The U.S. Automobile Industry Essay

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The United States recession (which lead to a world recession), began in 1997 and significantly impacted the United States automobile industry during the recession period. The United States automobile industry is still reeling from the effects of the recession throughout the period of economic recovery that continues today. According to Chu and Su, “In this credit-driven recession, one of the hardest hit sectors was the automotive industry, along with the housing and financial markets. Chrysler and General Motors were pushed into bankruptcy; and 276,000 jobs in the automobile and parts industry were destroyed, a whopping 36 percent of the total employment in the sector”. This paper will focus on the future of the U.S. Automobile…show more content…
sales of Chrysler automobiles in the same year, experienced huge setbacks in 2009 when the company found itself scrambling to protect its name brand image due to consumer complaints about “deadly defects in coolant pumps, brakes, accelerators and even floor mats” (Ross, 2010, p.1). This prompted the recall of over 10 million Toyota vehicles worldwide. This unfortunate series of events for Toyota came at the same time U.S. automakers Chrysler and General Motors where making a comeback from government bailouts received in 2009. Ford, Chrysler and General Motors have continued to see resurgence in sales while Toyota has continued to slump in its U.S. sales volume compared to sales in years prior to 2009. The U.S. auto industry has historically been a mature market. Rising oil and gasoline costs historically have not hurt the U.S. automobile industry significantly, consumers tend to change purchasing habits during periods of high fuel costs by purchasing more fuel efficient vehicles rather than not purchasing automobiles altogether. But if oil prices rise to the point where the U.S. economic recovery is slowed or stagnated, the U.S. auto industry will be affected. Factors Creating Value and Demand in the Industry As long as economic recovery continues in the U.S., the supply and demand curve for U.S. automobiles should continue to rise. Demand for U.S. automobiles should continue to grow while the supply side remains
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