U.S. auto production undergoes a decade of transformation

Automakers including Kia, above, and Honda, right, have built plants in Mexico, which has made itself an export center thanks in part to trade deals crafted by the government.

Automakers set a North American production record last year as 17.9 million light vehicles poured off assembly lines in the U.S., Mexico and Canada.

It was the third-straight year above 17 million vehicles, which was another first.

Unsurprisingly, the production surges roughly match the top five auto sales years in the U.S. But the nature of North American auto production has changed profoundly over the last decade.

A Rogue rolls off the line at Nissan’s plant in Smyrna, Tenn., in 2013. The North American production base is less dominated by Detroit, shifting to growing population centers in the South.

Compared with 2007, the production base is less dominated by Detroit. The center of gravity has shifted from the Northern U.S. and Canada toward the growing population of the Southern U.S. and the emergence of Mexico as a sales market and export base. Assembly plants are more flexible, efficient and truck-oriented. Manufacturers are building more vehicles in fewer plants.

Production shifts

% share of North American light-vehicle production by automaker
  2007 2017 (8 MOS.)
GM* 28.1 19.4
Ford* 18.7 17.9
Chrysler/FCA** 16.4 13.2
Toyota* 11 11.5
Honda 9.5 10.7
Nissan 7.9 10.5
Hyundai-Kia 1.7 5.4
VW Group 2.7 3.5
Source: Automotive News Data Center
*Totals include all manufacturer production plus branded vehicles built by joint ventures.
**Chrysler LLC in 2007; Fiat Chrysler Automobiles North America in 2017

Production has constantly grown and evolved on this side of the Atlantic since Henry Ford applied the assembly line process to automobiles on Piquette Avenue in Detroit. Domestic automakers built a production model that essentially radiated from the Motor City. That went virtually unchallenged until Volkswagen, Honda and Toyota established production footholds in North America in the 1970s and ’80s.

Asian and European automakers had developed strong North American presences by the turn of the century, but the crucible of the Great Recession accelerated the decline of the Detroit-concentric production model.

After the Lehman Brothers failure in September 2008 triggered the auto sales collapse, the bankruptcies of General Motors and Chrysler and a 2009 North American production plunge to 8.6 million vehicles, the Detroit 3 closed their least-efficient plants to survive. Compared with 2007, GM, Ford Motor and what became Fiat Chrysler operate 17 fewer North American assembly plants.

Assembly shuffle

The number of North American light-vehicle assembly plants has declined.
  2007 2017
Plants 85 75
Plants w/2-3 lines 9 13
Source: Automotive News Data Center

What’s different about North American auto production from a decade ago?

It’s more diverse. Detroit automakers still control a bare majority, with GM, Ford and FCA holding 50.5 percent of output in the U.S., Mexico and Canada in the first eight months of 2017. But in 2007, their share was 63.2 percent, a swing of 12.7 points.

Who ate Detroit’s lunch? Everybody. In 2007, Hyundai built 250,519 Sonatas and Santa Fes in one plant, a 1.7 percent share. So far this year, Hyundai-Kia has a 5.4 percent share, with 632,111 vehicles from three plants in Mexico and the U.S. Europeans had 4.9 percent of North American production in 2007 and 7.7 percent this year. Japanese manufacturers have 36 percent of production this year, up from 30.1 percent in 2007.

It’s truckier. As manufacturers respond to the swing in demand for crossovers, SUVs and other sit-high vehicles in the U.S. and other markets, car output is dwindling rapidly. In 2007, cars made up 44.1 percent of North American production. So far this year, that’s down to 35.3 percent.

Shifting south

North American light-vehicle production by country
  2007 2017 (8 mos.)
U.S. 69.90% 65.40%
Canada 16.80% 12.90%
Mexico 13.40% 21.70%
Source: Automotive News Data Center

It’s shifted south. Mexico production is booming, and the manufacturing footprint is shifting from plants just across the U.S. border to plants in the middle of the country, nearer Mexico’s population centers and handy to ports on the Pacific and Gulf of Mexico. Thanks in part to the Mexican government crafting trade deals with dozens of other countries, Mexico has become an export center. And the Mexican domestic market is growing.

The U.S. share of output has declined to 65.4 percent this year from 69.9 percent in 2007 and shifted farther south as Asian and European brands have developed a hub in Southern states.

A bounce-back decade

North American light-vehicle production*
  2007 2016
U.S. 10,585,000 12,101,000
Canada 2,542,000 2,327,000
Mexico 2,026,000 3,483,000
Total 15,153,000 17,911,000
*Figures are rounded
Source: Automotive News Data Center

But Canada has lost almost a quarter of its North American production share, from 16.8 percent in 2007 to 12.9 percent this year.

It’s more efficient. Fewer plants are producing more vehicles. In 2007, 85 assembly plants, including nine with two production lines, built 15.2 million light vehicles. In 2016, the most recent complete year, 75 plants, including 13 with double lines, built 17.9 million units. The output per production line: 161,000 in 2007; 204,000 in 2016.

It supports fewer brands. Automakers aren’t supporting as many brands with North American manufacturing. The greater efficiency is most apparent at GM, which shed Saturn, Pontiac, Saab and Hummer after its bankruptcy. But North American production also has stopped since 2007 for other brands: Isuzu, Suzuki, Mitsubishi, Mercury and Opel. What’s been added since 2007? Tesla and Kia.