U S Automobile Industry

’s Share Of The Market Essay, Research Paper

The U. S. auto industry?s share of the market has experienced fluctuations over the past 50 years. These fluctuations have been caused by many reasons, but some of the main reasons include quality, price, and foreign competition.

The Ford Motor Company, General Motors Company, and the Chrysler Corporation, a.k.a. “The Big Three”, are the three largest manufacturers of automobiles in the world. ” The Big Three” hold nearly 75% of the market and produce over 8 million automobiles per year. The largest competitors of ” The Big Three” are Japanese auto producers that include Toyota, Nissan, and Honda. These three foreign manufacturers hold 20% of the market and produce about 2.7 million automobiles per year.

General Motors Company, the world?s largest automobile producer, originally was composed of four major vehicle manufacturers- Buick, Cadillac, Oldsmobile, and Oakland which became Pontiac. Presently, General Motors is made up of Buick, Cadillac, Oldsmobile, Chevrolet, Pontiac, and Saturn. During the first thirty years of operation GM?s only major competition was from U. S. manufacturers. However, since the first foreign truck was imported from Japan in 1956, GM?s share of the market began to decline. Foreign cars were smaller, more fuel efficient, less expensive, and often more reliable than their American counterparts. General Motor?s market share dipped from nearly 44% in 1973 to below 30% in 1985. In response to this sudden drop in its share of the market GM founded the Saturn Company. Saturn produces compact cars very similar to Japanese imports at competitive prices. This response halted GM?s declining share of the market. Today, General Motors maintains about 30% of the market.

General Motors was the first large auto company to begin research on alternative fuel sources and continues to lead the way. Some developments of this research include the first production natural gas engine, and the first car powered completely by electricity. Many ideas are still in the process of being developed, such as affordable solar powered vehicles and ultralight plastic body parts.

The Ford Motor Company, founded in 1903 by Henry Ford, was the largest car manufacturer in the world until 1929 when GM passed it. Ford is currently the second largest producer of automobiles in the world producing over 5 million cars per year and holding 25% of the market. In the late 1970s and early 80s when its share of the market was being taken over by foreign auto companies, Ford?s response was different than that of GM?s. Ford decided to buy small foreign companies and convert them to Ford production facilities. This would enable Ford to increase its share of the market in Europe and Asia. Also, this would allow Ford to avoid high tariffs placed on foreign cars in China and Japan.

Ford motor company currently employs over 300,000 workers world-wide. In January of 1996, Ford merged its North American, South American, Asia-Pacific, European, and African Automotive Operations into a single organization, Ford Automotive Operations. This merger cut back on costs of developing new cars because now instead of five different organizations working on the same project only one organization would work on it. This decreased the amount of time and labor needed to improve or design new cars. In return the price of Ford products declined, resulting in more sales.

Another approach of Ford was to enter joint-ventures with foreign companies. Through these joint-ventures the foreign companies would produce and assemble Ford automobiles for sale in that country.

Ford is trying to assure future sales by researching vehicles that contain plastics that can be recycled into common materials. Also, Ford is currently working with the U. S. Department of Energy to develop alternative fuels, such as electricity, methanol/ethanol, natural gas and solar energy.

The third member of the ” Big Three”, the Chrysler Corporation, was founded in 1921 when the Maxwell Motor Company failed and Walter P. Chrysler reorganized it. Chrysler was able to capture its share of the market when it acquired Dodge Brothers, Inc. and when Ford stopped production in 1927 to switch from producing the Model T to producing the Model A. During the 1950 and 60s Chrysler took over the operations of several small companies in France, Spain, and Britain. This enabled Chrysler to begin selling cars in Europe and compete with Ford and GM on foreign markets. In 1970, Mitsubishi Motors of Japan began producing compact cars under the Chrysler name to be sold in the United States. This led to a rise in Chrysler?s share of the market until the early 80s when Mitsubishi began using its own name. To counter this move Chrysler formed a joint-venture with Renault of France to produce compact cars. Then in 1987 Chrysler purchased the Italian company, Nuova Automobili F. Lamborghini, maker of expensive sports cars. Chrysler also purchased the American Motors Corporation, the maker of Jeep products. These purchases increased Chrysler?s share of the market from 11% to 16.3% and continuing to rise. Chrysler produces nearly 3 million automobiles a year under the Chrysler, Dodge, Plymouth, Jeep, and Eagle names.

Chrysler is also in the process of producing alternative fuel cars. These include vehicles powered by electricity, liquefied natural gas, and gasoline-methanol mixture.

The future share of the market for the ” Big Three” should remain steady or even increase. Today, the ” Big Three” is able to produce top-of-the-line, fuel efficient, affordable cars to compete with imports. The ” Big Three” also leads the way in research on alternative fuels and designs that will make automobiles more efficient and less polluting. In conclusion, the United States automobile industry, which pioneered processes and technology in the early 1900s, has returned as the leader and will lead the auto industry into the 21st century.