American Automotive Industry

[Abstract

American automotive industry faced a severe decline from 2009 to 2010. The decline was so intense that the big three automotive companies of the United States came at the verge of bankruptcy. However, a timely intervention of US government saved the companies but the decline adversely affected the US economy and the hopes of the American people who love to use luxurious vehicles. To analyze the downfall of automotive industry, the below study explains the whole situation in the light of Porter's Model. The model gives five forces of the market which play an instrumental role in running any industry successfully. The model clearly explains reasons for a successful business and the sources that affect the company negatively. The relationship among suppliers, buyers, competitors, new emerging companies and the potential threats of substitutes are the elements which must be studied in details for the successful run of the business. The future of the American automotive industry depends upon the focused marketing strategies. In addition, international expansion and production efficiency are the two important growth sectors in the US automotive industry.

American Automotive IndustryIntroduction

In the early nineteenth century, the inventions and developments in the field of technology including floor mounted accelerators and steering wheel expedited the development in the automobile industry. At the same time, the United States of America provided a safe and fertile environment for the perfect growth of the industry. Service stations and sales of cars were being made along with the introduction of new models, like Ford's Model T. Moreover, traffic lights began to appear on the roads of the United States with the thousands of road signs. Henry Ford launched its famous line in the mean time, and made the vehicle mass produced. By the end of 1913, automakers began mergers with other companies like GM merged with Chevrolet and tried to discover international market, such as GM of Canada (Tierney, 2005).

The merging companies continued by the end of 1920, such as Benz and Daimler, Ford and Lincoln, Chrysler and Dodge. In the United States, road building projects were being initiated and a modern sophisticated road system of US came into being. On manufacturing side, Ford emphasized on a solitary model, while GM embarked on a new plan of action for offering a wide range of motor vehicles. 1930 marked the advent of several new vehicle brands and trends in consumer's preferences. The consumers in the United States started to prefer more luxurious vehicles, whereas the European consumers inclined toward buying low-priced and smaller cars (Tierney, 2005).

The flourishing US auto industry faced its first downfall when in 1980 the Japanese automakers began to manufacture fuel efficient and affordable cars. This market share loss led the US auto makers to focus on quality improvement by adopting different strategies of Japanese companies. However, this move could not reduce the gaps of qualities between the vehicle of United States and Japan. US made mergers with some of the Asian companies, improved the quality and ...