Can automakers that lost U.S. share in chip crisis win it back?

Automakers tend to jealously guard their market share because once it's gone, it can be extremely difficult to win back.

Yet with the microchip shortage stirring the sales race this year, a question is starting to emerge: If Toyota Motor North America and Hyundai-Kia keep picking up market share as they have this year because they have vehicles to sell and others don't, are they, with their high customer retention rates, likely to give it back when inventories normalize?

Toyota not only leads General Motors in overall sales through the first three quarters but also has picked up 1.8 percentage points of U.S. market share over the last year. It now leads the industry, at 15.8 percent. Hyundai-Kia's market share has also climbed dramatically over the last 12 months, rising 1.5 percentage points to 10 percent, tying it with American Honda. Meanwhile, Ford Motor Co.'s market share has fallen 2.6 percentage points to 11.8 percent, GM has lost 2 full percentage points to drop to 15 percent, and Stellantis has declined 1.1 percentage points to 11.7 percent.

"If you lose market share, it is difficult to win back, but it's not impossible," said Don Johnson, who retired as head of sales and service for Chevrolet in 2014 and is now a managing partner with consultancy Motor- mindz. "The offset to that question is what price do you pay to win it back? Frankly, I'd rather have a slightly smaller piece of pie and be enormously profitable," as GM has remained this year, he said.

The issue that may face automakers is just who they're losing sales to: According to its 2021 Brand Retention and Defection Report, marketing firm Naked Lime said Toyota had the highest brand loyalty rate in the industry, at 60.3 percent, while sibling brand Lexus was fourth, at 51.7 percent, sandwiching Ferrari and Lamborghini.

Tyson Jominy, vice president of data and analytics at J.D. Power, said Toyota is conquesting other automakers at an increased rate this year, "with the vast majority of that gain coming in

August and September alone" while other automakers were in the deepest throes of the microchip shortage.

"In an industry where every sale is crucial, combined with Toyota's very high loyalty rate — second best in the 2021 J.D. Power Automotive Brand Loyalty Study and trailing only Subaru — it means that it will be difficult for other automakers to win those customers back."

However, Jominy said, "the global supply chain remains fragile, and no one fully believes they are out of the woods. Toyota is up so far, but the road is long."

Augusto Amorim, senior manager, vehicle sales forecasts for the Americas at LMC Automotive, said automakers working through these inventory issues should be thinking right now about customer loyalty.

Consider "someone who was driving a Fusion," Amorim posited this month when discussing the long-term impacts of the chip crisis. "Ford's hope was that person was going to move to Escape. But what happened this year, if that person needed a new car, they went to a Ford dealer, and there were no Escapes to be bought. So they went to a Toyota dealer and they could still get a Camry if they really wanted a car, or they could buy a RAV4, because Toyota still had inventory."

Amorim admitted he didn't have an answer to offer but said automakers "need to think about who they lost, how to conquest back those clients and how to keep their current customers."

Michelle Krebs, executive analyst with Cox Automotive, said Toyota "is and has long been the No. 1 shopped brand" on the Kelley Blue Book Brand Watch, and Toyota "owns the No. 1 most important factor to consumers: durability/reliability."

Krebs said that Nissan was able to recover some of the share it had lost before the chip crisis "but at a great cost, as it led to bad behaviors to meet its goals, for which it is still trying to recover," adding that she doubted the Detroit 3 would follow Nissan's costly path.

Stephanie Brinley, principal analyst at IHS Markit, said the Detroit 3 have an edge to get market share back because of their "more robust dealer network" and more robust North American manufacturing footprint.

"Toyota kind of walked into this sales leadership position, but we still haven't seen exactly how much of an impact on Toyota's inventories is going to happen" because its chip crunch hit later in the year, Brinley explained. "It's certainly a risk that any automaker who's lost a sale [to another automaker] has. There's risk, and there's also more cost once you lose someone to get them back."

Still, said Motormindz's Johnson, "When you're a sales guy, everyone wants you to sell, sell, sell to keep the market share. But they also say they want you to be profitable, and it can be very hard to do both."