Automotive industry in the United States
Encyclopedia
The American automobile industry began in the 1890s and rapidly evolved into the largest automotive producer in the world through the use of mass-production. The United States
was the world's leader amongst motor vehicle
s main manufacturers many dozens years. US lost a leadership to Japan
since 1980s (and then to China
since 2009) and currently is the third largest manufacturer in the world. In 2010, 7,761,443 motor vehicles were manufactured in US only, although former production were up to 13—15 million per year sometimes in 1970s—2000s.
The motor vehicle industry
began with hundreds of manufacturers, but by the end of the 1920s it became dominated by three large companies - General Motors
, Ford and Chrysler
. After the Great Depression
and World War II
, these companies continued to prosper. However, beginning in the 1970s, a combination of high oil prices, increased competition from foreign auto manufacturers, and increasing government regulation severely affected the companies. In the ensuing years, the companies periodically bounced back, but by 2008 the industry was in turmoil. As a result General Motors and Chrysler filed bankruptcy reorganization and were bailed out with loans and investments from the federal government.
Prior to the 1980s, most of the plants were owned by domestic manufacturers of the Big Three (GM, Ford, Chrysler) and AMC
. However that has dropped steadily since with auto transplants, factories established in the US by foreign-owned car companies.
and initial efforts consisted of attaching an engine to an existing buggy. The first American automobiles were developed in the 1890s. The American automobile market began its early years with hundreds of auto makers and a variety of technologies. Internal combustion engines, battery-powered electric engines, and steam engines were used. Electric cars were popular in cities, where the short range of their batteries were less of a concern, and charging stations were available. Steam car
s were also initially popular, despite the long starting time in cold weather. Gasoline powered internal combustion engines were initially deemed too unreliable, noisy, dirty, hard to start, and difficult to shift. The popularity of steam and electric cars lasted for about the first decade of the 1900s, after which the gasoline powered cars predominated due to the invention of the electric starter in 1911 and the lower production costs of gasoline powered cars.
John William Lambert
's Buckeye gasoline buggy
, made in 1891, is considered the first practical gasoline-powered automobile made in the United States. Charles Duryea
and J. Frank Duryea
are generally acknowledged as the first U.S. car makers to build more than one automobile. In 1893, they produced a one-cylinder two-stroke gasoline-powered car. They were followed soon after by Elwood Haynes
and Alexander Winton. By the end of the 1800s, the biggest auto manufacturer was Albert Augustus Pope
, who through a series of companies sold mostly steam and electric automobiles. The first mass production automobile was made by Ransom E. Olds
with the Oldsmobile Curved Dash
in 1901. Sales climbed and in 1903 he sold 3,750 of the vehicles.
allocated $75 million for building roads, and the Federal Aid Highway Act of 1921 provided additional funding for road construction. By 1924 there were 31,000 miles of paved road in the U.S.
began building cars in 1896 and started his own company in 1903. The Ford Motor Company
improved mass-production with the first conveyor belt-based assembly line in 1913, producing the Model T (which had been introduced in 1908). These assembly lines significantly reduced costs. The first models were priced at $850, but by 1924 had dropped to $290. The Model T sold extremely well and Ford became the largest automobile company in the U.S. By the time it was retired in 1927, more than 15 million Model Ts had been sold. Ford introduced the Model A in 1927 (after a six-month production stoppage to convert from the Model T), and produced it through 1931. However, while the Model A was successful, Ford lost ground to GM and eventually Chrysler, as auto buyers looked to more upscale cars and newer styling. Ford was also a pioneer in establishing foreign manufacturing facilities, with production in England in 1911, and Germany and Australia in 1925. Ford purchased the luxury Lincoln
automaker in 1922 and established the Mercury
division in 1938.
General Motors Corporation, the company that would soon become the world's largest automaker, was founded in 1908 by William Durant
. Durant had previously been a carriage maker, and had taken control of Buick
in 1904. The company initially acquired Buick
, Oldsmobile
and Oakland (later to become Pontiac
) in 1908. The next year GM acquired Cadillac
, along with a number of other car companies and parts suppliers. Durant also was interested in acquiring Ford, but after initial merger talks, Henry Ford decided to keep his company independent. In 1910, Durant lost control of GM after over-extending the company with its acquisitions. A group of banks took over control of GM and ousted Durant. Durant and Louis Chevrolet
founded Chevrolet
in 1913 and it quickly became very successful. Durant began acquiring stock in GM and by 1915 had majority control. Chevrolet was acquired by GM in 1917 and Durant was back in charge of GM. In 1921, Durant was again forced out of the company. During the late 1920s, General Motors became the largest automaker, overtaking Ford. Under the leadership of Alfred Sloan, General Motors instituted decentralized management and separate divisions for each price class. They also introduced annual model changes. GM also became an innovator in technology under the leadership of Charles Kettering
. GM followed Ford by expanding overseas, including purchasing England's Vauxhall Motors
in 1925, Germany's Opel
in 1929, and Australia's Holden
in 1931.
Walter Chrysler
was formerly president of Buick
and an executive of GM. After leaving GM in 1920 he took control of the Maxwell Motor Company, revitalized the company and in 1925 reorganized it into Chrysler Corporation. He then acquired Dodge Brothers in 1927. The acquisition of Dodge gave Chrysler the manufacturing facilities and dealer network that it needed to significantly expand production and sales. In 1928, Chrysler introduced the Plymouth
and DeSoto
brands. Chrysler also overtook Ford to become the second largest auto maker by the 1930s, following similar strategies as General Motors.
, stiff competition from the Big Three, and/or mismanagement. Luxury carmakers were particularly affected by the economy, with companies like Stutz Motor Car Company, Pierce-Arrow
Motor Car Company, and the Marmon Motor Car Company going out of business. The decade also saw several companies with innovative engineering, such as the Doble Steam Motors
Corporation (advanced steam engines) and Franklin Automobile Company
(air-cooled aluminum engines) going out of business. Errett Lobban Cord
, who controlled the Auburn Automobile
Company (which also sold the Cord) and the Duesenberg
Motor Company, was under investigation by the Securities and Exchange Commission and the Internal Revenue Service
. His auto empire collapsed in 1937 and production ceased.
Major technological innovations were introduced or were adopted widely during the 1930s, such as synchromesh manual transmissions, semi-automatic transmissions, automatic transmissions, hydraulic brakes, independent front suspension, and overhead-valve engines. The Cord
810 used front-wheel drive, had hidden headlights, and was offered with a supercharger. Exterior styling designs were more flowing, as shown most noticeably on the Auburn Speedster and the Cord 810. Radical air-streamed design was introduced on the Chrysler Airflow
, a sales flop, and the Lincoln Zephyr (both of which used unit-body construction).
When the U.S. entered World War II
, all domestic passenger automobile production ceased by February 1942. All factories were converted to produce war materiel such as armaments, aircraft and military vehicles. These factories produced an astonishing amount of materiel, including 5.9 million weapons, 2.8 million tanks and trucks, and 27,000 aircraft. This production was a major factor in the victory of the allies.
union won recognition from GM and Chrysler in 1937, and Ford in 1941. In 1950, the automakers granted workers a company-paid pension to those 65 years old and with 30 years seniority. In the mid-1950s, the automakers agreed to set up a trust fund for unemployed auto workers. In 1973 the automakers agreed to offer pensions to any worker with 30 years seniority, regardless of age. By then the automakers had also agreed to cover the entire health insurance bill for its employees, survivors and retirees.
, Chrysler Corporation, Hudson Motor Car Company
, Nash-Kelvinator Corporation
, Packard Motor Car Company, Studebaker Corporation and Crosley Motors. The former three companies, known as the Big Three, enjoyed significant advantages over the smaller independent auto companies due to their financial strength which gave them a big edge in marketing, production and technological innovation. Most of the Big Three's competitors ended production by the 1960s, and their last major domestic competitor was acquired in the 1980s.
Crosley Motors ceased auto production in 1952. Packard Motor Car Company and Studebaker Corporation merged in 1954, but ended production of Packard branded cars in 1958 and ceased all auto production in 1966.
Kaiser-Frazer Corporation was started in 1945 and acquired Willys-Overland Motors (maker of the Jeep
) in 1953. Production of passenger cars was discontinued in 1955. In 1970, the company was sold to American Motors Corporation.
In 1954, Nash-Kelvinator Corporation
and Hudson Motor Car Company
merged to form American Motors Corporation (AMC). The company was unable to compete successfully with the big three and struggled financially. The French auto maker Renault
took control of AMC in the early 1980s, but financial difficulties continued and AMC was sold to Chrysler Corporation in 1987.
V-8 engine developed by GM in the late-1940s proved to be very successful and helped ignite the horsepower race, the second salvo of which was Chrysler's 1951 Hemi engine
. Longer, lower and wider tended to be the general trend. Exterior styling was influenced by jets and rockets as the space-age dawned. Rear fins were popular and continued to grow larger, and front bumpers and taillights were sometimes designed in the shape of rockets. Chrome plating was very popular. The most extreme version of these styling trends were found in the 1959 Cadillac Eldorado
and Chrysler Corporation's 1957 Imperial
. The Chevrolet Corvette
and the Ford Thunderbird
, introduced in 1953 and 1955 respectively, were designed to capture the sports car market. However, the Thunderbird grew in size in 1958 and evolved into a personal luxury car
. The 1950s were also noted for perhaps one of the biggest miscues in auto marketing with the Ford Edsel, which was the result of unpopular styling and being introduced during an economic recession.
, a network of regional and interstate roads continued to enhance transportation. As urban areas became more congested, more families migrated to the suburbs. In fact, between 1960 and 1970, 70 percent of the population's growth occurred in the suburbs.
Imports grew during the 1950s, with the Volkswagen Beetle
being the biggest seller. In response to this the domestic auto makers developed compact cars, such as the Ford Falcon, the Chevrolet Corvair
, the Studebaker Lark
and the Plymouth Valiant
. (The compact AMC Rambler had been around since the early 1950s.) While initially successful in sales, they mostly took sales away from larger cars within their companies.
Pony cars were introduced with the Ford Mustang
in 1964 This car combined sporty looks with a long hood, small rear deck and a small rear seat. The car proved highly successful and imitators soon arose, such as the Chevrolet Camaro
, Pontiac Firebird
, Dodge Challenger
, Plymouth Barracuda
(actually introduced two weeks prior to the Mustang), Mercury Cougar
and AMC Javelin
. Muscle cars were also introduced in 1964 with the Pontiac GTO
. This car combined an intermediate-sized body with a large high-output engine. Competitors were also quickly introduced, including the Chevrolet Chevelle SS, Dodge R/T (Coronet
and Charger
), Plymouth Road Runner
/ GTX, Ford Torino
and AMC AMX
. Muscle cars reached their zenith in the late 1960s, but soon fell out of favor due to high insurance premiums along with the combination of emission controls and high gas prices in the early 1970s.
While the pony and muscle cars got most of the attention, the full sized cars formed the bulk of auto sales in the 1960s, helped by low oil prices. The styling excesses and technological gimmicks (such as the retractable hardtop and the pushbutton automatic transmission) of the 1950s were de-emphasized. The rear fins were downsized and largely gone by the mid-1960s, as was the excessive chrome.
