Automakers Mistakes

By Author: Henry Ford
Total Articles: 189
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In late 1970s the United States big automakers (ford, general motors, and Chrysler) used to sell nine out of ten automobiles in United States, but as from 2004 other foreign industries have outdone United States automotive sector making the local industries only to sell fifty percent of their automobile products in the United States. By 2005, Toyota, Hyundai, and Honda possessed 60% of the United States auto market. This auto industry is in fatal, terminal, and incurable decline, and if the whole situation continues this way then 100% of the United States automotive industry will be in the hands of foreign industries. There are many questions than answers concerning the decline of United States automotive industry. market analyst are wondering, why United States auto sector is continuously on descending spiral for many years, but the current decline has been demonstrated disastrous, catastrophic, and tragic. There were dreadful ‘omen’ in United States auto sector in the past twenty years, which frequently gave a forewarning for further declines. For instance, from 1995 to 2005, General Motors (GM) reinstated 14% capacity ...
... per year, its average sales area age came to 0.8 year old weighed against industry 5.8%. On contrary the Japanese reinstated 20% of capacity in a year, their average sales area came to 1.5 year old, enabling them 7.2% gain of the market. Consequently General Motors declined in its market share from 42% in 1985 to 26% in 2005.
The disparities in designing of cars demonstrate the complexity of the crisis American auto sector is facing today. In the earlier period when the financial system was flourishing, design corresponded with the desires of the end users in present, and occasionally the past. Public trend in favorites were equally shortsighted and auto industries had no reason in promoting any other brand of car besides the favorites of Americans. Foreign auto industries market, however, created an additional demand and the major understandable force remains the gasoline consumption. In Asia and Europe markets, gas is very expensive as a result of higher taxes. Saving cash started at the gas location and not at the automobile dealership. So, as deconstructed, the trouble-free dilemma of design disparities turns into a many-sided subject where auto industry, government, and consumers are all accountable. The influence and balance of all three in United States is particularly significant when the automotive industries want to achieve the lost glory of once great, leading industries in both local and international economies. Other reasons which have lead to auto sector collapse are in fact part of the identical problems. But Asian progress in automobile industries remains the most important tribulations slowing the advancement of the United States automotive sector.
The policies of government have led to sluggish innovation in America. Governments in Asian are using incentives and taxes to hearten their citizens and automotive industry, and the absence of these types of plans has lead to a dormant, stagnant, and moribund auto sector. In China for example, fuel efficient, small cars are subjected to half the taxes, increasing demand for these small cars. Consequently, the automakers are able to charge extra for their manufactured goods (automobile) at the times when United States automotive industry is lacerating prices of their products in an effort to make sales. The United States automotive sector is lagging behind in the international market and this is due to its complex and complicated history. However, given that the fault is not just with the industry itself, reviving the United States auto sector back to its international glory, prominence, and fame, an understanding of all stakeholders is needed, and a rigorous attempt by the consumers, the government, and the automotive industry.
Literature review
Ford, Chrysler, and General Motors are also known as ‘big three’ or of recent they have been referred to as the ‘Detroit three’, remain the largest automotive companies in the United States of America. For a while they were the global largest automaker, two of these (Ford & General Motors) still remain among the top five largest in the world. Ford has been position two in the world for the last 56 years (De Camp, 1967). The ‘big three’ are not only notable by their geography and size, but their business model as well. Most of their businesses are unionized, ensuing in elevated employment expenses than other international automakers, including those operating in North America. The superiority of Toyota in the automakers market emanates from lower labor cost as compared to United States auto sector. For these automakers to realize substantial profits in this stiff competition from foreign auto industries, they made an agreement with the union to cut down on wages, but making health care and pension a priority (Grove et al., 1983). For example General Motors took the commitment of funding health cover premiums for its workers, General Motors retirees, and their survivors, because the United States government had not implemented the universal system of health care. With the majority of these strategies continually marginalized, the companies have struggled to give retirement packages to retirees, and made agreements with the union to reassign pension responsibilities to an independent trust. This year CBC has details that the Japanese automakers industry has no union costs and, with juvenile American worker and smaller number of retirees, it will go on benefiting from the cost advantage over General Motors, Ford, and Chrysler (Womack et al., 1990).
General Motors, Ford, and Chrysler have as well suffered from alleged changeableness and substandard quality weighed against Japanese counterparts, who remain to been challenged and thorny to overcome. They have been sluggish in bringing brand vehicles to both domestic and global market, while the Japanese automakers have taken advantage of the situation and produced a considerable number small, fuel efficient car, which are of high demanded on market due global economic crisis. Declining in market shares and sales have effected these three automaker plants to operate beneath their competence, reducing the production , closure of plants, and possible layoffs (Ingrassia,1994). They have been depending mainly on substantial motivations and subsidized let outs to sell vehicles which kept running the plants, thus driving an important portion of American economy.

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