American cars
America is the home of the auto industry. For this America is indebted to Henry Ford for his effort in creating a process called mass production where by cars or for that matter anything could be manufactured in huge volumes. These huge volumes could earn millions for their manufacturer. Henry Ford had an ambition to sell one car to each American Home.
Ford introduced the model T which has become famous. He also priced it at a little above 900 dollars.At this price it was well within the financial reach of most Americans. But Henry Ford was not satisfied and wished to excel further. He thus introduced the assembly line in 1913 where in a model T could be made in less than two hours. The price of the car also came down to about 490 dollars and this resulted in bringing the car to the doorstep of most American homes. This was the beginning of the auto age in America and soon American autos became synonymous with auto domination all over the world.
However with the passage of years and the end of the Second World War the American hold on the auto industry slackened. This was because of the advent of the Japanese autos and others manufacturers in Germany and Korea. The oil crisis of the seventies resulting in the rise in oil prices and its use as political weapon resulted in American autos becoming a shade uneconomical. The American industry which had for long manufactured large autos which were gas guzzlers could not match the Japanese autos which were fuel efficient.
The advent of the 21st century has been particularly hard for the American auto Industry. Sales have shrunk and this has been followed by job cuts in the work force by thousands.Knowledgable persons will write as 2005 as one of their most dreadful years.
This does not mean that the American auto Industry is in the dumps. On the contrary the Auto Industry in America is alive and throbbing. Automobile sales are still at a high threshold. But despite the heavy sales, the nation?s two biggest auto giants ? General Motors and Ford have nothing to cheer about. They are in the middle of a reorganization to put them back on their feet . They are further constrained by a shrinking domestic market share. This has resulted in profit margins going down as high wages and health benefits for existing and former workers have taken their toll. In addition American auto industry and its supremacy are under threat from Asian manufacturers. Some are already well-established and there are others that are keen to enter the lucrative American market.
Along with sagging sales the Industry has also to deal with tough union negotiations. In addition there are other pressing problems that are dominating the American auto scenario. They include stiff competition from Asian manufacturers and rise of the fuel-efficient, gas-electric hybrid cars.
However the ills faced by the American auto Industry are not just because of high gas prices and healthcare benefits agreed for their workforce. There are other reasons also and one of them is the inability of the American auto industry to come up with new models that could excite the consumers. GM is aware of this lacuna and has plans to counter this and launch SUVs and pickups which are more fuel-efficient for 2007. But this will not be enough as the perception that Japanese cars a better than the American cars will have to be countered.
The giant GM presently is the world?s largest auto manufacturer but it is
facing a unique position of becoming number two in the world auto industry.
There is a good chance that
Lindland, an automotive analyst at consultancy Global Insight has opined
that from the year 2007
U.S. place auto Sales of SUVs have fallen by 2 or 3 percent in each of
the last few years, and a jump in gas prices late in 2005 accelerated that
trend, curbing sales of the biggest SUVs.
GM launched a new lineup of full-size SUV?s in 2006. In 2007 GM has some more vehicles coming up in the market. The Chevrolet Tahoe, Cadillac Escalade and other models that are fuel efficient are on the way. They are very fuel efficient and average nearly 20 miles to the gallon And Ford hopes its Ford Fusion sedan, introduced this fall, will be stiff competition for the 2007 Toyota Camry is a number one product in the American car market and even Ford has taken it head on with its Ford fusion.
In 2005 the American giants introduced 22 new cars and nearly 21 in 2007. This is a healthy sign as the American Industry has taken the Japanese challenge head on.
We must recollect that in 1980, America's automakers lost 1.8 billion dollars. This was also the year when Japanese auto giants out sold the American automobiles worldwide for the first time. But there was a silver lining also, for in that year American automobile companies invested seventy billion dollars in modernization of their plants.
The biggest advantage that the United States has it?s the abundance of naturally available raw materials required for auto production. This contrasts sharply with the Japanese who even in 1980s ran into problems because of their dependence on foreign imports of raw materials. Also at some point of time sales get saturated and Japanese auto manufactures were faced with this problem and thus profits dwindled. The Japanese who had for long relied on small fuel efficient cars now launched a slew of larger models which were costlier and had a host of luxury features. Their profit also increased. In that year Japanese cars became cheaper due to the strength of the Yen against the dollar. However By 1985, the yen had dropped against the dollar and Japanese cars had become two thousand dollars costlier in America.
One aspect that led to the resurgence of the American Industry at that time was the fact that Japan, automobile manufacturers depended heavily on robots to man their production lines. In contrast to American companies. What seemed to make economic sense in the 1980s, proved a money pit for the Japanese. They discovered that while they saved money from lying off workers who were replaced by robots, they were spending extra money on the people who maintained the robots and programmed the robots\' computers. The result was that by 1995, American automobile makers regained their dominant position in the market . There is a lesson in this. I for one do feel that the American auto Industry despite reports of all analysts will still surge ahead and remain at the top of the world global car industry. Henry Ford will certainly rest in peace .
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