, emission controls began being instituted in 1968. The use of leaded gasoline began being curtailed in the early 1970s, which resulted in lower-compression engines being used, and thus reducing horsepower and performance. Catalytic converters began being widely used by the mid-1970s.
selling 548,904 vehicles, followed by Toyota with 127,018 vehicles. In response to this, the domestic auto makers introduced new compact and sub-compact cars, such as the Ford Pinto
and Maverick
, the Chevrolet Vega
, and the AMC
Gremlin
, Hornet
and Pacer
. However, design and manufacturing problems inflicted a number of these cars and led to unfavorable perceptions of the cars.
The auto industry was severely affected by the 1973 oil crisis
Arab embargo. Small fuel-efficient cars from foreign automakers took a sharply higher share of the U.S. auto sales market. The federal government initiated fuel efficiency standards (known as Corporate Average Fuel Economy
, or CAFE) in 1975, effective as of 1978 for passenger cars, and as of 1979 for light trucks. For passenger cars, the initial standard was 18 miles per gallon (mpg), and increased to 27.5 mpg by 1985.
General Motors began responding first to the high gas prices, by downsizing most of their models by 1977. In 1979, the second oil price spike occurred, precipitated by political events in Iran, resulting in the 1979 energy crisis
. By 1980, the economy slid into turmoil, with high inflation, high unemployment, and high interest rates. The automakers suffered large operating losses. Chrysler was hurt most severely and in 1979 received a bailout from the federal government in the form of $1.5 billion in loan guarantees, one quick fix was a Detroit-built version of their then-new French (Simca
) economy car, the Horizon
.
As bold and confident as the Big Three automakers were in the 1950s and 1960s, the American auto makers in the 1970s and 1980s stumbled badly, going from one engineering, manufacturing or marketing disaster to another. Ford reaped a public relations nightmare when it was revealed that the Pinto
's gas tank was vulnerable to exploding when hit from behind. Ford knew about this vulnerability but did not design any safeguards in order to save a few dollars per vehicle. They rationalized that the cost of lawsuits would be less than the cost of redesigning the car. GM had a string of miscues starting with the Chevrolet Vega
, which developed a reputation for rapidly rusting and having major problems with the aluminum engine. Cadillac damaged their reputation when the four-cylinder Cadillac Cimarron
was introduced in 1981 (a gussied-up Chevrolet Cavalier
at twice the price) and the "V8-6-4" engine didn't work as advertised. GM's reputation was also damaged when it revealed in 1977 that they were installing Chevrolet
engines in Oldsmobile
s, and lawsuits from aggrieved Oldsmobile owners followed. Likewise litigation ensued when a trio of diesel engines, designed from gasoline engines and used in GM cars from 1978 to 1985 suffered major problems. Class action lawsuits and efforts from the Federal Trade Commission
resulted in buybacks of the cars from GM. Chrysler also suffered damage to its reputation when its compact cars, the Plymouth Volaré and Dodge Aspen
, were developed quickly and suffered from massive recalls and poor quality.
In 1981, Japanese automakers entered into a so-called "Voluntary restraint agreement" limiting the number of autos that they could import to the U.S. to 1.68 million per year. One side effect of this quota was that the Japanese car companies began developing luxury cars that had higher profit margins, such as Toyota's Lexus
, Honda
's Acura
,and Nissan's Infiniti
divisions. Another consequence was that the Japanese car makers began opening auto production plants in the U.S., with the three largest Japanese auto manufacturers all opening production facilities by 1985. These facilities were opened primarily in the southern U.S., in states that were not union friendly. Although the U.A.W. made substantial union -organizing efforts at these plants, they remained non-union. The Big Three also began investing in and/or developing joint manufacturing facilities with several of the Japanese automakers. Ford invested in Mazda
as well as setting up a joint facility with them called AutoAlliance International
. Chrysler bought stock in Mitsubishi Motors
and established a joint facility with them called Diamond-Star Motors
. GM invested in Suzuki
and Isuzu
, and set up a joint manufacturing facility with Toyota under the name of Nummi
.
Despite the financial and marketing upheavals during the 1970s and 1980s, the decades led to technological innovations and/or widespread use of such improvements as disc brakes, fuel injection
, electronic engine control unit
s, and electronic ignition. Front-wheel drive
became the standard drive system.
By the mid-1980s, oil prices had fallen sharply, helping lead to the revitalization of the American auto industry. Under the leadership of Lee Iacocca
, Chrysler Corporation mounted a comeback after its flirtation with bankruptcy in 1979. The Minivan
was introduced in 1984 by Chrysler with the Plymouth Voyager
and Dodge Caravan
, and proved very popular. These vehicles were built on a passenger-car chassis and seated up to seven people as well as being able to hold bulky loads. Chrysler also introduced their "K-cars
" in the 1980s, which came with front-wheel drive and fuel-efficient OHC engines. In 1987 Chrysler bought American Motors
, which produced the Jeep
. This proved to be excellent timing to take advantage of the Sport utility vehicle
boom. Ford also began a comeback after losses of $3.3 billion in the early 1980s. The company introduced the very successful aerodynamic Taurus
in 1985. General Motors, under the leadership of Roger Smith, was not as successful as its competitors in turning itself around and its market share fell significantly. While Ford and Chrysler were cutting production costs, GM was investing heavily in new technology. The company's attempts at overhauling its management structure and using increased technology for manufacturing production were not successful. Several large acquisitions (Electronic Data Systems
and Hughes Aircraft Company) also diverted management attention away from their main industry. (Ford and Chrysler also joined in the acquisition and diversification trend, with Ford buying Jaguar Cars, Aston Martin
, The Associates (a finance company), and First Nationwide Financial Corp. (a savings and loan). Chrysler purchased Lamborghini
, an interest in Maserati
, and Gulfstream Aerospace
jets.) GM started the Saturn Corporation brand in the late 1980s as a way to gain sales from imported cars. While initially receiving a positive reception, GM later neglected to provide it much support. Around this time GM also began development on the General Motors EV1
electric car, which debuted in 1996.
by Iraq
caused a temporary jump in oil prices. However, the automakers recovered fairly quickly. In the mid-1990s, light truck sales (which included Sport utility vehicle
s, Pickup truck
s and Minivan
s) began to rise sharply. Due to the CAFE
standards differentiating between passenger cars and light trucks, the automakers were able to sell large and heavy vehicles without fear of the CAFE fines. Low oil prices also gave incentives for consumers to buy these gas-guzzling vehicles. The American automakers sold combined, and even separately, millions of pickup trucks and body on frame SUVs during this period. Imports such as the Toyota 4Runner, Land Cruiser, Tacoma, and Nissan Pathfinder and Frontier were also hugely popular during this time period.
The automakers also continued their trend of purchasing or investing in foreign automakers. GM purchased a controlling interest in Saab
in 1990 and Daewoo Motors
in 2001, and invested in Subaru
in 1999 and Fiat
in 2000. They also purchased the Hummer
name from AM General
in 1998. Ford purchased Volvo
in 1999 and Land Rover
in 2000. GM and Ford also established joint ventures with Chinese auto companies during this period. GM's joint ventures are with Shanghai GM
, SAIC-GM-Wuling Automobile
, and FAW-GM Light Duty Commercial Vehicle Co Ltd. Ford's joint ventures are with Chang'an Ford
and Jiangling Ford
.
While the American automakers were investing in or buying foreign competitors, the foreign automakers continued to establish more production facilities in the United States. In the 1990s, BMW
and Daimler-Benz
opened SUV factories in Spartanburg County, South Carolina and Tuscaloosa County, Alabama
, respectively. In the 2000s, Hyundai
and Kia
opened plants in Montgomery, Alabama
and West Point, Georgia
. Also, several of the Japanese auto manufacturers expanded or opened additional plants during this period.
In 1998, Chrysler and the German automaker Daimler-Benz
entered into a "merger of equals" although in reality it turned out be an acquisition by Daimler-Benz. Thus the Big Three American-owned automakers turned into the Big Two automakers. However, a culture clash emerged between the two divisions, and there was an exodus of engineering and manufacturing management from the Chrysler division. The Chrysler division struggled financially, with only a brief recovery when the Chrysler 300
was introduced. In 2007 Daimler-Benz sold the company to a private equity firm, Cerberus Capital Management
, thus again making it American-owned.
The 2000s began with a recession in early 2001 and the effects of the September 11, 2001 terrorist attacks, significantly affecting auto industry sales and profitability. The stock market decline affected the pension fund levels of the automakers, requiring significant contributions to the funds by the automakers (with GM financing these contributions by raising debt).
In 2005, oil prices began rising and peaked in 2008. With the American automakers heavily dependent upon the gas-guzzling light truck sales for their profits, their sales fell sharply. In addition, during the 2000s, the finance subsidiaries of the Big Three became of increasing importance to their overall profitability (and their eventual downfall). General Motors Acceptance Corporation
, the GM finance division, began making home mortgage loans, especially subprime loans. With the subsequent collapse of the subprime mortgage industry, GM suffered heavy losses.
By 2008 the Big Three were in weak financial condition and the beginning of an economic recession and the financial crisis resulted in the automakers looking to the federal government for help. Ford was in the best position, as under new CEO Alan Mulally
they had fortuitously raised $23 billion in cash in 2006 by mortgaging most of their assets. Chrysler, purchased in 2007 by a private equity firm, had weak financial backing, was the most heavily dependent on light truck sales, and had few new products in their pipeline. General Motors was highly leveraged, also heavily dependent on light truck sales, and burdened by high health care costs.
The CEOs of the Big Three requested government aid in November 2008, but sentiment in Congress was against the automakers, especially after it was revealed that they had flown to Washington D.C. on their private corporate jets. In December 2008, President Bush gave $17.4 billion to GM and Chrysler from the Troubled Asset Relief Program program as temporary relief for their cashflow problems. Several months later, President Obama formed the Automotive Task Force to decide how to handle GM and Chrysler. Chrysler received a total of $12.5 billion in TARP funds and entered Chapter 11 bankruptcy in April 2009.
Automaker Fiat
was given management control and a 20% ownership stake (adjusted to 35% under certain conditions), the U.S. and Canadian governments were given a 10% holding, and the remaining ownership was given to a Voluntary Employee Beneficiary Association (VEBA), which was a trust fund established to administer employee health care benefits. The Automotive Task Force requested that GM CEO Rick Wagoner
resign (although he was replaced by another long-time GM executive, Frederick Henderson
). GM received a total of $49.5 billion in TARP finds and entered Chapter 11 bankruptcy in June 2009. The U.S. and Canadian governments received a 72.5% ownership stake, a VEBA received 17.5%, and the unsecured creditors received 10%. As part of the bailout GM and Chrysler closed numerous production plants, and eliminated hundreds of dealerships and thousands of jobs. They also required a number of major labor union concessions. GM also sold or eliminated four of their brands: Pontiac
, Hummer
, Saturn Corporation, and Saab
. In addition to the $62 billion that the automakers received from TARP, their financing arms, GMAC and Chrysler Financial received an additional $17.8 billion.
Ford did not request any government assistance, but as part of their downsizing sold Volvo
in 2010. (They had previously sold Aston Martin
in 2007, and Land Rover
and Jaguar Cars in 2008). Under the Advanced Technology Vehicles Manufacturing Loan Program
Ford borrowed $5.9 billion to help their vehicles meet higher mileage requirements.
