AUTOMOBILE INDUSTRY

Ford and the World Automobile Industry in 2009

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Abstract

This paper discusses the downward trend of U.S. automobile industry since 1960. This paper also gauges the structure of world's automobile industry. This study also identifies the competitive and profitability scenario of the automobile industry as well as studied the key success factors of the industry.

Ford and the World Automobile Industry in 2009

Introduction

The history of U.S. automobile industry showed a downward trend of profitability since 1960. The production of the automobile was decreased at 7.9 million units as compared to other countries whose production was going up at about 16.4 million, and come up with new vehicles. At that time, the automobile industry was dominated by Detroit but eventually domination has come to an end. Other than U.S. market share, the huge market share was of Europe, specifically over 2 million market share was of Germany replaced the second largest producer the British, who has about 1.8 million market share. Furthermore, Japanese has a small market share but have the benefit of phenomenal growth.

In 1964, seat belts in cars were introduced by Studebaker-Packer, who was U.S. manufacturer. Ford to generate sales introduced its new sporty car "Mustang." The idea of economies of scale was used for Mustang, the Studebaker and Packard production comes to an end. In 1965, the production of U.S. bounced back but as compare to the world market the U.S was still losing its market share. There was a trend of losing market share; for instance, in 1960 turn down from 48%, decline from 67% in 1955, and in 1950 decline of almost 76%, and contributes 45% of production to the rest of the world (Dargay. et. al., 2007).

In 1970, there was a fundamental alignment in the production statistics of the automobile industry. Japan become the second largest automobile producer; whereas, U.S was still at number one, Germany slipped at third with a production of 3.8 million, French at number four with 2.75 million production, and British just hold 2 million. The U.S. market share gets smaller by 8.3 million units that were 28% of the world market share. Other than British and U.S. all other market competitors were enjoying phenomenal growth. In was clear now that the world's automobile industry was growing while U.S. industry was losing its market share. In 1975, Japan was gaining the market share at an expense of Europe market share. In 1978, U.S. imported more than half of the cars from Japan, and sales accounted for 1.5 million. As well as in 1979, the Chrysler Corporation of U.S. was bankrupt resulted in contributing to reduce the overall U.S. automobile industry share in the world market. Japan continued to enjoying number one position in the automobile industry as a leading producer of the world. In U.S. market, automakers of Japan detained 30% share.

In 1980s, the U.S. market share was also declining due to the new entrant Hyundai/Kia. The loss of Ford reached about $ 1 billion; hence there was ...