Skip to Content

8 top auto industry surprises of 2014

Chrysler's January Sales Up 8 Percent, Lead By Jeep And Ram TrucksChrysler's January Sales Up 8 Percent, Lead By Jeep And Ram Trucks

Here’s a look in greater depth at eight of them.

1. Chrysler’s comeback

Five years ago, Chrysler was nearly left by the side of the road. Only an intervention by President Obama, worried about the potential job losses in the Midwest, kept it open with an injection of government capital. When Fiat opportunistically scooped it up for no cash down, few in the industry gave it much chance of survival. In an increasingly competitive environment, Chrysler’s product line was out of date, out of sync, and out of fashion.

Fast-forward to today and Chrysler (FCA) is the industry’s phoenix. Its sales have gone up every month for the past four-and-a-half years, and rose again in October, by a glittery 22%. Its overall sales of 170,480 came in just 18,174 vehicles behind Ford Motor (F), according to a tabulation by Automotive News. For the year, Chrysler sales have now climbed 15% to 1.73 million.

Analysts have been a little mystified by the rise, except to note most of the gains are coming from light trucks. Credit some shrewd marketing (“Imported from Detroit”), aggressive sales tactics (Chrysler is usually among the leaders in incentives), and a new corporate culture of accountability (its quality boss left the company quickly after a poor showing in a quality survey). Chrysler has long since grown beyond the flash-in-the-pan category, but it is unclear how long momentum can carry it. Satisfied, loyal buyers are the key to Chrysler’s future,” says Michelle Krebs, senior analyst for “If Chrysler lets its new buyers down on quality, they have plenty of other choices and will go elsewhere.”

2. Jeep’s jump

Jeep’s surge in popularity been the jewel in Chrysler’s rebirth. Its sales through October ran a remarkable 46% ahead of a year ago, making it the industry’s fastest growing major brand. There are no signs of a let-up; Jeep sales surged 52% in October. It’s getting a big boost from the all-new Cherokee, but older models, like the Wrangler, a descendant of the World War II icon an last redesigned in 2007, are also selling well.

3. Mulally’s legacy

The Mulally-for-president boomlet that erupted a few months ago (shades of Lee Iacocca in 1988!) has died out, but his name is still gold around Dearborn after an eight-year run at the head of Ford. Too bad Mulally Magic isn’t transferrable. Since Mark Fields succeeded him as CEO on July 1, the company has cut its earnings forecast, endured a blizzard of recalls, many of them for the 2013 Escape, and seen its shares lose 20% of their value. Admiring accounts of the Mulally legacy may have to be rewritten if the bad news keeps piling up.

4. Crossover’s conquest

Year after year, Honda’s Accord is one of the most popular mid-size sedans and one of the top selling passenger cars of any description. But in October it was outsold by a compact crossover, Honda’s own CR-V, a development first reported by Automotive News. The CR-V outperformed every other model in Honda’s lineup with 29,257 units sold, a 30% increase over last October. True, the cute ute has just been redesigned while the Accord awaits its next makeover. But the idea of a cheap-and-cheerful crossover knocking off a sales leviathan like Accord is a jarring one to industry vets. If the trend continues, it will require a rethinking of product plans and volume projections.

5. Mercedes’ Makeover

One of the less-heralded stories of 2014 has been the recovery at Mercedes-Benz and its ascension to near-mainstream status in the eyes of upscale consumers. Despite one of the highest price structures among volume manufacturers, luxury Mercedes models are outselling mere premium offerings by other makers.

Mercedes sales rose 7.5% through October and it outsold Volkswagen last month—a feat that is all the more remarkable when you consider the average transaction price for a Benz is a princely $58,200—more than twice that of VW’s $24,388 (data from Kelley Blue Book). Mercedes’ flagship S-Class is by far the leader in high-end luxury, easily out pacing BMW’s aging 7 Series; the newly-redesigned C-Class is the second most popular entry-level luxury car, ahead of Lexus, Cadillac and Buick; the mid-size E-Class beats Cadillac CTS; and GL-Class outsells Cadillac Escalade among full-size luxury SUVs. Attribute Mercedes’ new relevance to a better understanding of its affluent customers, reflecting changes made by Daimler chairman Dieter Zetsche.

6. Honda’s hurt

The Japanese manufacturer and its American operations have long been considered one of the industry’s more upstanding players. So it was particularly jarring to read in Automotive News that the National Highway Traffic Safety Administration has issued a special order to “investigate the extent and scope” of Honda’s failures to report at least two incidents tied to defective Takata airbags. It gets worse from there. NHTSA also says it is also concerned that Honda’s reporting failures go beyond Takata , including reporting other death or injury incidents. Honda has hired an outside firm to investigate its reporting practices.

7. Barra’s boost

You’d think that the public confidence in General Motors (GM) would be at a post-bankruptcy low, inasmuch as it is being led by an untested CEO coping with the fallout from multiple vehicle recalls and the prospect of a cascade of lawsuits. But if confidence is low, it hasn’t been reflected in the sales numbers. In October, GM sold 226,819 vehicles, up 0.2% from a year earlier. That’s less than the industry as a whole, but margins are stronger. Healthy truck sales—up 6%—fueled record average transaction prices, richer by $2,200 than a year earlier, that now stand at $34,700 according J.D. Power data. (Kelley Blue Book actually has still higher transaction prices: $37,743).

How much of this is attributable to the goodwill generated by CEO Mary Barra is impossible to calculate. Yet unlike many rookie CEOs, especially in times of crisis, she has been highly visible, giving interviews to Fortune, Time, and other publications to drive home her message that GM has to do better. “We’ll either change the people or we’ll change the people,” she told Detroit News recently. That’s a kind of get-tough talk that’s never come from GM executives in the past, and it seems to be resonating with customers.

8. Oil’s gusher

Increase supply—fracking deposits in shale formations in North Dakota and Texas—and reduce demand—slowing growth in China and a recession in Europe—and you have a prescription for falling oil prices that few predicted. Drivers are buying gasoline this fall for less than $3 per gallon in some places vs. as much as $4 a few years ago. Besides producing a surprise dividend for consumers, cheaper gas threatens to derail the industry’s predictable progress toward more fuel-efficient vehicles. The U.S is now the world leader in the production of oil and natural gas, surpassing Saudi Arabia and Russia. That would come as a surprise to the gloomy geologists who believed that U.S. production peaked in the 1970s and would inevitably decline from there.