General Motors
Chrysler
BMW
Paccar
Volvo
Nissan Motors
Honda
Fuji Heavy Industries
Mazda
Mitsubishi
Isuzu
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
was the world's leader amongst motor vehicle
Motor vehicle
A motor vehicle or road vehicle is a self-propelled wheeled vehicle that does not operate on rails, such as trains or trolleys. The vehicle propulsion is provided by an engine or motor, usually by an internal combustion engine, or an electric motor, or some combination of the two, such as hybrid...
s main manufacturers many dozens years. US lost a leadership to Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
since 1980s (and then to China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
since 2009) and currently is the third largest manufacturer in the world. In 2010, 7,761,443 motor vehicles were manufactured in US only, although former production were up to 13—15 million per year sometimes in 1970s—2000s.
The motor vehicle industry
Automotive industry
The automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
began with hundreds of manufacturers, but by the end of the 1920s it became dominated by three large companies - General Motors
General Motors
General Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
, Ford and Chrysler
Chrysler
Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
. After the Great Depression
Great Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
and World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, these companies continued to prosper. However, beginning in the 1970s, a combination of high oil prices, increased competition from foreign auto manufacturers, and increasing government regulation severely affected the companies. In the ensuing years, the companies periodically bounced back, but by 2008 the industry was in turmoil. As a result General Motors and Chrysler filed bankruptcy reorganization and were bailed out with loans and investments from the federal government.
Prior to the 1980s, most of the plants were owned by domestic manufacturers of the Big Three (GM, Ford, Chrysler) and AMC
AMC
AMC may refer to:* AMC , a short-lived British steam car manufactured in London in 1910*AMC Networks, an American media company** AMC , originally American Movie Classics, a cable television channel owned by AMC Networks...
. However that has dropped steadily since with auto transplants, factories established in the US by foreign-owned car companies.
The early years
The automobile in America evolved from the horse-powered buggyHorse and buggy
A horse and buggy or horse and carriage refers to a light, simple, two-person carriage of the late 18th, 19th and early 20th centuries, drawn usually by one or sometimes by two horses...
and initial efforts consisted of attaching an engine to an existing buggy. The first American automobiles were developed in the 1890s. The American automobile market began its early years with hundreds of auto makers and a variety of technologies. Internal combustion engines, battery-powered electric engines, and steam engines were used. Electric cars were popular in cities, where the short range of their batteries were less of a concern, and charging stations were available. Steam car
Steam car
A steam car is a light car powered by a steam engine.Steam locomotives, steam engines capable of propelling themselves along either road or rails, developed around one hundred years earlier than internal combustion engine cars although their weight restricted them to agricultural and heavy haulage...
s were also initially popular, despite the long starting time in cold weather. Gasoline powered internal combustion engines were initially deemed too unreliable, noisy, dirty, hard to start, and difficult to shift. The popularity of steam and electric cars lasted for about the first decade of the 1900s, after which the gasoline powered cars predominated due to the invention of the electric starter in 1911 and the lower production costs of gasoline powered cars.
John William Lambert
John William Lambert
John William Lambert was an American automotive pioneer, inventor, and automobile manufacturer.-Biography:...
's Buckeye gasoline buggy
Buckeye gasoline buggy
The Buckeye gasoline buggy or Lambert gasoline buggy was the first practical gasoline automobile available for sale in America, according to automobile historians.-History:...
, made in 1891, is considered the first practical gasoline-powered automobile made in the United States. Charles Duryea
Charles Duryea
Charles Edgar Duryea was the engineer of the first-ever working American gasoline-powered car. He was born near Canton, Illinois, the son of George Washington Duryea and Louisa Melvina Turner and died in Philadelphia, Pennsylvania, but spent most of his life working in Springfield, Massachusetts...
and J. Frank Duryea
J. Frank Duryea
James Frank Duryea , along with his brother Charles Duryea, invented and built the first American, road-tested gasoline-fueled automobile in Springfield, Massachusetts in 1892-1893...
are generally acknowledged as the first U.S. car makers to build more than one automobile. In 1893, they produced a one-cylinder two-stroke gasoline-powered car. They were followed soon after by Elwood Haynes
Elwood Haynes
Elwood P. Haynes was an American inventor, metallurgist, automotive pioneer, entrepreneur and industrialist. He invented the metal alloys stellite and martensitic stainless steel and designed one of the earliest automobiles made in the United States...
and Alexander Winton. By the end of the 1800s, the biggest auto manufacturer was Albert Augustus Pope
Albert Augustus Pope
Albert Augustus Pope was a Brevet Lieutenant-Colonel who founded the Pope Manufacturing Company in 1877. -Birth:...
, who through a series of companies sold mostly steam and electric automobiles. The first mass production automobile was made by Ransom E. Olds
Ransom E. Olds
Ransom Eli Olds was a pioneer of the American automotive industry, for whom both the Oldsmobile and REO brands were named. He claimed to have built his first steam car as early as 1894, and his first gasoline powered car in 1896...
with the Oldsmobile Curved Dash
Oldsmobile Curved Dash
The gasoline powered Curved Dash Oldsmobile is credited as being the first mass-produced automobile, meaning that it was built on an assembly line using interchangeable parts. It was introduced by the Oldsmobile company in 1901 and produced through 1907...
in 1901. Sales climbed and in 1903 he sold 3,750 of the vehicles.
Development of the American road system
The practicality of the automobile was initially limited because of the lack of suitable roads. Travel between cities was mostly done by railroad or waterways. Roads were mostly dirt and hard to travel, especially in bad weather. The Federal Aid Road Act of 1916Federal Aid Road Act of 1916
The Federal Aid Road Act of 1916, 39 Stat. 355, was enacted on July 11, 1916, and was the first federal highway funding legislation in the United States. It was introduced by Rep. Dorsey W. Shackleford of Missouri, then amended by Sen. John H. Bankhead of Alabama to conform with model legislation...
allocated $75 million for building roads, and the Federal Aid Highway Act of 1921 provided additional funding for road construction. By 1924 there were 31,000 miles of paved road in the U.S.
The Birth of the Big Three Automakers
Henry FordHenry Ford
Henry Ford was an American industrialist, the founder of the Ford Motor Company, and sponsor of the development of the assembly line technique of mass production. His introduction of the Model T automobile revolutionized transportation and American industry...
began building cars in 1896 and started his own company in 1903. The Ford Motor Company
Ford Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
improved mass-production with the first conveyor belt-based assembly line in 1913, producing the Model T (which had been introduced in 1908). These assembly lines significantly reduced costs. The first models were priced at $850, but by 1924 had dropped to $290. The Model T sold extremely well and Ford became the largest automobile company in the U.S. By the time it was retired in 1927, more than 15 million Model Ts had been sold. Ford introduced the Model A in 1927 (after a six-month production stoppage to convert from the Model T), and produced it through 1931. However, while the Model A was successful, Ford lost ground to GM and eventually Chrysler, as auto buyers looked to more upscale cars and newer styling. Ford was also a pioneer in establishing foreign manufacturing facilities, with production in England in 1911, and Germany and Australia in 1925. Ford purchased the luxury Lincoln
Lincoln (automobile)
Lincoln is an American luxury vehicle brand of the Ford Motor Company. Lincoln vehicles are sold mostly in North America.-History:The company was founded in August 1915 by Henry M. Leland, one of the founders of Cadillac . During World War I, he left Cadillac which was sold to General Motors...
automaker in 1922 and established the Mercury
Mercury (automobile)
Mercury was an automobile marque of the Ford Motor Company launched in 1938 by Edsel Ford, son of Henry Ford, to market entry-level luxury cars slotted between Ford-branded regular models and Lincoln-branded luxury vehicles, similar to General Motors' Buick brand, and Chrysler's namesake brand...
division in 1938.
General Motors Corporation, the company that would soon become the world's largest automaker, was founded in 1908 by William Durant
William C. Durant
William Crapo "Billy" Durant was a leading pioneer of the United States automobile industry, the founder of General Motors and Chevrolet who created the system of multi-brand holding companies with different lines of cars....
. Durant had previously been a carriage maker, and had taken control of Buick
Buick
Buick is a premium brand of General Motors . Buick models are sold in the United States, Canada, Mexico, China, Taiwan, and Israel, with China being its largest market. Buick holds the distinction as the oldest active American make...
in 1904. The company initially acquired Buick
Buick
Buick is a premium brand of General Motors . Buick models are sold in the United States, Canada, Mexico, China, Taiwan, and Israel, with China being its largest market. Buick holds the distinction as the oldest active American make...
, Oldsmobile
Oldsmobile
Oldsmobile was a brand of American automobile produced for most of its existence by General Motors. It was founded by Ransom E. Olds in 1897. In its 107-year history, it produced 35.2 million cars, including at least 14 million built at its Lansing, Michigan factory...
and Oakland (later to become Pontiac
Pontiac
Pontiac was an automobile brand that was established in 1926 as a companion make for General Motors' Oakland. Quickly overtaking its parent in popularity, it supplanted the Oakland brand entirely by 1933 and, for most of its life, became a companion make for Chevrolet. Pontiac was sold in the...
) in 1908. The next year GM acquired Cadillac
Cadillac
Cadillac is an American luxury vehicle marque owned by General Motors . Cadillac vehicles are sold in over 50 countries and territories, but mostly in North America. Cadillac is currently the second oldest American automobile manufacturer behind fellow GM marque Buick and is among the oldest...
, along with a number of other car companies and parts suppliers. Durant also was interested in acquiring Ford, but after initial merger talks, Henry Ford decided to keep his company independent. In 1910, Durant lost control of GM after over-extending the company with its acquisitions. A group of banks took over control of GM and ousted Durant. Durant and Louis Chevrolet
Louis Chevrolet
Louis-Joseph Chevrolet was a Swiss-born American race car driver of French descent, co-founder of the Chevrolet Motor Car Company in 1911 and later, the Frontenac Motor Corporation in 1916 which made racing parts for Ford's Model T.-Early life:Born in 1878 in La Chaux-de-Fonds, a center of...
founded Chevrolet
Chevrolet
Chevrolet , also known as Chevy , is a brand of vehicle produced by General Motors Company . Founded by Louis Chevrolet and ousted GM founder William C. Durant on November 3, 1911, General Motors acquired Chevrolet in 1918...
in 1913 and it quickly became very successful. Durant began acquiring stock in GM and by 1915 had majority control. Chevrolet was acquired by GM in 1917 and Durant was back in charge of GM. In 1921, Durant was again forced out of the company. During the late 1920s, General Motors became the largest automaker, overtaking Ford. Under the leadership of Alfred Sloan, General Motors instituted decentralized management and separate divisions for each price class. They also introduced annual model changes. GM also became an innovator in technology under the leadership of Charles Kettering
Charles Kettering
Charles Franklin Kettering was an American inventor, engineer, businessman, and the holder of 186 patents. He was a founder of Delco, and was head of research for General Motors for 27 years from 1920 to 1947. Among his most widely used automotive inventions were the electrical starting motor and...
. GM followed Ford by expanding overseas, including purchasing England's Vauxhall Motors
Vauxhall Motors
Vauxhall Motors is a British automotive company owned by General Motors and headquartered in Luton. It was founded in 1857 as a pump and marine engine manufacturer, began manufacturing cars in 1903 and was acquired by GM in 1925. It has been the second-largest selling car brand in the UK for...
in 1925, Germany's Opel
Opel
Adam Opel AG, generally shortened to Opel, is a German automobile company founded by Adam Opel in 1862. Opel has been building automobiles since 1899, and became an Aktiengesellschaft in 1929...
in 1929, and Australia's Holden
Holden
GM Holden Ltd is an automaker that operates in Australia, based in Port Melbourne, Victoria. The company was founded in 1856 as a saddlery manufacturer. In 1908 it moved into the automotive field, before becoming a subsidiary of the U.S.-based General Motors in 1931...
in 1931.
