Transplant Automakers Ramping Up Production of Niche Models in the U.S.

Washington DC June 13, 2005; The AIADA newsletter reported that the surge in transplant automobile manufacturing facilities in the U.S. has contributed to a change in the dynamics of the U.S. auto industry, reports Automotive News.

While the New American Manufacturers still rely heavily on high-volume vehicles, there has been a shift in strategy. The transplants’ challenge: Figure out how to fit lower-volume nameplates into busy plants without eroding profitability.” Over the past ten years, transplant automakers have begun offering more niche models, ramping up production in the U.S. from 26 nameplates in 1994 to 48 nameplates in 2004.

This shift, according to the News, “accomplishes two things. It broadens the companies’ product portfolio at a time when consumers are showing more interest in new segments. It also cushions North American factories against market downturns.” Brett Smith, assistant director at the Center for Automotive Research, suggests this mode of niche production (planning for sales in the range of 7,000 to 35,000) will continue in the future with Asian automakers proving very adept.

"The differentiating point for automakers will be whether a volume is that low intentionally," says Smith. "It’s one thing to plan for 100,000 units and sell only half that many. But it’s something else altogether to intentionally shoot for 50,000 and make the business plan work at that level. I think that’s what the Asians are going to prove very good at."

Most recently, Toyota, Honda and Nissan have all shifted operations within their U.S. plants to make way for new models in segments they plan to tap further into. Note the flexibility: “Last month, Georgetown got the nod to begin building Toyota’s first North America-made hybrid vehicle, a Camry hybrid that will import key powertrain components from Japan.”

This addition of up to 50,000 cars annually will cost the company just $10 million in capital investment. “Honda has a similar outlook. Its two Ohio assembly plants have hustled to satisfy relentless demand for Accords and Civics,” reports the News. At the same time, Nissan’s plant in Smyrna, Tenn., juggles five nameplates, including the Pathfinder and Maxima.

In a separate note, officials at Isuzu Motors America announced plans to begin production of up to 10,000 new trucks at a GM facility in Shreveport, Louisiana. The trucks -- Isuzu’s midsize i-280 and i-350 trucks -- are based on GM’s Chevy Colorado and GMC Canyon trucks already produced at the plant.

According to Isuzu Motors America spokesman Chip Letzgus, "The parts that would be unique to Isuzu would be cosmetic: the grill, the badging.” For the most up-to-date and accurate information on transplant production in the U.S., see AIADA’s “At Home in America poster.