Motor Vehicles and Passenger Car Bodies

SIC 3711

Companies in this industry

Industry report:

Establishments primarily engaged in the manufacture of truck and bus bodies or in the assembly of completed trucks and buses on purchased chassis are classified in SIC 3713: Truck and Bus Bodies. Establishments primarily engaged in the manufacture of truck trailers are classified in SIC 3715: Truck Trailers. Other motor vehicle classifications include motor homes assembled on purchased chassis (SIC 3716: Motor Homes), motorcycles (SIC 3751: Motorcycles, Bicycles, and Parts), off-highway tractors (SIC 3523: Farm Machinery and Equipment), industrial tractors (SIC 3537: Industrial Trucks, Tractors, Trailers, and Stackers), combat tanks (SIC 3795: Tanks and Tank Components), and stamped passenger car body parts (SIC 3465: Automotive Stampings).

Industry Snapshot

The motor vehicle industry represents one of the largest segments of the U.S. economy and forms the core of the nation's industrial strength. More than 251 million vehicles were on U.S. roads at the end of the first decade of the 2000s. The U.S. auto industry was dominated by the Big Three, consisting of General Motors (GM), Ford Motor Co., and Chrysler, as it had been since the mid-twentieth century. The dominance of the Big Three in the U.S. market, which began to erode in the 1970s, was severely threatened by the middle of the first decade of the 2000s and all but collapsed at the end of the decade, prompting government bailouts for Chrysler and General Motors under the Obama administration. Between 2005 and 2006, the market share of U.S. sales of the Big Three fell from 57 percent to 53 percent. Globally, GM was toppled from its longstanding position as world leader in sales by Toyota Motor Corporation of Japan in 2008 when Toyota sold 8.97 million vehicles compared to GM's 8.35 million. In addition, for the first time, Ford was relegated to fourth place behind Volkswagen, which had 3.3 million units sold compared to Ford's 3.2 million. The Chrysler Group was fifth with 1.45 million units sold in the United States. The decade-long DaimlerChrysler connection was ended in 2007 when Daimler sold Chrysler to private-equity firm Cerberus Capital Management for $7.4 billion in a deal that closed in August 2007.

Several facts, including employment, demonstrate the industry's overall importance to the U.S. economy. When jobs dependent on the industry are included, the auto industry employs nearly 6.6 million nationwide, or about 5 percent of private sector jobs. Based on a study conducted by the University of Michigan and the Center for Automotive Research, the Alliance of Automobile Manufacturers (AAM) reported that the motor vehicle industry is among the nation's leading users of computer chips, textiles, aluminum, copper, steel, iron, lead, plastics, vinyl, and rubber. According to the study, almost seven jobs are created for every worker employed by an automaker, and 1 out of every 10 jobs in the United States is linked to the auto industry.

Organization and Structure

Reflecting the globalization of the automobile industry, automakers from several nations formed the Alliance of Automobile Manufacturers, which replaced the American Automobile Manufacturers Association in the late 1990s as the industry's premier association. The Alliance comprised nine members: BMW Group, Chrysler, Ford Motor Company, General Motors, Mazda, Mitsubishi Motors, Porsche, Toyota, and Volkswagen of America, Inc.

Background and Development

History of the Automobile.
The modern automobile was not invented by one person. Many people in many nations contributed the ideas, inventions, and innovations required to assemble useful motor vehicles. Roger Bacon, the thirteenth-century English philosopher and scientist, prophesied its development, and Leonardo da Vinci envisioned plans for its construction. Nicholas Joseph Cugnot constructed the first functioning, self-propelled unit. Cugnot's vehicle, built in 1769, had three wheels and was powered by a steam engine. The first U.S. patent for a self-propelled vehicle was awarded to Oliver Evans by the state of Maryland in 1787. The then newly organized Federal Patent Office awarded its first patent for a self-propelled land carriage to Nathan Read in 1791. By 1891 more than 100 renderings of motorized vehicles had been created in the country.

The first internal combustion engine was developed by Belgian inventor Etienne Lenoir to power a car during a demonstration in Paris in 1862. Nicholas Otto, a German inventor, developed a quieter, four-stroke, coal-gas engine in 1878. The first gasoline vehicles were developed in 1885 by two Germans working independently--Karl Benz and Gottlieb Daimler. The world's first motor vehicles built for commercial sale were offered in France by Armand Peugeot in 1889 and Panhard and Levassor in 1890. The French are also credited with coining the term "automobile," formed from two Latin words meaning self-moving.

During the early 1890s, many people in the United States were working separately on how to produce better "horseless carriages." According to some accounts, Charles and Frank Duryea, brothers from Springfield, Massachusetts, created the first successful U.S. gasoline automobile. The Duryea model was based on Benz's work according to Scientific American. Other contenders for the honor of producing the first U.S. motorcar included Gottfried Schloemer of Milwaukee, Wisconsin; Henry Nadig of Allentown, Pennsylvania; Charles H. Black of Indianapolis, Indiana; and John W. Lambert of Ohio City, Ohio.