Walter Chrysler
Walter Chrysler
Walter Percy Chrysler was an American machinist, railroad mechanic and manager, automotive industry executive, Freemason, and founder of the Chrysler Corporation.- Railroad career :...
was formerly president of Buick
Buick
Buick is a premium brand of General Motors . Buick models are sold in the United States, Canada, Mexico, China, Taiwan, and Israel, with China being its largest market. Buick holds the distinction as the oldest active American make...
and an executive of GM. After leaving GM in 1920 he took control of the Maxwell Motor Company, revitalized the company and in 1925 reorganized it into Chrysler Corporation. He then acquired Dodge Brothers in 1927. The acquisition of Dodge gave Chrysler the manufacturing facilities and dealer network that it needed to significantly expand production and sales. In 1928, Chrysler introduced the Plymouth
Plymouth
Plymouth is a city and unitary authority area on the coast of Devon, England, about south-west of London. It is built between the mouths of the rivers Plym to the east and Tamar to the west, where they join Plymouth Sound...
and DeSoto
DeSoto (automobile)
The DeSoto was a brand of automobile based in the United States, manufactured and marketed by the Chrysler Corporation from 1928 to 1961. The DeSoto logo featured a stylized image of Hernando de Soto...
brands. Chrysler also overtook Ford to become the second largest auto maker by the 1930s, following similar strategies as General Motors.
The Great Depression and World War II
The 1930s saw the demise of many auto makers due to the economic effects of the Great DepressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
, stiff competition from the Big Three, and/or mismanagement. Luxury carmakers were particularly affected by the economy, with companies like Stutz Motor Car Company, Pierce-Arrow
Pierce-Arrow
Pierce-Arrow was an American automobile manufacturer based in Buffalo, New York, which was active from 1901-1938. Although best known for its expensive luxury cars, Pierce-Arrow also manufactured commercial trucks, fire trucks, camp trailers, motorcycles, and bicycles.-Early history:The forerunner...
Motor Car Company, and the Marmon Motor Car Company going out of business. The decade also saw several companies with innovative engineering, such as the Doble Steam Motors
Doble steam car
Any of several makes of steam-powered automobile in the early 20th century, including Doble Detroit, Doble Steam Car, and Doble Automobile, are referred to as a Doble because of their founding or association with Abner DobleFox Stephen...
Corporation (advanced steam engines) and Franklin Automobile Company
Franklin (automobile)
The Franklin Automobile Company was a manufacturer of automobiles in the United States between 1902 and 1934 in Syracuse, New York. Herbert H. Franklin, the founder, began his career in the metal die casting business before establishing his automobile enterprise.Franklin founded the H. H. Franklin...
(air-cooled aluminum engines) going out of business. Errett Lobban Cord
Errett Lobban Cord
Errett Lobban "E. L." Cord was a leader in United States transport during the early and middle 20th century.Cord founded the Cord Corporation in 1929 as a holding company for over 150 companies he controlled, mostly in the field of transportation...
, who controlled the Auburn Automobile
Auburn Automobile
Auburn was a brand name of American automobiles produced from 1900 through 1936.-Corporate history:The Auburn Automobile Company grew out of the Eckhart Carriage Company, founded in Auburn, Indiana, in 1875 by Charles Eckhart...
Company (which also sold the Cord) and the Duesenberg
Duesenberg
Duesenberg was an Auburn, Indiana based American luxury automobile company active in various forms from 1913 to 1937, most famous for its high-quality passenger cars and record-breaking racing cars.-History:...
Motor Company, was under investigation by the Securities and Exchange Commission and the Internal Revenue Service
Internal Revenue Service
The Internal Revenue Service is the revenue service of the United States federal government. The agency is a bureau of the Department of the Treasury, and is under the immediate direction of the Commissioner of Internal Revenue...
. His auto empire collapsed in 1937 and production ceased.
Major technological innovations were introduced or were adopted widely during the 1930s, such as synchromesh manual transmissions, semi-automatic transmissions, automatic transmissions, hydraulic brakes, independent front suspension, and overhead-valve engines. The Cord
Cord Automobile
Cord was the brand name of a United States automobile, manufactured by the Auburn Automobile Company from 1929 through 1932 and again in 1936 and 1937....
810 used front-wheel drive, had hidden headlights, and was offered with a supercharger. Exterior styling designs were more flowing, as shown most noticeably on the Auburn Speedster and the Cord 810. Radical air-streamed design was introduced on the Chrysler Airflow
Chrysler Airflow
The Chrysler Airflow is an automobile produced by the Chrysler Corporation from 1934-1937. The Airflow was the first full-size American production car to use streamlining as a basis for building a sleeker automobile, one less susceptible to air resistance...
, a sales flop, and the Lincoln Zephyr (both of which used unit-body construction).
When the U.S. entered World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, all domestic passenger automobile production ceased by February 1942. All factories were converted to produce war materiel such as armaments, aircraft and military vehicles. These factories produced an astonishing amount of materiel, including 5.9 million weapons, 2.8 million tanks and trucks, and 27,000 aircraft. This production was a major factor in the victory of the allies.
Unionization of the auto manufacturers workforce
Due to the difficult working conditions in the auto production plants, auto workers began to seek representation to help improve conditions and ensure fair pay. The United Auto WorkersUnited Auto Workers
The International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, better known as the United Auto Workers , is a labor union which represents workers in the United States and Puerto Rico, and formerly in Canada. Founded as part of the Congress of Industrial...
union won recognition from GM and Chrysler in 1937, and Ford in 1941. In 1950, the automakers granted workers a company-paid pension to those 65 years old and with 30 years seniority. In the mid-1950s, the automakers agreed to set up a trust fund for unemployed auto workers. In 1973 the automakers agreed to offer pensions to any worker with 30 years seniority, regardless of age. By then the automakers had also agreed to cover the entire health insurance bill for its employees, survivors and retirees.
The decline of the independent automakers
The only major auto companies to survive the Great Depression were General Motors Corporation, Ford Motor CompanyFord Motor Company
Ford Motor Company is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK...
, Chrysler Corporation, Hudson Motor Car Company
Hudson Motor Car Company
The Hudson Motor Car Company made Hudson and other brand automobiles in Detroit, Michigan, from 1909 to 1954. In 1954, Hudson merged with Nash-Kelvinator Corporation to form American Motors. The Hudson name was continued through the 1957 model year, after which it was dropped.- Company strategy...
, Nash-Kelvinator Corporation
Nash-Kelvinator Corporation
Nash-Kelvinator Corporation was the result of a merger between Nash Motors and Kelvinator Appliance Company. The union of these two companies was brought about as a result of a condition made by George W...
, Packard Motor Car Company, Studebaker Corporation and Crosley Motors. The former three companies, known as the Big Three, enjoyed significant advantages over the smaller independent auto companies due to their financial strength which gave them a big edge in marketing, production and technological innovation. Most of the Big Three's competitors ended production by the 1960s, and their last major domestic competitor was acquired in the 1980s.
Crosley Motors ceased auto production in 1952. Packard Motor Car Company and Studebaker Corporation merged in 1954, but ended production of Packard branded cars in 1958 and ceased all auto production in 1966.
Kaiser-Frazer Corporation was started in 1945 and acquired Willys-Overland Motors (maker of the Jeep
Jeep
Jeep is an automobile marque of Chrysler . The first Willys Jeeps were produced in 1941 with the first civilian models in 1945, making it the oldest off-road vehicle and sport utility vehicle brand. It inspired a number of other light utility vehicles, such as the Land Rover which is the second...
) in 1953. Production of passenger cars was discontinued in 1955. In 1970, the company was sold to American Motors Corporation.
In 1954, Nash-Kelvinator Corporation
Nash-Kelvinator Corporation
Nash-Kelvinator Corporation was the result of a merger between Nash Motors and Kelvinator Appliance Company. The union of these two companies was brought about as a result of a condition made by George W...
and Hudson Motor Car Company
Hudson Motor Car Company
The Hudson Motor Car Company made Hudson and other brand automobiles in Detroit, Michigan, from 1909 to 1954. In 1954, Hudson merged with Nash-Kelvinator Corporation to form American Motors. The Hudson name was continued through the 1957 model year, after which it was dropped.- Company strategy...
merged to form American Motors Corporation (AMC). The company was unable to compete successfully with the big three and struggled financially. The French auto maker Renault
Renault
Renault S.A. is a French automaker producing cars, vans, and in the past, autorail vehicles, trucks, tractors, vans and also buses/coaches. Its alliance with Nissan makes it the world's third largest automaker...
took control of AMC in the early 1980s, but financial difficulties continued and AMC was sold to Chrysler Corporation in 1987.
The post-war years
Initial auto production after the war was slowed by the retooling process, shortages of materials and labor unrest. However, the American auto industry reflected the post-war prosperity of the late-1940s and the 1950s. Cars grew in overall size, as well as engine size during the 1950s. The Overhead valveOverhead valve
An overhead valve engine, also informally called pushrod engine or I-head engine, is a type of piston engine that places the camshaft within the cylinder block , and uses pushrods or rods to actuate rocker arms above the cylinder...
V-8 engine developed by GM in the late-1940s proved to be very successful and helped ignite the horsepower race, the second salvo of which was Chrysler's 1951 Hemi engine
Hemi engine
A Hemi engine is an internal combustion engine in which the roof of each cylinder's combustion chambers is of hemispherical form.- History :...
. Longer, lower and wider tended to be the general trend. Exterior styling was influenced by jets and rockets as the space-age dawned. Rear fins were popular and continued to grow larger, and front bumpers and taillights were sometimes designed in the shape of rockets. Chrome plating was very popular. The most extreme version of these styling trends were found in the 1959 Cadillac Eldorado
Cadillac Eldorado
The 1953 Eldorado was a special-bodied, low-production convertible . It was the production version of the 1952 El Dorado "Golden Anniversary" concept car, and borrowed bumper bullets from the 1951 GM Le Sabre show car...
and Chrysler Corporation's 1957 Imperial
Imperial (automobile)
Imperial was the Chrysler Corporation's luxury automobile brand between 1955 and 1975, with a brief reappearance in 1981 to 1983.The Imperial name had been used since 1926, but was never a separate make, just the top-of-the-line Chrysler. In 1955, the company decided to spin it off as its own make...
. The Chevrolet Corvette
Chevrolet Corvette
The Chevrolet Corvette is a sports car by the Chevrolet division of General Motors that has been produced in six generations. The first model, a convertible, was designed by Harley Earl and introduced at the GM Motorama in 1953 as a concept show car. Myron Scott is credited for naming the car after...
and the Ford Thunderbird
Ford Thunderbird
The Thunderbird , is an automobile manufactured by the Ford Motor Company in the United States over eleven model generations from 1955 through 2005...
, introduced in 1953 and 1955 respectively, were designed to capture the sports car market. However, the Thunderbird grew in size in 1958 and evolved into a personal luxury car
Personal luxury car
A personal luxury car is a highly styled, luxury vehicle with an emphasis on image over practicality. Accenting the comfort and satisfaction of its owner and driver above all else, the personal luxury car sometimes sacrifices passenger capacity, cargo room, and fuel economy in favor of style and...
