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American Automotive Industry - A Rise and Decline of an American Industry

American Automotive Industry - A Rise and Decline of an American Industry

The American automotive industry started in the 1890s. While this industry started out with hundreds of competing manufacturers, it came to be defined by three, dominant automakers by the end of the 1920s, which were General Motors, Chrysler, and Ford. While these three carmakers continued to prosper even after the Great Depression and then World War II, the 1970s marked the beginning of extremely troubled times for these carmakers. In the ensuing years, adversities like high oil prices and then competition from foreign carmakers pushed American automakers to the brink, until two of them, Chrysler and General Motors, filed for bankruptcy in 2008 and were bailed out by the federal government.

The Beginning of the American Automotive Industry

In the beginning, the American automotive industry in the 1890s had hundreds of manufacturers and a whole host of different technologies like steam engines, electric, and internal combustion. In the first decade of the 1900s, electric and steam-powered cars were the most popular. In 1911, the electric starter was invented, creating a desire for the gasoline-powered car. Cars in general became more popular after the passing of both the Federal Road Act in 1916 and the Federal Highway Act in 1921, which resulted in the construction of more roads in the US. In the late 1920s and 1930s, the three big American carmakers began to come into their own, dominating the marketplace and fighting for the title of biggest carmaker in the country.

The Great Depression saw the downfall of many luxury automakers like the Stutz Motor Car Company and the Marmon Motor Car Company. New technologies like automatic transmission and hydraulic brakes were introduced in the 1930s. During World War II, domestic passenger carmakers stopped making cars as their factories were used to help in the war effort. Around the same time, unions were winning more and more recognition from automakers, such as when Ford officially recognized the United Auto Workers in 1941. In the following years, automakers would agree to union demands of providing their workers with a pension for those over 65 years old and with decades of loyalty to the company. After the Great Depression, independent automakers also started going out of business, largely due to competition from the Big Three.

History of the American Automobile and the Environment: Webpage that looks at the intersection of the US auto industry and the environment throughout history.

Color in Cars: A look at how the use of color has evolved in American cars throughout the history of the US auto industry.

Chrysler’s History: An exploration of the early years of one of America’s Big Three automakers.

Century of US Cars: An examination of the first 100 years of the US car industry features highlights of the most noteworthy events.

Ford’s Contribution to the Auto Industry: A look at how Henry Ford made the first car that was reachable to a wide sector of Americans.

The Post War Years

The post war years saw the Big Three—Chrysler, Ford, GM—firmly in the lead and dominating the American automobile industry. This growth in the post war years was primarily driven by the newfound prosperity in the country during both the late 1940s as well as the 1950s. This prosperity, in turn, helped automakers answer the demand for bigger cars, and cars featured bigger sizes and bigger engines. The 1960s saw the popularity of muscle cars and pony cars, but it was full size cars that sold the most, especially due to low oil prices. The 1970s in the auto industry were severely influenced by the higher oil prices, while the 1980s were characterized by the appearance of foreign car makers setting up plants in the US and competing with American carmakers.

1950s Era: A write-up on what was happening in the US car industry in the 1950s, which includes mention of a better highway system and more emphasis on a car’s interior design.

BBC Article: From the BBC comes an article that, in part, addresses what American car makers were doing to car designs in the 1950s and 1960s.

US Auto Industry Post-1960: An examination of the US auto industry since the 1960s includes information for key years.

Auto Industry Good News: An article that looks at, in part, what the US auto industry has done since the 1960s.

Oil Crisis: A look at the 1970s oil crisis that raised gas prices and made it difficult for the auto industry in the 1970s.

1990's and 2000's Beginnings of Decline

The 1990s and the 2000s were detrimental to the American automotive industry. The 1990s began in a recession, and the liberation of Kuwait helped to worsen the already battered sales of the American carmakers. By the mid-1990s, however, conditions were in a rebound, yet that would soon turn around again negatively by the early 2000s. The US economy was again in a recession in early 2001, and the 9/11 terrorist attacks only hurt the auto industry more with weak sales due to Americans not wanting to spend due to the recession and further fears of terror attacks. By 2008, the Big Three were in dire straits due to yet another recession and the financial crisis that came about from the global financial turndown. As a result, both GM and Chrysler were forced to rely on the federal government to bail them out.

Plunging Car Sales: An examination into summer 2008 car sales that were as bad as car sales during the 1990 recession.

Fuel Price Rise: A look at the late Saddam Hussein’s invasion of Kuwait, which caused fuel prices at the pump to rise, hurting the US economy and car industry.

Length of 2001 Recession: Article that examines how long the 2001 recession lasted, which was another negative event for the US car industry.

Digital Archive: Digital archive website of the 911 terror attacks, which contributed greatly to the auto industry’s poor sales.

Financial Crisis: A look into 2008’s global financial crisis, which had damaging ramifications for the auto industry.

Process to Rebuild

To help GM and Chrysler with rebuilding efforts, the federal government came in and used taxpayer money to bail out both companies. Ford was the only one of the Big Three not to rely on a big-government takeover in order to survive; it was able to achieve this due to a big line of credit that it got in 2007. As a result of the government takeover, GM became majority owned by the US Treasury, and Chrysler became majority owned by the United Auto Workers union and also Fiat S.p.A. Today, all three carmakers have turned around somewhat by improving their vehicle sales and posting profits.

Bailouts?: News article that questions the need for the Auto Industry's bailouts.

Chrysler and GM Bailouts: Exploration of how Chrysler and GM kept asking for more bailout money from the government.

Ford against Bailout: News article featuring a story on how Ford took a stand against getting a government bailout.

Current Sales: Report that explores how the carmakers are currently doing in regards to their monthly sales.

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