During the 1890s commercial automobile production began in the United States. Elwood Haynes and Edgar and Elmer Apperson were among the first entrepreneurs of the new technology. They built Haynes-Apperson vehicles in a machine shop in Kokomo, Indiana. By 1899 about 30 motor vehicle producers offered electric, steam, and gasoline powered vehicles. In 1900 the U.S. Census Bureau listed motor vehicle manufacturers under "Miscellaneous Manufacturers."

Among the long list of early automotive pioneers, the best remembered is undoubtedly Henry Ford. He built his first car, called a "quadricycle," in 1896. Ford endured two failed ventures, the Detroit Automobile Company (founded in 1899) and the Henry Ford Company (founded in 1901), before he finally achieved success with the Ford Motor Company that was officially founded on June 10, 1903. By that time, Detroit was becoming center of the nascent industry.

Meanwhile, many other popularly known names in automotive history entered the industry. Studebaker, originally a manufacturer of wagons, carriages, and horse-drawn vehicles, turned to the automotive industry in 1897. Packard Motor Company was founded in 1899 and produced its first car in 1900. Ransom Eli Olds established the Olds Motor Vehicle Company in 1897, and the company was later reorganized to form the Olds Motor Works. By 1904 Olds was producing 5,000 "Olds-mobiles" annually. Cadillac Motor Car was established in 1902 with the help of financial backers who had abandoned Henry Ford's earlier efforts. Buick Motor Car Company, founded by David D. Buick in 1903, was later sold to William Durant, the founder of General Motors. Louis Chevrolet, born in Switzerland, came to the United States in 1905 and began his automotive career as a race car driver for Buick. Walter P. Chrysler purchased his first car in 1908. Following a career at Buick Motor Car Company, he formed the Chrysler Corporation in the early 1920s from the remnants of the Maxwell Motor Car Company.

Industry Growth.
Henry Ford emerged as the dominant figure in the industry during the early twentieth century. He achieved nearly legendary status by introducing the automotive industry to the benefits of assembly line production and by providing an automobile at a price that most people could afford. In 1908 Ford decided to focus his company's efforts on the construction of only one model--the Model T.

In 1913 a moving belt was installed in Ford's magneto department. (A magneto was a part that provided the electric current required for ignition.) After its installation, the moving belt enabled each worker to perform a single task rather each assembling a complete magneto. Production increased four-fold, and Ford transferred moving assembly lines to other parts of the plant. In the first complete year of assembly line production, the company built 248,000 cars compared to 78,000 the previous year. In 1915 Ford's annual production reached 500,000, and prices fell. Although the 1912 Model T had sold for $600, the 1914 Model T cost $490, a 1915 touring car cost $440, and, by 1925, the price had dropped to $290. By 1920 an estimated three-fifths of U.S. cars and 50 percent of all the cars in the world were Model Ts. Although sales diminished as consumers turned to more modern offerings, the Model T had earned its place in history. When production of the Model T was halted in 1927, 15 million units had been sold, and an estimated 11 of every 20 cars on U.S. roads were Model Ts. No other single model surpassed Model T sales until the 1960s when the record was broken by the Volkswagen Beetle.

During the mid-1920s, the automobile market became saturated. To help families make purchases more quickly, dealers offered financing, and an estimated 75 percent of all new cars were purchased on installment plans in 1925. By 1929 motor vehicles had been driven 198 billion miles, with the average motorist logging 7,500 miles per year.

Auto sales dropped in 1929, which was indicative of the coming Depression. At the beginning of the 1930s, auto output was down 37 percent. Production in 1931 tumbled 30 percent. The auto industry fell from first place in value of products sold to fourth in the national economy, and its decline created a ripple effect throughout the nation's economic infrastructure. Automakers, however, were among the first to emerge from the Depression, and by 1936 General Motors was close to its pre-Depression profits.

Technical innovations to the automotive industry were made in the late 1930s. Automatic transmissions became common, increased precision enabled manufacturers to produce better cars, and attention to styling and aerodynamics improved stability and fuel efficiency. Post-Depression era work projects also improved the nation's highway system as the mileage of paved roads more than doubled between 1933 and 1941. The Pennsylvania Turnpike opened in 1940, and although initial estimates projected the toll road would carry 715 vehicles per day, within two weeks, 26,000 vehicles were using the new roadway each day.

Post-World War II.
When World War II began, the nation refocused its attention to produce items for the war effort. Civilian car production stopped in 1942. One of the most popular cars developed for military use was the "Jeep." A few historians contend that the name Jeep was coined from the initials GP that was taken from the military lexicon where the "General Purpose Vehicle" had become a GP. After the end of the war, the Jeep was redesigned for civilian use and designated a "Civilian Jeep" or "CJ" model.