. The 1950s were also noted for perhaps one of the biggest miscues in auto marketing with the Ford Edsel, which was the result of unpopular styling and being introduced during an economic recession.
The 1960s
Big changes were taking place in automobile development in the 1960s, with the Big Three dominating the industry. Meanwhile, with the passage of the $33 billion Federal Aid Highway Act of 1956Federal Aid Highway Act of 1956
The Federal-Aid Highway Act of 1956, popularly known as the National Interstate and Defense Highways Act , was enacted on June 29, 1956, when Dwight D. Eisenhower signed the bill into law...
, a network of regional and interstate roads continued to enhance transportation. As urban areas became more congested, more families migrated to the suburbs. In fact, between 1960 and 1970, 70 percent of the population's growth occurred in the suburbs.
Imports grew during the 1950s, with the Volkswagen Beetle
Volkswagen Beetle
The Volkswagen Type 1, widely known as the Volkswagen Beetle or Volkswagen Bug, is an economy car produced by the German auto maker Volkswagen from 1938 until 2003...
being the biggest seller. In response to this the domestic auto makers developed compact cars, such as the Ford Falcon, the Chevrolet Corvair
Chevrolet Corvair
-First generation :The 1960 Corvair 500 and 700 series four-door sedans were conceived as economy cars offering few amenities in order to keep the price competitive, with the 500 selling for under $2,000...
, the Studebaker Lark
Studebaker Lark
The Studebaker Lark is a "compact car" which was produced by Studebaker from 1959 to 1966.From its introduction in early 1959 until 1962, the Lark was a product of the Studebaker-Packard Corporation. In mid-1962, the company dropped "Packard" from its name and reverted to its pre-1954 name, the...
and the Plymouth Valiant
Plymouth Valiant
The Plymouth Valiant is an automobile manufactured by the Plymouth division of Chrysler Corporation in the United States from 1960 to 1976. It was created to give the company an entry in the compact car market emerging in the late 1950s...
. (The compact AMC Rambler had been around since the early 1950s.) While initially successful in sales, they mostly took sales away from larger cars within their companies.
Pony cars were introduced with the Ford Mustang
Ford Mustang
The Ford Mustang is an automobile manufactured by the Ford Motor Company. It was initially based on the second generation North American Ford Falcon, a compact car. Introduced early on April 17, 1964, as a "1964½" model, the 1965 Mustang was the automaker's most successful launch since the Model A...
in 1964 This car combined sporty looks with a long hood, small rear deck and a small rear seat. The car proved highly successful and imitators soon arose, such as the Chevrolet Camaro
Chevrolet Camaro
The Chevrolet Camaro is an automobile manufactured by General Motors under the Chevrolet brand, classified as a pony car and some versions also as a muscle car. It went on sale on September 29, 1966, for the 1967 model year and was designed as a competing model to the Ford Mustang...
, Pontiac Firebird
Pontiac Firebird
The Pontiac Firebird was built by the Pontiac division of General Motors between 1967 and 2002. The Firebird was introduced the same year as the automaker's platform-sharing model, the Chevrolet Camaro...
, Dodge Challenger
Dodge Challenger
The Dodge Challenger is the name of three different generations of automobiles marketed by the Dodge division of Chrysler.The first generation Dodge Challenger was a pony car built from 1970 to 1974, using the Chrysler E platform and sharing major components with the Plymouth Barracuda. The second...
, Plymouth Barracuda
Plymouth Barracuda
The Plymouth Barracuda is a 2-door car that was manufactured by the Plymouth division of the Chrysler Corporation from 1964-1974.The first-generation Barracuda, a fastback A-body coupe based on the Plymouth Valiant, had a distinctive wraparound back glass and was available from 1964-1966.The...
(actually introduced two weeks prior to the Mustang), Mercury Cougar
Mercury Cougar
The Mercury Cougar is an automobile which was sold under the Mercury brand of the Ford Motor Company's Lincoln-Mercury Division from 1967 to 2002. The name was first used in 1967 and was carried by a diverse series of cars over the next three decades. As is common with Mercury vehicles, the Cougar...
and AMC Javelin
AMC Javelin
The Javelin was a production version of one of the AMC AMX prototypes shown during the 1966 AMX project nationwide tour. Intended to rival other pony cars such as the Ford Mustang and Chevrolet Camaro. American Motor's Javelin debuted on 22 August 1967, for the 1968 model year...
. Muscle cars were also introduced in 1964 with the Pontiac GTO
Pontiac GTO
The Pontiac GTO is an automobile built by Pontiac Division of General Motors in the United States from 1964 to 1974, and by GM subsidiary Holden in Australia from 2004 to 2006. It is considered an innovative, and now classic muscle car of the 1960s and 1970s...
. This car combined an intermediate-sized body with a large high-output engine. Competitors were also quickly introduced, including the Chevrolet Chevelle SS, Dodge R/T (Coronet
Coronet
A coronet is a small crown consisting of ornaments fixed on a metal ring. Unlike a crown, a coronet never has arches.The word stems from the Old French coronete, a diminutive of coronne , itself from the Latin corona .Traditionally, such headgear is – as indicated by the German equivalent...
and Charger
Dodge Charger
The Dodge Charger is an American automobile manufactured by the Dodge division of Chrysler. There have been several different Dodge vehicles, built on three different platforms and sizes, all bearing the Charger nameplate...
), Plymouth Road Runner
Plymouth Road Runner
The Plymouth Road Runner was a muscle car built by the Plymouth division of the Chrysler Corporation in the United States between 1968 and 1980. In 1968, the first muscle cars were, in the opinion of many, moving away from their roots as relatively cheap, fast cars as they gained options...
/ GTX, Ford Torino
Ford Torino
The Ford Torino is an intermediate automobile produced by the Ford Motor Company for the North American market between 1968 and 1976. The car was named after the city of Turin , which is considered the Detroit of Italy...
and AMC AMX
AMC AMX
The AMC AMX is a two-seat GT in style and approach sports car that was produced by American Motors Corporation for the 1968 through 1970 model years. The AMX was also classified as a muscle car, but "unique among other American cars at the time due its short wheelbase"...
. Muscle cars reached their zenith in the late 1960s, but soon fell out of favor due to high insurance premiums along with the combination of emission controls and high gas prices in the early 1970s.
While the pony and muscle cars got most of the attention, the full sized cars formed the bulk of auto sales in the 1960s, helped by low oil prices. The styling excesses and technological gimmicks (such as the retractable hardtop and the pushbutton automatic transmission) of the 1950s were de-emphasized. The rear fins were downsized and largely gone by the mid-1960s, as was the excessive chrome.
Federal regulation of the auto industry
Safety and environmental issues during the 1960s led to stricter government regulation of the auto industry. This resulted in higher costs and eventually to weaker performance for cars in the 1970s. Seat lap belts were mandated by many states effective in 1962. Federal Motor Vehicle Safety Standards initiated in 1968 required shoulder belts for front passengers, front head restraints, energy-absorbing steering columns, ignition-key warning systems, anti-theft steering column/transmission locks, side marker lights and padded interiors. Beginning in 1972, bumpers were required to be reinforced to meet 5-mph impact standards. With the Clean Air ActClean Air Act
A Clean Air Act is one of a number of pieces of legislation relating to the reduction of airborne contaminants, smog and air pollution in general. The use by governments to enforce clean air standards has contributed to an improvement in human health and longer life spans...
, emission controls began being instituted in 1968. The use of leaded gasoline began being curtailed in the early 1970s, which resulted in lower-compression engines being used, and thus reducing horsepower and performance. Catalytic converters began being widely used by the mid-1970s.
The 1970s and 1980s
By 1969, imports had increased their share of the U.S. auto market, with VolkswagenVolkswagen
Volkswagen is a German automobile manufacturer and is the original and biggest-selling marque of the Volkswagen Group, which now also owns the Audi, Bentley, Bugatti, Lamborghini, SEAT, and Škoda marques and the truck manufacturer Scania.Volkswagen means "people's car" in German, where it is...
selling 548,904 vehicles, followed by Toyota with 127,018 vehicles. In response to this, the domestic auto makers introduced new compact and sub-compact cars, such as the Ford Pinto
Ford Pinto
The Ford Pinto is a subcompact car produced by the Ford Motor Company for the model years 1971–1980. The car's name derives from the Pinto horse. Initially offered as a two-door sedan, Ford offered "Runabout" hatchback and wagon models the following year, competing in the U.S. market with the AMC...
and Maverick
Ford Maverick (North America)
The Ford Maverick was a compact car manufactured from April 1969-1977 in the United States, Canada, Mexico and from 1973-1979 in Brazil — employing a rear wheel drive platform dating to the original 1960 Falcon...
, the Chevrolet Vega
Chevrolet Vega
The Chevrolet Vega is a subcompact, two-door automobile that was produced by the Chevrolet division of General Motors for the 1971-1977 model years. Named after the star Vega, the car was powered by a lightweight aluminum-block inline four-cylinder engine...
, and the AMC
American Motors
American Motors Corporation was an American automobile company formed by the 1954 merger of Nash-Kelvinator Corporation and Hudson Motor Car Company. At the time, it was the largest corporate merger in U.S. history.George W...
Gremlin
AMC Gremlin
The AMC Gremlin is a two-door subcompact car produced in the United States and Canada by the American Motors Corporation between 1970 and 1978. AMC reduced its development and manufacturing costs by adapting a shortened Hornet platform with a Kammback-type tail...
, Hornet
AMC Hornet
The AMC Hornet was a compact automobile made by the American Motors Corporation in one generation beginning with the 1970 model year and continuing through the 1977 model year. The Hornet replaced the compact Rambler American marking the end of the Rambler marque in the American and Canadian markets...
and Pacer
AMC Pacer
The AMC Pacer is a two-door compact automobile produced in the United States by the American Motors Corporation between 1975 and 1980.Its initial design idea was started in 1971. The car's unusual rounded shape with massive glass area greatly contrasted with the three-box architecture with "square,...
. However, design and manufacturing problems inflicted a number of these cars and led to unfavorable perceptions of the cars.
The auto industry was severely affected by the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...
Arab embargo. Small fuel-efficient cars from foreign automakers took a sharply higher share of the U.S. auto sales market. The federal government initiated fuel efficiency standards (known as Corporate Average Fuel Economy
Corporate Average Fuel Economy
The Corporate Average Fuel Economy are regulations in the United States, first enacted by the U.S. Congress in 1975, and intended to improve the average fuel economy of cars and light trucks sold in the US in the wake of the 1973 Arab Oil Embargo...
, or CAFE) in 1975, effective as of 1978 for passenger cars, and as of 1979 for light trucks. For passenger cars, the initial standard was 18 miles per gallon (mpg), and increased to 27.5 mpg by 1985.
General Motors began responding first to the high gas prices, by downsizing most of their models by 1977. In 1979, the second oil price spike occurred, precipitated by political events in Iran, resulting in the 1979 energy crisis
1979 energy crisis
The 1979 oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979 and the Ayatollah Khomeini soon became the new leader of Iran. Protests severely disrupted the Iranian oil...
. By 1980, the economy slid into turmoil, with high inflation, high unemployment, and high interest rates. The automakers suffered large operating losses. Chrysler was hurt most severely and in 1979 received a bailout from the federal government in the form of $1.5 billion in loan guarantees, one quick fix was a Detroit-built version of their then-new French (Simca
Simca
Simca was a French automaker, founded in November 1934 by Fiat. It was directed from July 1935 to May 1963 by the Italian Henri Théodore Pigozzi...
