Avoiding The Possible Impending Death Of The US Auto Industry

By: Sam Abuelsamid, VP of Market Research

My colleague Craig Daitch has written about the results of a YouGov study that examines the demographics of U.S. vehicle owners, and the prospects are extremely troubling for General Motors, Ford, and Stellantis. The owners of vehicles from these brands are getting older by the day, while younger car buyers are going for brands based in other countries. While older customers generally have more money to spend, the nature of the human lifecycle is that they have fewer years left to spend it. Having an inexorably aging average customer base is the kiss of death for any brand. 

According to the YouGov study, 51% of owners of American-brand vehicles are over the age of 55. Among those who own non-American brands, only 44% are over 55. At the opposite end of the scale, 25% of non-American brand vehicle owners fall in the 18-34 year old cohort, while only 18% of American-brand owners are in this group. 

Why?

What are some of the reasons for this? One of the key components is that younger customers are in the earlier stages of their working lives and have less to spend on vehicles. In the mid-to-late 2010s, the Detroit-based automakers seemed to be falling all over themselves to abandon smaller, less expensive, and low or negative margin cars in favor of the larger SUVs and pickup trucks that could pull in the big profits. While this strategy helps boost the quarterly bottom line and has traditionally appealed to Wall Street investors, it effectively abandons the pipeline of customers needed to buy those profitable vehicles 10 to 20 years from now. 

While manufacturers like Toyota, Honda, Nissan, and Hyundai Motor Group reduced some entry-level offerings, they didn’t abandon entry-level customers entirely. Nissan still offers cars like the Sentra and Kicks, Toyota still has Corollas, and the Kia Soul and Hyundai Venue are offered in the low $20,000 range. The only domestic brand vehicles in that price range are the Chevrolet Trax and Buick Envista. Ford briefly offered the Maverick at a $20,000 starting price, but it now costs upward of $27,000, and the Jeep Compass is in the same range. 

Any reasonably intelligent marketer knows that it’s a lot easier to retain a customer if you have high-quality, competitively priced products than it is to convert established customers from other brands. Alfred Sloan figured this out in the 1920s when he set up a ladder of brands at General Motors from entry-level Chevrolets to luxury Cadillacs. While GM still has some of that, Stellantis and Ford seem to have forgotten that lesson. 

Gas Guzzlers Versus EVs

Another major problem for the domestic industry is consumer attitudes toward cleaner vehicles. 51% of non-American brand owners believe EVs are the future of the industry compared to only 39% of those who own American brands. As sales growth has stalled for EVs in the past two years, much of the industry has pulled back on the deployment of these emissions-free vehicles. While Toyota, Honda, and Hyundai Motor Group are offsetting this with a broad range of hybrid and plug-in hybrid vehicles, those powertrains are still very limited from Detroit. 

Further exacerbating this problem are the policies of the current administration in Washington, which seems hell-bent on eradicating any lower-emitting vehicles. Among the recent policy changes are eliminating the clean vehicle tax credits and federal incentives for building EV charging infrastructure. The recent tax and spending legislation also eliminated fines for failing to meet corporate average fuel economy standards. 

As a result, automakers have less incentive to produce cleaner, more efficient vehicles, and we’re already seeing product plan changes as a result. Stellantis is restoring availability of its 5.7-liter V8 in the Ram 1500 pickup and will probably add it to other recent products as well. GM is also investing billions of dollars in next-generation V8 engines and expanding full-size truck and SUV production in the US. 

While this may bring some near-term margin benefits to those automakers, it will do nothing to attract the younger buyers who are already buying from non-American brands. As those customers get older and more affluent, they will probably stay with the brands they’ve already owned. Those other automakers are continuing to invest in electrification, particularly Hyundai Motor Group, which has promised a number of lower-cost EVs in the near future. If domestic brands don’t continue to press forward with bringing similar, more affordable EVs to market, they will have even less to offer in the coming years. 

The outlook gets even dimmer for the Detroit automakers if you look beyond U.S. borders. If these manufacturers pivot in the direction that the administration in Washington is encouraging, their products will have little or no demand outside of the U.S. The belligerent attitude of the administration on trade and foreign policy matters only makes things worse. While non-American brands have a broader range of products to appeal to consumers in Canada, Mexico, Latin America, and Europe, the Detroit brands have a much more limited range, and those customers are getting increasingly less inclined to buy any American products. 

With tariffs incentivizing American automakers to withdraw production from Canada and Mexico, there is a major opening for Chinese automakers to set up shop in those countries. These manufacturers can offer extremely competitive products at much lower prices. 

Is There Any Hope for Detroit?

Believe it or not, all is not lost. Despite the pressure from Washington to consume as much oil as possible, there are a few positive signals, particularly from GM. In the first half of 2025, GM’s EV sales volume grew to more than 78,000 units, accounting for 6.2% of its sales. For the Cadillac brand, EVs accounted for more than 23% of its sales volume. GM’s share of the U.S. EV market is now up to 15.8% and GM has 12 different battery-powered models in the market. 

This week, GM also announced plans to update its joint venture battery plant in Spring Hill, Tennessee, to begin producing cheaper lithium iron phosphate (LFP) cells in addition to the lithium manganese-rich cells that were announced earlier this spring. At the same time, GM reaffirmed plans to launch a next-generation Chevrolet Bolt later this year using LFP and its lower-cost Ultium electric component set. GM also continues to invest heavily in the domestic supply chain for the critical minerals needed to produce batteries. 

Meanwhile, Ford is continuing to build out its own LFP battery plant in Marshall, Michigan, with the installation of production equipment to begin in the next few weeks. That plant should be in production by mid-2026 to support the production launch of next-generation, lower-cost EVs later in the year. While Ford hasn’t publicly confirmed any technical details of this new EV architecture from its California skunk works program, the battery packs produced in Marshall are known to be structural, following the pattern of many Chinese EV makers. If the current signals are accurate, the new Ford EVs should be far more affordable and have better margins than the company’s current offerings. 

The big unknown is Stellantis. The Dutch-domiciled company that includes the Ram, Jeep, Dodge, and Chrysler brands has many issues to deal with. Recently installed CEO Antonio Filosa has yet to publicly announce any new product plans apart from ending its hydrogen fuel-cell program. The company's first EV offerings in North America, the Dodge Charger Daytona and Jeep Wagoneer S, are not selling well so far, and other programs have been significantly delayed. 

However, former CEO Carlos Tavares struck a deal with California last year to avoid some hefty penalties for non-compliance with the state’s zero-emission vehicle (ZEV) mandate. Congress recently approved a resolution to rescind the Clean Air Act waiver that allows California to set its own emissions rules, including mandating the end of internal-combustion engine (ICE) vehicle sales in the state by 2035. However, the Stellantis deal explicitly says that the automaker will continue to comply with those rules even if the federal government pulls the state’s authority to impose them. That means Stellantis has to keep offering EVs even though some people in the leadership ranks might be inclined to pull back. 

It Won’t be Easy

Attracting younger buyers into the fold for an established brand is rarely easy. Even if you offer the products they want, they have become increasingly cynical, especially when they see these companies actively lobbying to roll back fuel economy and emissions standards. The legacy American brands also haven’t done a great job implementing a lot of new technology in recent years. They’ve done a mediocre job when it comes to deploying new software, and almost everything they introduce is too expensive. There are very good reasons to be skeptical that these companies will remain committed to the long-term vision. 

The probability that these companies will actually be willing and able to stick to a plan that convinces younger buyers to invest in their products is low, but it’s not zero. But it will take much more than $100,000 electric pickups and $80,000 electric muscle cars.