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Decline in the American Automobile Industry

Essay by review  •  April 27, 2011  •  Essay  •  353 Words (2 Pages)  •  950 Views

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The American automobile industry has continued to see a consistent downfall in sales. Recently making up about one quarter of the nation’s economy, the decline in the industry has proved to be a major issue in the United States. Ford is still reeling, after a crisis that saw its chief executive dumped and the young great-grandson of Henry Ford take the wheel. Ford's profits were $7.2 billion in 1999; by 2001 it was losing $5.4 billion. GM has picked up some momentum, gaining market share, but mainly by discounting. GM started a price war to keep sales going after September 11th 2001, when car showrooms emptied of people. The trouble is, as its chief executive, Rick Wagoner, admitted earlier this year, discounts soon stop being effective sales boosters and suck down profitability. Japanese, South Korean, and German models account for half of car sales in America today. Detroit, Michigan is a major Mecca for the three major American car companies. Car sales are still at historically high levels; it is just that Detroit's share of these sales has slumped. But there is more to Detroit's weakness. The big three manufacturers have to deal with the powerful United Auto Workers Union, which has won its members great benefits, while employers are loaded with pension and health-care costs that top $1,200 per vehicle. This problem is where foreign car companies come in and have appeased some of the economic conflict. There is a competition gap that separates foreign manufacturers and U.S. car manufacturers in America.

This essay will begin with a brief history about the dawn of Ford’s major economy explosion, as he not only created a luxury transportation item, but millions of jobs for America in the factories in the 20th century. Next, the essay will explore how foreign car companies like Toyota and other Asian manufacturers have created a way to generate half of the car sales in America. Finally, whether imported or made in the seventeen car factories that foreigners have opened in America in the past 20 years, America plans to solve this problem that makes up one quarter of our economy.

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