The US auto industry has faced numerous challenges and failures throughout its history, with significant periods of decline and restructuring. Key years include the 1970s and early 1980s (Malaise Era), the late 1980s, and the 2008-2010 crisis. These periods were marked by factors like the oil crisis, increased foreign competition, economic recessions, and shifts in consumer preferences.
Periods of Decline and Failure:
1970s-Early
1980s (Malaise Era):
This period saw the US auto industry grapple with the oil crisis of 1973, leading to a surge in demand for fuel-efficient foreign vehicles. Stricter emissions regulations also impacted vehicle performance and design, contributing to a decline in quality and appeal of US cars. The industry also faced challenges from the economic recession of the late 1970s and early 1980s, impacting sales and profitability.
Late
1980s:
While some companies like Chrysler experienced a temporary resurgence due to factors like the K-car and the acquisition of American Motors, the overall industry continued to face challenges. Foreign automakers continued to gain market share, and some US models faced criticism for poor design and outdated features.
2008-2010
(Financial Crisis):
The global financial crisis of 2008 led to a sharp decline in auto sales and a credit crunch that severely impacted the industry. This crisis resulted in bankruptcies for Chrysler and General Motors, and forced the companies to restructure and seek government bailouts. The crisis also accelerated the shift of production to the Southern US.
Specific Examples of Failures:
Edsel: The Ford Edsel, launched in 1958, is a prime example of a commercial failure, becoming a synonym for failure in American popular culture.
GM's Bolt: While not a failure in the same sense as the Edsel, the Chevrolet Bolt is mentioned in one source as an example of a car that benefited from the restructuring that followed the 2008-2010 crisis according to Knowledge at Wharton.
Chrysler's
TC: Chrysler's TC by Maserati, a joint venture with Maserati, is cited as a
commercial flop.
Key Factors Contributing to Failures:
Economic
Downturns:
Recessions and financial crises have repeatedly impacted the auto industry, leading to reduced consumer spending and decreased sales.
Shifting
Consumer Preferences:
Changes in consumer preferences, such as a growing demand for fuel-efficient vehicles and SUVs, have sometimes caught US automakers unprepared.
Foreign
Competition:
Increased competition from foreign automakers, particularly Japanese manufacturers, has put pressure on US companies.
Management
and Design Decisions:
Poor management decisions, outdated designs, and a focus on larger, less fuel-efficient vehicles have also contributed to the industry's struggles.
Significant
Industry Downturns and Bankruptcies:
· 1920s-1940s: The
number of active US automakers significantly declined from 88 in 1921 to 44 by
1927, due in part to the 1920 recession. The Great Depression further impacted
the industry, with US auto production falling drastically from 4.5 million in
1929 to 1.1 million in 1932, and not recovering until 1949.
· Late 1970s - Early
1980s: A recession led to decreased demand and reduced profitability for
the US auto industry. Some foreign manufacturers gained market share during
this period due to increased consumer interest in more fuel-efficient vehicles.
· 1990-1991: A
recession caused a sharp decline in new car sales, leading to production cuts
and layoffs.
· 2008-2010 Automotive
Industry Crisis: This period saw a major downturn due to the global
financial crisis, high fuel costs, and declining vehicle sales. Both General
Motors (GM) and Chrysler were forced to file for bankruptcy, despite receiving
government support. Ford, though not filing for bankruptcy, also faced
significant financial challenges, losing $12.7 billion in 2006.
Failures
of Specific Brands and Companies:
· 2000s: Several
long-standing American car brands were discontinued, often due to corporate
restructuring or failure to generate sufficient consumer interest. Examples
include:
·
2001: Plymouth.
·
2004: Oldsmobile.
·
2010: Pontiac,
Saturn, and Hummer.
·
2011: Mercury.
·
2013: Mosler
and Carbon Motors Corporation.
· 2009: Coda, an EV
startup, went defunct due to running out of cash.
Factory
Closures and Job Losses:
· 1979-1991: GM,
Ford, and Chrysler cut a significant percentage of their production jobs.
· 1988: American
Motors closed its Kenosha, Wisconsin plant.
· 2010: GM closed
its assembly plant in Janesville, Wisconsin, and Chrysler closed its engine
plant in Kenosha, resulting in layoffs.
· 2024: Several
automakers announced or are undergoing job cuts, including General Motors and
Ford.
Factors
Contributing to Failures and Downturns:
· Economic recessions and
financial crises: These events reduce consumer spending, making car
purchases less likely.
· High fuel
prices: These can lead to decreased demand for larger, less fuel-efficient
vehicles.
· Competition from
foreign automakers: Japanese and other foreign manufacturers have gained
market share at different times due to factors like fuel efficiency or cost
advantages.
· Poor management
decisions and business practices: These contributed to the bankruptcies of
GM and Chrysler in 2009.
· Supply chain
disruptions: These can limit production and affect car availability and
pricing.
· Changing consumer
preferences: Shifts in demand towards smaller, more fuel-efficient cars or
specific types of vehicles like SUVs can impact sales and profitability.
Note: This is not an exhaustive list of every failure in the US auto industry. The information highlights key events and brands mentioned in the provided search results.
https://www.google.com/search?q=us+auto+industry+failures+by+year
Fracking,
or hydraulic fracturing, has roots stretching back to the 1860s, but
modern hydraulic fracturing as we know it today began in 1947 with experiments
in Kansas. While the initial experiments weren't immediately successful,
they paved the way for commercial applications starting in 1949.
https://www.google.com/search?q=what+year+was+fracking+invented
AI
Overview
In
1970, the average price of gasoline in the US was $0.36 per gallon. This
price was relatively stable for several years leading up to 1970. However, the
1970s saw significant price increases due to events like the 1973
oil embargo. By
1980, the average price had risen to $1.19 per gallon
https://www.google.com/search?q=us+gasoline+prices+1970
In 2000, US gasoline prices saw a significant increase, continuing a trend that started in 1999. The average annual gas price was $1.51 per gallon.
In
2010, The average national price of gasoline in the US rose to $2.98 a gallon,
up from $2.90 earlier in the year.
https://www.google.com/search?q=us+gasoline+prices+2010+ai+overview
Hydraulic
fracturing, or fracking, became widely used in the US starting in
the mid-2000s, particularly with the combination of horizontal drilling
and fracking techniques. This marked a significant shift, transforming the
US from a country reliant on energy imports to a major oil and gas
producer. While fracking as a technique has been around since the late
1940s, it was the combination of horizontal drilling and fracking in the
mid-2000s that led to the "fracking boom" and widespread use.
https://www.google.com/search?q=what+year+was+fracking+widely+used+in+the+us
Comments
The failure of the US Auto Industry that began in 1970 was the worst historic US failure of the 20th Century. Fracking was ignored until 2005. The price of gasoline spiked to $4/gal after 2010. Like the Mortgage Meltdown of 2008, there was lots of blame to spread around.
Norb Leahy, Dunwoody GA Tea Party Leader
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