Competition And Efficiency Of The United States

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COMPETITION AND EFFICIENCY Up until about the 1960s, the Big Three dominated the automotive landscape in the United States. The oligopolistic trio topped out at about a combined 90% market share in a domestic industry with only seven remaining producers (International Encyclopedia). The intra-industry domestic rivalries experienced a new foe beginning in the 60s. Starting with Volkswagen and Toyota, foreign competition began to chip away at the Big Three’s stranglehold of the US market. The emergence of foreign competitors can partly be attributed to the US government and the $33 Billion Highway Act of 1956. By greatly enhancing both regional and interstate roads, there was a greater reason than ever before for the typical…show more content…
The result of these tougher regulations is that “thirty years since CAFE standards were put in place, new cars in the United States emit approximately 1 percent of the smog-producing compounds emitted by new cars in the 1970s” (Encyclopedia). However, the selling point for most vehicles did not hinge on fuel efficiency, it was still based on luxury and features. European luxury imports took market share away from the Big Three at the top targeting their most expensive offerings, and Asian imports at the bottom by offering practical, inexpensive cars. GM made a desperate attempt to fight back by announcing a new, separate headquarters in NYC for its luxury brand, Cadillac with the goal of “pursu[ing] opportunities with more focus and clarity” (O’Leary and Welch). Nevertheless, the trend of increasing imports has only gained momentum, with the average consumer having access to cars from all over the world. The main Economic implication of increased imports is the decreasing trade deficit and decreasing demand for domestic cars. Throughout the course of the next last 40 years, the Big Three saw their market share plummet over 30%. This steep drop off is partially offset by the steadily increasing number of vehicles on the road in the US, but it still signifies adverse economic benefit to domestic producers. In 2009, GM and Chrysler filed for Chapter 11 restructuring due to their falling profits and business woes. FUTURE
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