For many of us, the COVID-19 pandemic was a low point, and our lives have improved since it began to fade. For many automakers, the opposite is true.
They saw record profits at the peak of the pandemic. Supply chain problems meant they produced fewer cars, which helped cut their expenses. A shortage of new vehicles let dealers charge higher prices for the few they could get in stock.
Soaring interest rates meant only wealthier, better-credit Americans could easily car shop. So automakers tailored their lineups to them, building more expensive luxury models and trimming affordable cars from their lineups.
2024 brought those trends to an end.
Several Brands in Trouble
The New York Times reports, “Nissan, the Japanese automaker, is laying off 9,000 employees. Volkswagen is considering closing factories in Germany for the first time. The chief executive of the U.S. and European automaker Stellantis, which owns Jeep, Peugeot, Fiat, and other brands, quit after sales tumbled. Even luxury brands like BMW and Mercedes-Benz are struggling.”
Nissan may be looking for a bailout from rival Honda or an activist investor group.
Stellantis, the parent company of Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Maserati, and Ram, may consider shuttering some struggling brands.
Volkswagen faces the first worker strikes in its long history as it attempts to renegotiate worker contracts in its home country.
Lincoln, Volvo, and other long-established names find themselves overstocked, with dealers marking down prices to sell off stock that is costly to maintain.
Globally, automakers face intense new competition from Chinese brands. China’s BYD looks likely to overtake Ford and Honda in global sales when year-end numbers are final. Federal authorities are exploring new ways to block China’s automakers from entering the American market.
“Many of these problems have been apparent for years but became less pressing during the pandemic, lulling some automakers into complacency,” according to the Times.
2025 Could Bring Some Relief
Early forecasts say sales will likely pick up in 2025. Kelley Blue Book parent company Cox Automotive projects that, when final 2024 numbers are tallied, Americans will have bought 15.85 million new cars last year, up from 15.5 in 2023.
In 2025, Cox Automotive projects that number could reach 16.3 million.
Rough Water Ahead for Some
It may not be enough to make every brand breathe easier.
“Companies that were slow to replace aging models are doing worst. That has been the case for Nissan, Stellantis, and even Tesla, which analysts expect to end the year with sales that are roughly unchanged from 2023,” the Times notes.
With an aging lineup and possibly no substantially new vehicles to reveal in 2025, Tesla may see its position slip. The company lost ground in 2024, with sales dropping 6.1%. It saw its long grip on the electric vehicle market fail, dropping its market share below 50%.
President-Elect Donald Trump has thrown additional turmoil into the markets, announcing an attempt to end the $7,500 federal EV tax rebate that helps sell many electric cars and threatening tariffs on Mexico and Canada that could raise the price of every vehicle on the market overnight.
Automakers Slim Down, Consolidate
The industry is preparing by trimming unnecessary spending and, in some cases, working together.
General Motors was one of 2024’s biggest winners, watching its market share grow by 4.2%. However, the company still trimmed its Cruise robotaxi unit last month.
“Market pressures will prompt carmakers to cooperate with one another more, for example, by sharing the costs of engine development,” the Times predicts.
Nissan has announced plans to work more closely with partner Renault and licensed Mitsubishi’s hybrid system to introduce a hybrid edition of its best-selling model, the Rogue, in 2025.
Volkswagen, meanwhile, has made a major investment in EV builder Rivian and hopes to share technology between the brands.