The Failure Of The Auto Industry

The automobile industry is a capital intensive industry, the players in the industry need high capital expenditure in order to maintain their market position, but the expected returns in the future is quite high. The industry analysis can be carried out under the following heads:

Detroit, Michigan grew up around the automobile industry. At its peak, Detroit was the fifth-largest city in the United States, becoming the home to over 1.8 million people by 1950 (Davey, Monica 2013). The prolific population was due greatly to the success of the auto industry in the city. At that time, Detroit was flying high, its name coined “The Motor City” (americaslibrary.gov), and automobiles greatly impacted commercialization. From transporting goods to hastening production, to selling parts, to manufacturing and selling new automobiles, the auto industry completely transformed Detroit. Things seemed

Several factors have affected how the American auto industry now positions itself on the world market, and big changes have been made to reflect this new direction. The introduction of new technologies in vehicles, the growing market for cars in new developing markets, the impact of the industry on the environment, legislative responses and demands, as well as the increased expectations from consumers, are some of the factors. More international cars are being designed, manufactured and bought by American consumers and exported to foreign markets today than those exclusively manufactured by American companies, redefining the American auto industry, while having a positive impact on its economy. International brands accounted for 45% of total sales in the U.S. in 2013 and have now risen to 59% of the market, and continue to grow. While the amount of American cars has decreased in the local U.S. market share to international ones, the increase of foreign car production on U.S. soil has had the effect of creating new jobs for Americans both in the auto industry as well as in related new industries. The industry has seen huge growth numbers in the last few years with more growth expected.

The automobile industry has brought the United States economic growth due to the impact that automobiles have made on society. There has been a plethora of jobs associated with the auto industry, including manufacturing, auto repairs, insurance, and the development of roads, sales, and auto parts to enhance vehicles. Cars, trucks, and SUVs’ have become a way of life for people and have made an additional economic impact by becoming the primary means of transportation for consumers to commute to and from work, vacations, and travel between destinations. Most family households live on a budget and they must make the decision of how much of their budget they can allocate to transportation costs.

In the latter part of 2008, the United States’ economy was rapidly plummeting - the stock market crashed, the housing bubble burst and gas prices skyrocketed. The majority of U.S. based firms faced the reality that they would not be able to survive during such desperate economic times. The U.S. automobile industry, in particular, began to buckle under the depressed economy. The government stepped in proposing a multi-billion dollar bailout to stimulate the economy and restore economic balance. The possibility of this unprecedented government intervention was condemned by many economists. If the government helped the ailing automotive industry, this industry would have to tighten their expenditures and plan for the future to prove to

The automotive industry has a negative effect on other countries when it is outsourced to them.Humphrey, John. "Globalization and Supply Chain Networks: The Auto Industry in Brazil and India." Global Networks. Blackwell Publishing Ltd, 01 Apr. 2003. Web. 09 Mar. 2017. Outsourcing can negatively affect the auto industry in several ways, while manufacturers try to save money by

Statistics show that Americans have a preference of buying American made products over foreign ones. In general, the great majority is even willing to pay more for a made in America product, based on beliefs that these products are better quality, have better safety standards and because someone in the family has a shared belief, which supports American values. “But in our increasingly complex global economy, how much meaning does a label stating “Made in America” still hold?” ("Made in America - Consumer Reports," n.d.)

As is the case with Chrysler, organizations can possess characteristics of each type, but generally have one that is more dominant than the others. By looking at the two fundamental dimensions or axes, we can determine the new type of organizational culture manifested through the changes orchestrated by Marchionne”.( “Business,” 2015). Paying back all the government loans ahead of time getting the corporation through the bankruptcy coming back on top, with the vision that the new CEO had and what he has done each year produce more cars and provided more jobs for the people in Detroit trying to bring the life back to the city to what was a big tourist State that people enjoy going to. With the new changes that Chrysler has begin maybe this will bring people back to Detroit for the new jobs that are now open. Chrysler has went through a lot throughout the years and with the new CEO Shocking the organization with new ideas that are working it's up to the new executive to continue with the new ideas that they have been taught so that the vision can continue to be seen by

challenges, however, are the most difficult ones to face and overcome. Some environmental issues that

