The auto industry has been the core of the American nation, its living an American dream. I will focus of the car manufacturing industry in this article. We have always been very proud of the cars we made.
Our cars were an extension of America; they were big, beautiful and made a statement. The reason I chose to write about the auto industry is that I have always felt that the auto industry is like the heartbeat of the American industry, what better way to talk about the impact of macro economic changes on this industry.
I will talk about some of the basics of the industry and how it has changed in the last few decades and how we are placed now. I will compare the American companies against the other companies and analyze how the changes in the macro economic environment are affecting companies from America and the companies from other parts of the world.
History of the industry
Carol Loomis in The tragedy of General Motors mentions that the auto industry in America is just over a hundred years old; Ford completed its 100 years a few quarters back and the rest are getting there. We have always been known for our big 3. General Motors, Ford and Chrysler. Chrysler is now of course Daimler Chrysler and the other 2 can always use tie ups with other companies to take themselves forward.
The major change in the last few years has been the rise of oil prices. We always loved our Hummers and the big SUV’s, they seemed to be the right choice for every user but off the last few years that choice has suddenly become a very expensive passion, it has become like playing golf, you spend a decent amount of money every time you play golf and you end up spending a decent amount of money every time you run your SUV.
That is the why nowadays, the success is in smaller or mid sized cars and smaller SUV’s. the average fuel prices are across America are expected to be at $2.71 per gallon and its getting very expensive compared to the good days when we could get gas for less than a dollar a gallon.
This change in gas prices has affected the kind of choices consumers are making. The consumers were choosing the small and easy to drive Japanese cars for a long while but the lucrative SUV market was still a place where GM and Ford used to make lots of money, but now that markets has gradually and now rapidly dwindled. Let us see how the major manufacturers are doing in the industry.