) economy car, the Horizon
Chrysler Horizon
The Horizon was a subcompact automobile developed by Chrysler Europe and was sold in Europe between 1977 and 1985 under the Chrysler, Simca and Talbot nameplates...
.
As bold and confident as the Big Three automakers were in the 1950s and 1960s, the American auto makers in the 1970s and 1980s stumbled badly, going from one engineering, manufacturing or marketing disaster to another. Ford reaped a public relations nightmare when it was revealed that the Pinto
Pinto
-General:*Conspiracy of the Pintos, a rebellion against Portuguese rule in Goa, India in 1787*Ford Pinto , a subcompact car manufactured by the Ford Motor Company for the North American market...
's gas tank was vulnerable to exploding when hit from behind. Ford knew about this vulnerability but did not design any safeguards in order to save a few dollars per vehicle. They rationalized that the cost of lawsuits would be less than the cost of redesigning the car. GM had a string of miscues starting with the Chevrolet Vega
Chevrolet Vega
The Chevrolet Vega is a subcompact, two-door automobile that was produced by the Chevrolet division of General Motors for the 1971-1977 model years. Named after the star Vega, the car was powered by a lightweight aluminum-block inline four-cylinder engine...
, which developed a reputation for rapidly rusting and having major problems with the aluminum engine. Cadillac damaged their reputation when the four-cylinder Cadillac Cimarron
Cadillac Cimarron
The Cadillac Cimarron was a compact car built by Cadillac based on the GM J platform. It was first introduced in 1981 for the 1982 model year, and sold through 1988. During its seven-year model run, 132,499 Cimarrons were built.-Development:...
was introduced in 1981 (a gussied-up Chevrolet Cavalier
Chevrolet Cavalier
The Chevrolet Cavalier was a compact automobile produced from 1982 to 2005 by General Motors. Built on the company's J platform, the Cavalier was one of the best-selling cars in the United States throughout its life.- Predecessors :...
at twice the price) and the "V8-6-4" engine didn't work as advertised. GM's reputation was also damaged when it revealed in 1977 that they were installing Chevrolet
Chevrolet
Chevrolet , also known as Chevy , is a brand of vehicle produced by General Motors Company . Founded by Louis Chevrolet and ousted GM founder William C. Durant on November 3, 1911, General Motors acquired Chevrolet in 1918...
engines in Oldsmobile
Oldsmobile
Oldsmobile was a brand of American automobile produced for most of its existence by General Motors. It was founded by Ransom E. Olds in 1897. In its 107-year history, it produced 35.2 million cars, including at least 14 million built at its Lansing, Michigan factory...
s, and lawsuits from aggrieved Oldsmobile owners followed. Likewise litigation ensued when a trio of diesel engines, designed from gasoline engines and used in GM cars from 1978 to 1985 suffered major problems. Class action lawsuits and efforts from the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
resulted in buybacks of the cars from GM. Chrysler also suffered damage to its reputation when its compact cars, the Plymouth Volaré and Dodge Aspen
Dodge Aspen
The Dodge Aspen, produced from 1976 to 1980, was a compact car from Chrysler Corporation's Dodge division; its Plymouth-branded counterpart was the Volaré . It was launched as a two-door coupe, a four-door sedan, and a unique-for-the-segment station wagon...
, were developed quickly and suffered from massive recalls and poor quality.
In 1981, Japanese automakers entered into a so-called "Voluntary restraint agreement" limiting the number of autos that they could import to the U.S. to 1.68 million per year. One side effect of this quota was that the Japanese car companies began developing luxury cars that had higher profit margins, such as Toyota's Lexus
Lexus
is the luxury vehicle division of Japanese automaker Toyota Motor Corporation. First introduced in 1989 in the United States, Lexus is now sold globally and has become Japan's largest-selling make of premium cars. The Lexus marque is marketed in over 70 countries and territories worldwide, and has...
, Honda
Honda
is a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
's Acura
Acura
Acura is the luxury vehicle division of Japanese automaker Honda Motor Company. The brand has been available in the United States and Canada since March 1986, marketing luxury, performance, and near-performance vehicles. It was introduced to Hong Kong in 1991, Mexico in 2004, and China in 2006...
,and Nissan's Infiniti
Infiniti
is the luxury division of automaker Nissan. Infiniti officially started selling vehicles on November 8, 1989 in North America. Marketing operations have since grown to include the Middle East, South Korea, Russia, Taiwan, China, Ukraine and the United Kingdom. Infiniti began sales in additional...
divisions. Another consequence was that the Japanese car makers began opening auto production plants in the U.S., with the three largest Japanese auto manufacturers all opening production facilities by 1985. These facilities were opened primarily in the southern U.S., in states that were not union friendly. Although the U.A.W. made substantial union -organizing efforts at these plants, they remained non-union. The Big Three also began investing in and/or developing joint manufacturing facilities with several of the Japanese automakers. Ford invested in Mazda
Mazda
is a Japanese automotive manufacturer based in Fuchū, Aki District, Hiroshima Prefecture, Japan.In 2007, Mazda produced almost 1.3 million vehicles for global sales...
as well as setting up a joint facility with them called AutoAlliance International
AutoAlliance International
AutoAlliance International is a joint venture automobile assembly firm co-owned by Ford Motor Company and Mazda Motor Corporation. The main AAI plant is located at 1 International Drive in Flat Rock, Michigan...
. Chrysler bought stock in Mitsubishi Motors
Mitsubishi Motors
is a multinational automaker headquartered in Minato, Tokyo. In 2009 it was the fifth-largest Japan-based automaker and the 17th-largest in the world measured by production...
and established a joint facility with them called Diamond-Star Motors
Diamond-Star Motors
Diamond-Star Motors was an automobile-manufacturing joint venture between the Chrysler Corporation and Mitsubishi Motors Corporation . The name came from the parent companies' respective logos: three diamonds and a pentastar...
. GM invested in Suzuki
Suzuki
is a Japanese multinational corporation headquartered in Hamamatsu, Japan that specializes in manufacturing compact automobiles and 4x4 vehicles, a full range of motorcycles, all-terrain vehicles , outboard marine engines, wheelchairs and a variety of other small internal combustion engines...
and Isuzu
Isuzu
, is a Japanese car, commercial vehicle and heavy truck manufacturing company, headquartered in Tokyo. In 2005, Isuzu became the world's largest manufacturer of medium to heavy duty trucks. It has assembly and manufacturing plants in the Japanese city of Fujisawa, as well as in the prefectures...
, and set up a joint manufacturing facility with Toyota under the name of Nummi
Nummi
Nummi is a district and a suburb of the city of Turku, Finland. It is located in the north-eastern part of the city, just outside the city centre and south of the river Aura...
.
Despite the financial and marketing upheavals during the 1970s and 1980s, the decades led to technological innovations and/or widespread use of such improvements as disc brakes, fuel injection
Fuel injection
Fuel injection is a system for admitting fuel into an internal combustion engine. It has become the primary fuel delivery system used in automotive petrol engines, having almost completely replaced carburetors in the late 1980s....
, electronic engine control unit
Engine control unit
An engine control unit is a type of electronic control unit that determines the amount of fuel, ignition timing and other parameters an internal combustion engine needs to keep running...
s, and electronic ignition. Front-wheel drive
Front-wheel drive
Front-wheel drive is a form of engine/transmission layout used in motor vehicles, where the engine drives the front wheels only. Most modern front-wheel drive vehicles feature a transverse engine, rather than the conventional longitudinal engine arrangement generally found in rear-wheel drive and...
became the standard drive system.
By the mid-1980s, oil prices had fallen sharply, helping lead to the revitalization of the American auto industry. Under the leadership of Lee Iacocca
Lee Iacocca
Lido Anthony "Lee" Iacocca is an American businessman known for engineering the Mustang, the unsuccessful Ford Pinto, being fired from Ford Motor Company, and his revival of the Chrysler Corporation in the 1980s...
, Chrysler Corporation mounted a comeback after its flirtation with bankruptcy in 1979. The Minivan
Minivan
Minivan is a type of van designed for personal use. Minivans are typically either two-box or one box designs for maximum interior volume – and are taller than a sedan, hatchback, or a station wagon....
was introduced in 1984 by Chrysler with the Plymouth Voyager
Plymouth Voyager
In 1984, the Voyager name was applied to Plymouth's variant of Chrysler's all new minivan. This Voyager used the Chrysler S platform, which was derived from the K-platform . In addition to using a derived platform, the Voyager shared many components with the K-cars, most notably the interior...
and Dodge Caravan
Dodge Caravan
The Dodge Caravan is a family minivan manufactured by Chrysler Group LLC and sold under its Dodge brand. Along with its nameplate variant, the Plymouth Voyager, the Caravan was introduced for the 1984 model year. In 1987, the Dodge Grand Caravan long-wheelbase model was introduced and sold...
, and proved very popular. These vehicles were built on a passenger-car chassis and seated up to seven people as well as being able to hold bulky loads. Chrysler also introduced their "K-cars
Chrysler K platform
The Chrysler Corporation's K-cars were compact-to-midsize cars designed to carry six adults on two bench seats and were aimed not only to replace Chrysler's nominally-compact F-body Aspen and Volaré, but also to compete with intermediates like the Chevrolet Malibu and Ford Fairmont...
" in the 1980s, which came with front-wheel drive and fuel-efficient OHC engines. In 1987 Chrysler bought American Motors
American Motors
American Motors Corporation was an American automobile company formed by the 1954 merger of Nash-Kelvinator Corporation and Hudson Motor Car Company. At the time, it was the largest corporate merger in U.S. history.George W...
, which produced the Jeep
Jeep
Jeep is an automobile marque of Chrysler . The first Willys Jeeps were produced in 1941 with the first civilian models in 1945, making it the oldest off-road vehicle and sport utility vehicle brand. It inspired a number of other light utility vehicles, such as the Land Rover which is the second...
. This proved to be excellent timing to take advantage of the Sport utility vehicle
Sport utility vehicle
A sport utility vehicle is a generic marketing term for a vehicle similar to a station wagon, but built on a light-truck chassis. It is usually equipped with four-wheel drive for on- or off-road ability, and with some pretension or ability to be used as an off-road vehicle. Not all four-wheel...
boom. Ford also began a comeback after losses of $3.3 billion in the early 1980s. The company introduced the very successful aerodynamic Taurus
Ford Taurus
The Ford Taurus is an automobile manufactured by the Ford Motor Company in the United States. Originally introduced in the 1986 model year, it has remained in near-continuous production for more than two decades, making it the fourth oldest nameplate that is currently sold in the North American...
in 1985. General Motors, under the leadership of Roger Smith, was not as successful as its competitors in turning itself around and its market share fell significantly. While Ford and Chrysler were cutting production costs, GM was investing heavily in new technology. The company's attempts at overhauling its management structure and using increased technology for manufacturing production were not successful. Several large acquisitions (Electronic Data Systems
Electronic Data Systems
HP Enterprise Services is the global business and technology services division of Hewlett Packard's HP Enterprise Business strategic business unit. It was formed by the combination of HP's legacy services consulting and outsourcing business and the integration of acquired Electronic Data Systems,...
and Hughes Aircraft Company) also diverted management attention away from their main industry. (Ford and Chrysler also joined in the acquisition and diversification trend, with Ford buying Jaguar Cars, Aston Martin
Aston Martin
Aston Martin Lagonda Limited is a British manufacturer of luxury sports cars, based in Gaydon, Warwickshire. The company name is derived from the name of one of the company's founders, Lionel Martin, and from the Aston Hill speed hillclimb near Aston Clinton in Buckinghamshire...
