General Motors, the
Ford Motor Company and
Chrysler are often referred to as the
Big Three, although Chrysler has been surpassed as the third-largest U.S. automaker by
Toyota of America. G.M., Ford and Chrysler were for a time the three largest automakers in the world, with G.M. and Ford remaining as the world's two largest until mid-2000s when they both were surpassed by
Toyota (and later the
Volkswagen Group), although Ford was in 1999 expected to surpass G.M. as the world's largest automaker by 2005, by increasing its production from around 7.77 million vehicles a year (of which about 1 million produced by
Mazda in which Ford then owned a 33.4% controlling interest) by 1999 to 9.15 million by 2005 (when G.M. was expected to produce 9.10 million). The Big Three are distinguished not just by their size and geography, but by their business model. All three have their headquarters in the
Detroit metro area and as such are sometimes also referred to as the
Detroit Three or the
Detroit Automakers. The majority of their operations are unionized with the
United Auto Workers and
Unifor.
Toyota, which surpassed G.M. as
the world's largest automaker in 2006, became that year for the first time one of the Big Three of the U.S. when surpassing
Chrysler. After surpassing Ford as the world's second-largest automaker by 2003, Toyota surpassed Ford in 2007 as the second-largest U.S. automaker, a title Ford had held since 1931. However, by 2010, because of Toyota's controversy surrounding their
unintended acceleration recall, Toyota fell back to third place in U.S. sales in the 2010s, and allowed G.M. and Ford to reclaim their title as the top two us automakers. Toyota, however, overtook GM as the best-selling automaker in the United States in 2021, marking the first time a non-American automaker has led US auto sales for a full year. Ignoring all other reasons for The Big Three's decline, and beginning with a fixed ideological/political premise that efficiency is best achieved by reducing the wages and working conditions of the lowest ranked employees, advocates of the neoclassical economic viewpoint argue that Union labor can result in higher labor costs than other multinational automakers, including those with plants in North America. The 2005 Harbour Report estimated that Toyota's lead in labor productivity amounted to a cost advantage of $350 US to $500 US per vehicle over American manufacturers.
Delphi, which was spun off from GM in 1999, filed for Chapter 11 bankruptcy after the UAW refused to cut their wages and GM is expected to be liable for a $7 billion shortfall. To improve profits, the Detroit automakers made deals with unions to reduce wages while making pension and health care commitments. GM, for instance, at one time picked up the entire cost of funding health insurance premiums of its employees, their survivors and GM retirees, as the US did not have a universal health care system. With most of these plans underfunded in the late 1990s, the companies offered and provided retirement packages to its elder senior workers, and made agreements with the UAW to transfer pension obligations to an independent trust. In 2009, the CBC reported that the non-unionized Japanese automakers, with their younger American workforces, lower wages and fewer retirees would continue to enjoy a cost advantage over the Big Three. as the Big Three shifted away resources from midsize and compact cars to lead the "SUV Craze". Since the late 1990s, over half of their profits have come from
Sport utility vehicles, while they often could not break even on compact cars unless the buyer chose options. Ron Harbour, in releasing the
Oliver Wyman’s 2008 Harbour Report, stated that many small "
econoboxes" of the past acted as loss leaders, but were designed to bring customers to the brand in the hopes they would stay loyal and move up to more profitable models. The report estimated that an automaker needed to sell ten small cars to make the same profit as one big vehicle, and that they had to produce small and mid-size cars profitably to succeed, something that the Detroit three had trouble doing. Falling sales and market share at times have resulted in the Big Three's plants operating below capacity leading to production cuts, plant reductions, closures and layoffs. Market incentives and subsidized leases were implemented to help sales which was crucial to keeping the plants operating at capacity, which in turn drove a significant portion of the Michigan economy. These promotional strategies, including rebates, employee pricing and 0 percent financing, have boosted sales but have also cut into profits. More importantly such promotions drain the automaker's cash reserves in the near term while in the long run the company suffers the stigma of selling vehicles because of low price instead of technical merit. Automakers have since been reduced and scaled back on incentives and raise prices, while cutting production. The
subprime mortgage crisis and inflated higher crude prices in 2008 resulted in the plummeting popularity of best-selling trucks and SUVs, led automakers to continue offering heavy incentives to help clear excess inventory. The Big Three filed a lawsuit against California Governor
Arnold Schwarzenegger because of an earmarked impending tailpipe emissions requirement. In response, Governor Schwarzenegger told the Big Three to "get off [their] butt". In 2008, with relatively high energy prices, a stagnant and declining economy and an overall tense market situation due to the
subprime mortgage crisis, the Big Three were re-strategizing and adapting their operations idling or converting light truck plants to passenger vehicle cars. Due to the declining residual value of its vehicles, Chrysler has stopped offering leases on its vehicles. In 2009, General Motors and Chrysler filed for and eventually successfully emerged from
Chapter 11 restructuring to restructure and liquidate burdensome corporate assets in the same year.
General Motors of Canada did not file for bankruptcy. The United States and Canadian government control are reported as temporary. On June 10, 2009, Chrysler Group LLC emerged from a
Chapter 11 reorganization bankruptcy and its stake was subsequently bought by the Italian automaker
Fiat. On June 3, 2011, Fiat bought out the remaining US Treasury's stake in Chrysler for $500 million, increasing its ownership of the automaker to 53 percent. On January 21, 2014, Fiat bought out the remaining stake in Chrysler Group that it did not already hold from the United Auto Workers' employee medical benefit retirement trust. Due to the corporate structure of
Fiat Chrysler Automobiles, which is headquartered in the United Kingdom for taxation purposes and the Italian
Agnelli family as the major shareholders, some media sources now list Detroit as having a "Big Two" (GM and Ford) as opposed to a "Big Three". Chrysler has become part of multinational auto giant
Stellantis after FCA Group merged with the largely pan-European
PSA Group in 2021. In more recent times Texas-based
Tesla has been included, thus the expression "big four" has been used. Tesla as of 2021 ranked as the fourth-largest American automobile manufacturer by production output while being by far the fastest growing as well as being the most valuable in terms of its market valuation measured by market capitalization. In 2021 Tesla was worth more than all of Japan's and Germany's largest automakers combined. == Japan ==