American Auto Industry

American Auto Industry

Brief history of the American Auto industry

In the early years in U.S. around 1895, only four cars were officially registered and in a period of about 20 years, around 1916, about 3,376,889 cars were registered. The auto industry had a large number of inventors and entrepreneurs who entered and wanted to meet the ever-growing demand for vehicles. Horse carriages, which were one of the earliest vehicles, were becoming obsolete. Some of the early automakers were GM, Ford, Cadillac, Oakland Motor Car, and Chevrolet among others. They were mainly located in the Detroit area and at present, GM, Ford and Chrysler are the biggest companies to date. One of the most notable automaker is the Ford Company, which still runs to date and has managed to flourish despite the economic recession that happened in 2007-2008.

Henry Ford is thought to have invented the automobile, but he was a great innovator whose goal was to build a car that was for the great number of people. This is illustrated when he chose to reduce the profit margins of the company to get greater sale numbers. According to Berger, (2005) there was a different face in America during World War II when a lot of economic resources were turned to manufacturing military vehicles. This saw the major automakers convert to producing wartime vehicles like tanks, jeeps, armored cars and trucks. Records indicate that in 1943 there were only 139 passenger vehicles that were produced for civilian use. This period enabled many innovations in the automobile industry during and after the war.

Challenges and changes in the past few decades

A number of innovations were made in the industry like power steering, power windows and disk breaking following the great consumer demand that saw companies get higher profits than before. There were great years for the automakers in terms of profit but in 1958, Japanese- made vehicles were imported in America. These were Toyotas and Datsuns and unlike ever before, the American automakers started to lose market shares to the more advantaged foreign vehicles. These foreign vehicles now competed with American vehicles in terms of engineering, affordability and gas saving. The American automakers were facing major competition as the foreign vehicles were gaining major ground in the U.S. American automakers like GM, Ford and Chrysler made more efforts to curb competition by producing smaller cars and ones that were fuel-efficient. According to Freedman, (2011) the period of the 1973 oil embargo following the Arab Israeli war was a major challenge to the auto industry due to the rising gas prices and gas shortages. Oil consumption in the U.S. had dropped because of the embargo. When the gas prices seemed to stabilize, they had risen almost 45 percent. It was a bad year for business in the auto industry since the whole country was affected.