, The Associates (a finance company), and First Nationwide Financial Corp. (a savings and loan). Chrysler purchased Lamborghini
Lamborghini
Automobili Lamborghini S.p.A., commonly referred to as Lamborghini , is an Italian car manufacturer. The company was founded by manufacturing magnate Ferruccio Lamborghini in 1963, with the objective of producing a refined grand touring car to compete with established offerings from marques like...
, an interest in Maserati
Maserati
Maserati is an Italian luxury car manufacturer established on December 1, 1914, in Bologna. The company's headquarters is now in Modena, and its emblem is a trident. It has been owned by the Italian car giant Fiat S.p.A. since 1993...
, and Gulfstream Aerospace
Gulfstream Aerospace
Gulfstream Aerospace Corporation is a producer of several models of jet aircraft. Gulfstream has been a unit of General Dynamics since 1999.The company has produced more than 1,500 aircraft for corporate, government, private, and military customers around the world...
jets.) GM started the Saturn Corporation brand in the late 1980s as a way to gain sales from imported cars. While initially receiving a positive reception, GM later neglected to provide it much support. Around this time GM also began development on the General Motors EV1
General Motors EV1
The General Motors EV1 was an electric car produced and leased by the General Motors Corporation from 1996 to 1999. It was the first mass-produced and purpose-designed electric vehicle of the modern era from a major automaker, and the first GM car designed to be an electric vehicle from the...
electric car, which debuted in 1996.
The 1990s and 2000s
The 1990s began the decade in a recession, which resulted in weak auto sales and operating losses. In addition, the Invasion of KuwaitInvasion of Kuwait
The Invasion of Kuwait, also known as the Iraq-Kuwait War, was a major conflict between the Republic of Iraq and the State of Kuwait, which resulted in the seven-month long Iraqi occupation of Kuwait, which subsequently led to direct military intervention by United States-led forces in the Gulf...
by Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
caused a temporary jump in oil prices. However, the automakers recovered fairly quickly. In the mid-1990s, light truck sales (which included Sport utility vehicle
Sport utility vehicle
A sport utility vehicle is a generic marketing term for a vehicle similar to a station wagon, but built on a light-truck chassis. It is usually equipped with four-wheel drive for on- or off-road ability, and with some pretension or ability to be used as an off-road vehicle. Not all four-wheel...
s, Pickup truck
Pickup truck
A pickup truck is a light motor vehicle with an open-top rear cargo area .-Definition:...
s and Minivan
Minivan
Minivan is a type of van designed for personal use. Minivans are typically either two-box or one box designs for maximum interior volume – and are taller than a sedan, hatchback, or a station wagon....
s) began to rise sharply. Due to the CAFE
Café
A café , also spelled cafe, in most countries refers to an establishment which focuses on serving coffee, like an American coffeehouse. In the United States, it may refer to an informal restaurant, offering a range of hot meals and made-to-order sandwiches...
standards differentiating between passenger cars and light trucks, the automakers were able to sell large and heavy vehicles without fear of the CAFE fines. Low oil prices also gave incentives for consumers to buy these gas-guzzling vehicles. The American automakers sold combined, and even separately, millions of pickup trucks and body on frame SUVs during this period. Imports such as the Toyota 4Runner, Land Cruiser, Tacoma, and Nissan Pathfinder and Frontier were also hugely popular during this time period.
The automakers also continued their trend of purchasing or investing in foreign automakers. GM purchased a controlling interest in Saab
Saab
Saab AB is a Swedish aerospace and defence company, founded in 1937. From 1947 to 1990 it was the parent company of automobile manufacturer Saab Automobile, and between 1968 and 1995 the company was in a merger with commercial vehicle manufacturer Scania, known as Saab-Scania.-History:"Svenska...
in 1990 and Daewoo Motors
Daewoo Motors
The Daewoo Motors was a South Korean car maker established in 1978, part of the Daewoo Group. The company sold most of its assets in 2001 to General Motors after running into financial trouble. The commercial vehicles division was acquired by Tata Motors in 2004.-History:The company was first...
in 2001, and invested in Subaru
Subaru
; is the automobile manufacturing division of Japanese transportation conglomerate Fuji Heavy Industries .Subaru is internationally known for their use of the boxer engine layout popularized in cars by the Volkswagen Beetle and Porsche 911, in most of their vehicles above 1500 cc as well as...
in 1999 and Fiat
Fiat
FIAT, an acronym for Fabbrica Italiana Automobili Torino , is an Italian automobile manufacturer, engine manufacturer, financial, and industrial group based in Turin in the Italian region of Piedmont. Fiat was founded in 1899 by a group of investors including Giovanni Agnelli...
in 2000. They also purchased the Hummer
Hummer
Hummer was a brand of trucks and SUVs, first marketed in 1992 when AM General began selling a civilian version of the M998 Humvee. In 1998, General Motors purchased the brand name and marketed three vehicles: the original Hummer H1, based on the Humvee; and the H2 and H3 models that were...
name from AM General
AM General
AM General is an American heavy vehicle manufacturer based in South Bend, Indiana. It is best known for the civilian Hummer and the military Humvee, that is assembled in Mishawaka, Indiana...
in 1998. Ford purchased Volvo
Volvo
AB Volvo is a Swedish builder of commercial vehicles, including trucks, buses and construction equipment. Volvo also supplies marine and industrial drive systems, aerospace components and financial services...
in 1999 and Land Rover
Land Rover
Land Rover is a British car manufacturer with its headquarters in Gaydon, Warwickshire, United Kingdom which specialises in four-wheel-drive vehicles. It is owned by the Indian company Tata Motors, forming part of their Jaguar Land Rover group...
in 2000. GM and Ford also established joint ventures with Chinese auto companies during this period. GM's joint ventures are with Shanghai GM
Shanghai GM
Shanghai General Motors Company Ltd. is a joint venture between General Motors Company and Shanghai Automotive Industry Corporation that manufactures and sells Chevrolet, Buick, and Cadillac brand automobiles in mainland China. Shanghai GM was founded on June 12, 1997 with 50% investment each...
, SAIC-GM-Wuling Automobile
SAIC-GM-Wuling Automobile
SAIC-GM-Wuling Automobile is a joint venture between General Motors and Shanghai Automotive Industry Corporation of China and Liuzhou Wuling Motors Co., Ltd...
, and FAW-GM Light Duty Commercial Vehicle Co Ltd. Ford's joint ventures are with Chang'an Ford
Chang'an Ford
Chang'an Ford Automobile Co., Ltd. is a joint venture between Ford Motor Company and Chang'an Motors in Chongqing, China.The company produced 20,000 Ford Fiestas in 2003 and will build the Mondeo and Escape-based Maverick SUV. Production is based around so-called knockdown kits, partially assembled...
and Jiangling Ford
Jiangling Motors
The Jiangling Motors Corporation Limited , abbreviated JMC, is a Chinese automobile manufacturer that is also known by the Landwind brand name in a number of markets...
.
While the American automakers were investing in or buying foreign competitors, the foreign automakers continued to establish more production facilities in the United States. In the 1990s, BMW
BMW
Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
and Daimler-Benz
Daimler-Benz
Daimler-Benz AG was a German manufacturer of automobiles, motor vehicles, and internal combustion engines; founded in 1926. An Agreement of Mutual Interest - which was valid until year 2000 - was signed on 1 May 1924 between Karl Benz's Benz & Cie., and Daimler Motoren Gesellschaft, which had...
opened SUV factories in Spartanburg County, South Carolina and Tuscaloosa County, Alabama
Tuscaloosa County, Alabama
Tuscaloosa County is a county of the U.S. state of Alabama.It is named in honor of the pre-Choctaw chief Tuskaloosa. In 2010, the population was 194,656...
, respectively. In the 2000s, Hyundai
Hyundai
Hyundai ) is a global conglomerate company, part of the Korean chaebol, that was founded in South Korea by one of the most famous businessmen in Korean history: Chung Ju-yung...
and Kia
Kia Motors
Kia Motors , headquartered in Seoul, is South Korea's second-largest automobile manufacturer, following the Hyundai Motor Company, with sales of over 1.4 million vehicles in 2010...
opened plants in Montgomery, Alabama
Montgomery, Alabama
Montgomery is the capital of the U.S. state of Alabama, and is the county seat of Montgomery County. It is located on the Alabama River southeast of the center of the state, in the Gulf Coastal Plain. As of the 2010 census, Montgomery had a population of 205,764 making it the second-largest city...
and West Point, Georgia
West Point, Georgia
West Point is a town in Troup County, with a small tail of the south end of town in Harris County, in the U.S. state of Georgia. As of the 2000 U.S. Census, this town had a total population of just 3,382 people...
. Also, several of the Japanese auto manufacturers expanded or opened additional plants during this period.
In 1998, Chrysler and the German automaker Daimler-Benz
Daimler-Benz
Daimler-Benz AG was a German manufacturer of automobiles, motor vehicles, and internal combustion engines; founded in 1926. An Agreement of Mutual Interest - which was valid until year 2000 - was signed on 1 May 1924 between Karl Benz's Benz & Cie., and Daimler Motoren Gesellschaft, which had...
entered into a "merger of equals" although in reality it turned out be an acquisition by Daimler-Benz. Thus the Big Three American-owned automakers turned into the Big Two automakers. However, a culture clash emerged between the two divisions, and there was an exodus of engineering and manufacturing management from the Chrysler division. The Chrysler division struggled financially, with only a brief recovery when the Chrysler 300
Chrysler 300
The Chrysler 300 is a full-size upscale car first shown at the 2003 New York Auto Show as a concept car. Sales in the U.S. began in the spring of 2004 as an early 2005 model year car. Designed by Ralph Gilles, the new 300 was built as a high-end sedan while the SRT-8 model was designed to be the...
was introduced. In 2007 Daimler-Benz sold the company to a private equity firm, Cerberus Capital Management
Cerberus Capital Management
Cerberus Capital Management, L.P. is one of the largest private equity investment firms in the United States. The firm is based in New York City, and run by -year-old financier Steve Feinberg. Former U.S...
, thus again making it American-owned.
The 2000s began with a recession in early 2001 and the effects of the September 11, 2001 terrorist attacks, significantly affecting auto industry sales and profitability. The stock market decline affected the pension fund levels of the automakers, requiring significant contributions to the funds by the automakers (with GM financing these contributions by raising debt).
In 2005, oil prices began rising and peaked in 2008. With the American automakers heavily dependent upon the gas-guzzling light truck sales for their profits, their sales fell sharply. In addition, during the 2000s, the finance subsidiaries of the Big Three became of increasing importance to their overall profitability (and their eventual downfall). General Motors Acceptance Corporation
General Motors Acceptance Corporation
Ally Financial Inc. is a bank holding company headquartered in Detroit, Michigan, United States at Tower 200 of the Renaissance Center. The bank slogan has more than 15 million customers worldwide and provides a range of financial services including auto financing, insurance, mortgage services, and...
, the GM finance division, began making home mortgage loans, especially subprime loans. With the subsequent collapse of the subprime mortgage industry, GM suffered heavy losses.
