakers Toyota, Nissan Motor Co, Honda Motor Co, and Fuji Heavy Industries Ltd (the maker of Subaru), and South Korea's Hyundai currently build 27 percent of the vehicles produced in North America and command 34 percent of the US market.
CSM expects the Asian production share to rise to 35 percent by 2012 as new facilities come online and GM and Ford complete restructuring plans that include the closure of more than two dozen facilities.
That shift has helped propel the economic decline of Detroit and the state of Michigan. While US automakers are still headquartered in and around the Motor City, Asian and European manufacturers have built most of their plants in the less union-friendly southern states.
Building vehicles in the market where they are sold has a number of advantages.
"It stabilizes the cost base and politically it can't hurt," Robinet said. "If you locate a plant in a new state, that's two more senators flying your flag."
Some of the increased production by Asian automakers will replace vehicles previously imported, Robinet said.
But a large chunk could come from new Asian models aimed at further chipping away the diminishing market share of GM and Ford.
While Kia has not announced what it plans to build at its new US$1.2 billion Georgia facility, many insiders expect it will enter the lucrative truck market.
Toyota meanwhile will open a truck assembly plant in Texas this spring and is expected to build a hybrid version of its best-selling Camry sedan at its new facility in Indiana.
Both Hyundai and Toyota have launched large ad campaigns touting the fact that their vehicles are made in the US, in an attempt to break through to consumers who are still uneasy about buying foreign cars.
"If you look at the demographic breakdown where sales occur, they are much heavier along the east and west coasts," said James Ricci, an auto analyst with Harbour Consulting.
"The only way Toyota can see sales growth is to appeal to a customer they really haven't had access to: the tried and true American," he said.
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