The Automotive Industry

The Automotive Industry

This paper would address the fall of the Automotive Industry. In 1979? the US Big three used to sell 9 out of 10 vehicles in US? but in 2004? foreign firms have overtaken the US auto sector and now local firms sell only 50 percent vehicles in US. By 2005? 60 percent of the US market belonged to Toyota? Honda and Hyundai. The US auto industry is in terminal decline? if this trend continues? the day is not far away when 100 percent of US auto sector will be taken by the foreign firms.

There are many unanswered questions about the declining US auto industry. Analysts are wondering? why US auto industry is constantly on downward spiral from decades? but in the recent times the decline has been proved catastrophic. There were many bad omens in US auto industry for the past two decades? which often gave a warning that further decline is coming. For example from 1995 to 2005? GM replaced its 14 percent volume per year; its average showroom age was 0.8 year old compared to industry 5.8 percent. On the contrary the Japanese replaced 20 percent of volume per year; their average showroom was 1.5 year old? which enabled them to gain 7.2 percent of the market. As a result GM (General Motors) market share declined from 42 percent in 1985 to 26 percent in 2005. (Cooney? 2006)

By 1994? a combination of bad management and new manufacturing techniques had turned G.M. into a jobs destruction machine." It was headed to total U.S. employment of 300?000? down from twice that in 1985.

Things have been getting better at the Big Three. Sales have been strong for more than a year? the companies are reaping record profits? and the Japanese are struggling to retain their share of the market. Big Three quality has improved for some models? and some factories are approaching the efficiency of the better Japanese plants. But it is too much of a leap to conclude that Detroit has regained the lead? as the packaging of this book suggests? perhaps in hopes of drawing a wider readership. Because of the cyclical nature of the industry? auto recoveries always produce astonishing profits. Between 1984 and 1988? the Big Three earned $45 billion. G.M. and Chrysler were becoming desperately sick? but to the world they looked robust.

Ford is also on decline. Recently it suffered huge losses? resulting in closing down many 14 plants and cutting down 30 thousand jobs. Ford is also expected to take one billion dollar from pre-tax charges in 2006 to do cost sweeping of its plants. It is also expected to take charges of $250 million in 2006 for its hourly staff and write off the value of plants and equipment clearly proving that Ford is going down the road. Even though Ford mentioned that it is looking forward to work on trucks in US; in present circumstances? it is mere wishful thinking. Similarly Delphi? which was US biggest auto parts company? ...