By 2008 the Big Three were in weak financial condition and the beginning of an economic recession and the financial crisis resulted in the automakers looking to the federal government for help. Ford was in the best position, as under new CEO Alan Mulally
Alan Mulally
Alan Roger Mulally is an American engineer and business executive who is currently the President and Chief Executive Officer of the Ford Motor Company...
they had fortuitously raised $23 billion in cash in 2006 by mortgaging most of their assets. Chrysler, purchased in 2007 by a private equity firm, had weak financial backing, was the most heavily dependent on light truck sales, and had few new products in their pipeline. General Motors was highly leveraged, also heavily dependent on light truck sales, and burdened by high health care costs.
The CEOs of the Big Three requested government aid in November 2008, but sentiment in Congress was against the automakers, especially after it was revealed that they had flown to Washington D.C. on their private corporate jets. In December 2008, President Bush gave $17.4 billion to GM and Chrysler from the Troubled Asset Relief Program program as temporary relief for their cashflow problems. Several months later, President Obama formed the Automotive Task Force to decide how to handle GM and Chrysler. Chrysler received a total of $12.5 billion in TARP funds and entered Chapter 11 bankruptcy in April 2009.
Automaker Fiat
Fiat
FIAT, an acronym for Fabbrica Italiana Automobili Torino , is an Italian automobile manufacturer, engine manufacturer, financial, and industrial group based in Turin in the Italian region of Piedmont. Fiat was founded in 1899 by a group of investors including Giovanni Agnelli...
was given management control and a 20% ownership stake (adjusted to 35% under certain conditions), the U.S. and Canadian governments were given a 10% holding, and the remaining ownership was given to a Voluntary Employee Beneficiary Association (VEBA), which was a trust fund established to administer employee health care benefits. The Automotive Task Force requested that GM CEO Rick Wagoner
Rick Wagoner
George Richard "Rick" Wagoner, Jr. is an American businessman and former Chairman and Chief Executive Officer of General Motors. Wagoner resigned as Chairman and CEO at General Motors on March 29, 2009, at the request of the White House...
resign (although he was replaced by another long-time GM executive, Frederick Henderson
Frederick Henderson
Frederick Arthur "Fritz" Henderson was President and Chief Executive Officer of General Motors. Prior to his appointment as CEO on March 31, 2009, Henderson was the Vice President of General Motors and has been with the company since 1984...
). GM received a total of $49.5 billion in TARP finds and entered Chapter 11 bankruptcy in June 2009. The U.S. and Canadian governments received a 72.5% ownership stake, a VEBA received 17.5%, and the unsecured creditors received 10%. As part of the bailout GM and Chrysler closed numerous production plants, and eliminated hundreds of dealerships and thousands of jobs. They also required a number of major labor union concessions. GM also sold or eliminated four of their brands: Pontiac
Pontiac
Pontiac was an automobile brand that was established in 1926 as a companion make for General Motors' Oakland. Quickly overtaking its parent in popularity, it supplanted the Oakland brand entirely by 1933 and, for most of its life, became a companion make for Chevrolet. Pontiac was sold in the...
, Hummer
Hummer
Hummer was a brand of trucks and SUVs, first marketed in 1992 when AM General began selling a civilian version of the M998 Humvee. In 1998, General Motors purchased the brand name and marketed three vehicles: the original Hummer H1, based on the Humvee; and the H2 and H3 models that were...
, Saturn Corporation, and Saab
Saab
Saab AB is a Swedish aerospace and defence company, founded in 1937. From 1947 to 1990 it was the parent company of automobile manufacturer Saab Automobile, and between 1968 and 1995 the company was in a merger with commercial vehicle manufacturer Scania, known as Saab-Scania.-History:"Svenska...
. In addition to the $62 billion that the automakers received from TARP, their financing arms, GMAC and Chrysler Financial received an additional $17.8 billion.
Ford did not request any government assistance, but as part of their downsizing sold Volvo
Volvo
AB Volvo is a Swedish builder of commercial vehicles, including trucks, buses and construction equipment. Volvo also supplies marine and industrial drive systems, aerospace components and financial services...
in 2010. (They had previously sold Aston Martin
Aston Martin
Aston Martin Lagonda Limited is a British manufacturer of luxury sports cars, based in Gaydon, Warwickshire. The company name is derived from the name of one of the company's founders, Lionel Martin, and from the Aston Hill speed hillclimb near Aston Clinton in Buckinghamshire...
in 2007, and Land Rover
Land Rover
Land Rover is a British car manufacturer with its headquarters in Gaydon, Warwickshire, United Kingdom which specialises in four-wheel-drive vehicles. It is owned by the Indian company Tata Motors, forming part of their Jaguar Land Rover group...
and Jaguar Cars in 2008). Under the Advanced Technology Vehicles Manufacturing Loan Program
Advanced Technology Vehicles Manufacturing Loan Program
Advanced Technology Vehicles Manufacturing Loan Program is a $25 billion direct loan program funded by Congress in fall 2008 to provide debt capital to the U.S. automotive industry for the purpose of funding projects that help vehicles manufactured in the U.S. meet higher mileage requirements and...
Ford borrowed $5.9 billion to help their vehicles meet higher mileage requirements.
Automobile production in the United States
General MotorsGeneral MotorsGeneral Motors Company , commonly known as GM, formerly incorporated as General Motors Corporation, is an American multinational automotive corporation headquartered in Detroit, Michigan and the world's second-largest automaker in 2010...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 3 382 314 | 1 215 677 | 2 127 062 | 39 576 |
Ford
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 2 965 872 | 783 053 | 2 132 223 | 50 596 |
ChryslerChrysler Chrysler Group LLC is a multinational automaker headquartered in Auburn Hills, Michigan, USA. Chrysler was first organized as the Chrysler Corporation in 1925....
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks | Bus and Coaches |
|---|---|---|---|---|
| 1 652 703 | 325 632 | 1 327 071 |
Daimler AG
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks | Bus and Coaches |
|---|---|---|---|---|
| 251 147 | 95 559 | 13 873 | 16 854 |
BMWBMWBayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 125 086 | 125 086 |
Navistar
| Total motor vehicles | Heavy trucks | Bus and Coaches |
|---|---|---|
| 84 678 | 70 735 | 13 943 |
PaccarPACCARPACCAR Inc is the third largest manufacturer of heavy-duty trucks in the world , and has substantial manufacture in light and medium vehicles through its various subsidiaries.-History:...
-DAFDAF TrucksDAF Trucks NV is a Dutch truck manufacturing company and a division of PACCAR. Its headquarters and main plant are in Eindhoven. Cabs and axle assemblies are produced at its Westerlo plant in Belgium...
| Total motor vehicles | Heavy trucks | |
|---|---|---|
| Kenworth | 33 282 | 33 282 |
| Peterbilt | 36 232 | 36 232 |
VolvoVolvoAB Volvo is a Swedish builder of commercial vehicles, including trucks, buses and construction equipment. Volvo also supplies marine and industrial drive systems, aerospace components and financial services...
| Total motor vehicles | Heavy trucks | |
|---|---|---|
| Volvo Trucks Volvo Trucks Volvo Trucks is a global truck manufacturer based in Sweden, owned by Volvo Group - AB Volvo it is the world's second largest heavy-duty truck brand.... |
32 256 | 32 256 |
| Mack Trucks Mack Trucks Mack Trucks is an American truck-manufacturing company and a former manufacturer of buses and trolley buses. A wholly owned subsidiary of Renault Véhicules Industriels since 1990, Mack Trucks is currently a subsidiary of AB Volvo. The company's headquarters are located in Greensboro, North Carolina... |
36 538 | 36 538 |
Toyota
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 1 283 829 | 988 362 | 295 467 |
Nissan MotorsNissan Motors, usually shortened to Nissan , is a multinational automaker headquartered in Japan. It was a core member of the Nissan Group, but has become more independent after its restructuring under Carlos Ghosn ....
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 835 946 | 494 836 | 341 110 |
HondaHondais a Japanese public multinational corporation primarily known as a manufacturer of automobiles and motorcycles.Honda has been the world's largest motorcycle manufacturer since 1959, as well as the world's largest manufacturer of internal combustion engines measured by volume, producing more than...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 973 290 | 973 290 |
Fuji Heavy IndustriesFuji Heavy Industries, or FHI, is a Japanese transportation conglomerate most known for being the manufacturer of Subaru automobiles. It traces its roots to the Nakajima Aircraft Company, a leading supplier of airplanes to the Japanese government during World War II...
-SubaruSubaru; is the automobile manufacturing division of Japanese transportation conglomerate Fuji Heavy Industries .Subaru is internationally known for their use of the boxer engine layout popularized in cars by the Volkswagen Beetle and Porsche 911, in most of their vehicles above 1500 cc as well as...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 122 328 | 122 328 |
MazdaMazdais a Japanese automotive manufacturer based in Fuchū, Aki District, Hiroshima Prefecture, Japan.In 2007, Mazda produced almost 1.3 million vehicles for global sales...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 75 200 | 75 200 |
MitsubishiMitsubishi Motorsis a multinational automaker headquartered in Minato, Tokyo. In 2009 it was the fifth-largest Japan-based automaker and the 17th-largest in the world measured by production...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 88 003 | 88 003 |
IsuzuIsuzu, is a Japanese car, commercial vehicle and heavy truck manufacturing company, headquartered in Tokyo. In 2005, Isuzu became the world's largest manufacturer of medium to heavy duty trucks. It has assembly and manufacturing plants in the Japanese city of Fujisawa, as well as in the prefectures...
| Total motor vehicles | Passenger cars | Light commercial vehicles | Heavy trucks |
|---|---|---|---|
| 4 681 | 4 681 |
See also
- Automotive industryAutomotive industryThe automotive industry designs, develops, manufactures, markets, and sells motor vehicles, and is one of the world's most important economic sectors by revenue....
- Automotive marketAutomotive marketThe automotive market is formed by the demand and the industry. This article is about the general, major trends in the automotive market, mainly from the demand side.The European automotive market has always boasted smaller cars than the United States...
- Big Three automobile manufacturers
- DecentralizationDecentralization__FORCETOC__Decentralization or decentralisation is the process of dispersing decision-making governance closer to the people and/or citizens. It includes the dispersal of administration or governance in sectors or areas like engineering, management science, political science, political economy,...
- Effects of the 2008-2010 automotive industry crisis on the United States
- Presidential Task Force on the Auto IndustryPresidential Task Force on the Auto IndustryThe Presidential Task Force on the Auto Industry is an ad hoc group of United States cabinet-level and other officials that was formed to deal with the financial bail out of automakers Chrysler Corporation and General Motors....
- U.S. Automobile Production Figures
- Automotive industry crisis of 2008-2009
- Big Three (automobile manufacturers)
- History of ChryslerHistory of ChryslerThis article is about the History of Chrysler, an American automobile manufacturer.-Origins:Chrysler was founded by Walter Chrysler on June 6, 1925, when the Maxwell Motor Company This article is about the History of Chrysler, an American automobile manufacturer.-Origins:Chrysler was founded by...
- History of General MotorsHistory of General MotorsGeneral Motors, also known as GM, is the world's second largest car manufacturer based on annual sales. Founded in 1908, in Flint, Michigan, GM employs approximately 266,000 people around the world. With global headquarters at the Renaissance Center in Detroit, Michigan, United States, GM...
- History of Ford
- List of U.S. cars