After the crisis of oil in 1973, the demand of Japanese’s vehicles in the United States increased significantly, this is mainly due to Japanese vehicles had a competitive advanced in the automobile manufacturing. They were cheaper, better design and more competent than cars produce in America. Part of the advantages was due to labor differences and technical efficiencies (Exhibit A) (Japan 's Automakers Face Endaka, 1996) Including the lower exchange value of the yen, leaving on the side the principal companies of the U.S automobile industry such as Chrysler, Ford and General Motors, who suffered important losses in their market share. Furthermore, during 1981 to 1985 the dollar appreciated approximate 30% appreciation (Exhibit B) (Trading Economics, 2014), The losses of market share and the appreciation of the dollar caused distress among several sectors in the U.S economy, who exerted pressure to politicians so they could take protective measures in favor of their industries. Most of the measures of protection are given through tariffs and quotas on imports. In pro of the automobile industry, the president of the United States, Ronald Regan, request the government of Japan to voluntary exports restrictions (VERs), limiting to 1.68 million the number of cars exported to the U.S, the restriction was kept in place until March 1984 (Toyota Global, 1981). Although at first the restriction help the American industry to maintain their market share, it also incentive the foreign

Between 2008 and 2009, the American automotive industry incurred a major crisis, on the heels of the housing market collapse occurring in 2007 (Klier & Ribenstein, 2013). General Motors was already in a financial vulnerable situation at this time, having already filed a $10.6 billion dollar loss three years earlier (United States Securities and Exchange Commission, 2005). In 2007, General Motors losses for the year were $38.7 billion and its sales had dropped a full forty five percent from the year before (Weardenm, 2009; Usborne, 2008). By the end of 2008, the company was in such bad shape that analyst predicted that the company would have the liquidate or discontinue operations without any assistance from the government (Bosco & Plante,

General Motors (GM) is an automobile industry founded by William Durant in the early 1900’s. GM’s market has grown to capture more than 20 other companies throughout its success as automobiles expanded to become a basic American need for transportation (GM, History & Heritage). In addition, by the early 2000’s, GM was the largest manufacturer of automobiles and web-based communication, went on to buy Saab and created partnerships with other major car manufacturers, such as Suzuki and Subaru.

Ford in 2011 is on the rebound, having recovered from the darkest hours in the late 2000s. The company for the company is that many of its competitors are also rebounding, and there are significant long-run changes in the automobile industry. Ford needs to determine a strategy that will take the company through the next decade, and improve the company's competitive position. The company has four of the top fifteen best-selling cars in America, but also needs to set strategy globally, as many of the best automobile growth markets are overseas. Another strategic consideration is that CEO Alan Mulally remains in the process of changing the organizational culture at Ford, which had become stagnant and unresponsive to the changes in the industry environment.

The auto industry in Canada has been one the biggest contributors to the economy since its conception. Autonomous State by Dimitry Anastakis discusses both the political and economical impacts of the automobile industry. In the book, Anastakis examines aspects of the auto industry including the Organization of Petroleum Exporting Countries (OPEC) in 1973, which spiked oil prices causing a slow down in exporting goods and a decrease in the general economy. Additionally, Anastakis discusses the downfall of Chrysler in the late 1970’s, which eventually inspired a deal with the government in order to save the company. The book also references the continuation of globalization in Canada, focusing on elements such as the entrance of over seas (mostly Japanese) car companies and in what way they impacted North American domestic companies. Moreover, it explains the effects of the 1989 Free Trade Agreement that was signed between Canada and US. This agreement helped govern trade and economically boosted both Canadian and US markets.

Although Alan Mulally’s ONE Ford Plan had brought incredible shifts in the strategic direction of Ford Motor Company, the organization was plagued with negative general environmental trends. Shortly after becoming President and Chief Executive Officer of Ford Motor Company, Alan Mulally found himself facing one of the worst recessions in the history of the United States. In 2008, the global financial downturn had a rippling effect through financial institutions that ultimately resulted in industry giants General Motors and Chrysler having to file for bankruptcy. Although Alan Mulally had preemptively positioned his organization to withstand the economic downturn, the bankruptcy of Ford’s competitors could have devastating economic impacts on suppliers and thus cripple Ford Motor Company in the process. Determined to prevent the complete collapse of the entire automotive industry, Alan Mulally spoke on behalf of his competitors in favor of a tax-payer funded government bailout valued