U.S. automakers found an eager market in the post-war years. One-half of the nation's 25.8 million registered cars were 10 or more years old, and people were ready to purchase new ones. Between 1946 and 1950, 21.4 million new cars were sold. Production in 1949 topped the 5 million mark for the first time since before the Depression. The dominance of car and truck transportation was further assured in 1958, when the National Highway Act was passed, providing funds for significant construction to improve the nation's highway system.

During the 1950s, a car's appearance assumed increased importance. Car buyers preferred big and powerful vehicles, which resulted in advertising that emphasized engine horsepower. Ornamental tail fins, inspired by aircraft fuselages, were first incorporated into a Cadillac design and came to symbolize cars of the era. Technical developments included power steering, power brakes, and improvements in automatic transmissions, all of which were necessary to help control large cars.

Modernization of the Motor Vehicle Industry.
By the 1960s, the new car market was saturated. Manufacturers relied on promotions and annual model changes to boost sales. The market was dominated by the Big Three and American Motors Corporation, which had been formed by the merger of two independent producers--Hudson and Nash--in the post-war years. Imported cars, led by the Volkswagen Beetle, began to make an impact on the U.S. market during this period. In 1968 approximately 10 percent of all auto sales were captured by foreign manufacturers. The two largest Japanese manufacturers, Toyota and Datsun (Nissan), had entered the U.S. market during the late 1950s and grew rapidly during the 1960s. By 1970 Toyota was the nation's number two import, and Datsun was number three. That year imports accounted for 15 percent of the U.S. passenger car market.

In addition to increased competition, criticism of the auto industry was on the rise in the 1970s. Ralph Nadar's Unsafe at Any Speed: The Designed-in Dangers of the American Automobile was published in 1965 and inaugurated a crusade for safer cars. In 1966 Congress passed the National Traffic and Motor Vehicle Safety Act, which mandated improvements in passenger safety, driver visibility, and braking. The Act also required public announcement of recalls to correct safety defects. During the first 10 years of regulation, 52 million cars and trucks were recalled.

In addition to safety concerns, cars also were identified as a source of air pollution. In 1965 Congress passed the Vehicle Air Pollution and Control Act, setting mandatory pollution standards. At the beginning of the 1970s, antipollution efforts continued as Congress passed the Clean Air Act, which mandated a 90 percent reduction in auto emissions within six years.

Concerns about fuel efficiency dominated the 1970s. In 1973 General Motors' cars averaged fewer than 12 miles per gallon, and other domestic car makers' offerings were only slightly better. Two oil crises during the decade resulted in increased gas prices, local shortages, a 55-mile-per-hour speed limit, and federally mandated fuel efficiency. The Energy Policy and Conservation Act, passed in 1975, specified that car manufacturers had to meet a sales weighted "Corporate Average Fuel Economy" (CAFE) standard of 20 miles per gallon by the 1980 model year and 27.5 miles per gallon by the 1985 model year.

During the mid-1970s, domestic auto makers found themselves unprepared for the sudden surge in the small car market, and as a result, they lost substantial ground to imports. Cars coming out of Detroit were deemed inferior to the more fuel-efficient and strong performance vehicles from abroad. Chrysler wavered on the brink of bankruptcy and secured a federal loan guarantee of $1.5 billion to survive.

A resurgence during the mid-1980s failed to provide long-term stability. The auto industry achieved record sales of 16.3 million units in 1986, but new light vehicle sales fell in four of the five years between 1986 and 1991. In 1990 the Big Three reported combined losses of $1.1 billion, and General Motors was in particularly bad shape. U.S. production facilities operated at only 60 to 65 percent of their capacity in 1991, although sales of cars and trucks were $189 billion, representing 3.3 percent of the nation's gross domestic product (GDP).

U.S. auto makers' profitability suffered during the economic slowdown of the late 1980s and early 1990s, but vehicle sales during 1992 and 1993 indicated that the industry was rebounding. In the fall of 1993, domestic production was up 6 percent. Lower costs and improved productivity helped bolster the industry's profit picture. Cars were manufactured more efficiently, and manufacturing processes had less environmental impact. U.S. automakers fed a growing appetite of Americans for light trucks and sport-utility vehicles. U.S. automakers controlled 92 percent of the market for SUVs in 1992, and profits increased dramatically through the mid-1990s, culminating with a combined $16 billion in earnings in 1998. A new record was set when 16.9 million new vehicles were sold in the United States in 1999.

Environmental concerns, however, continued to influence the industry. California had introduced stringent clean air standards in 1990. The legislation required automakers to begin offering Zero Emission Vehicles (ZEV) in 1998. The regulations also called for incremental increases in the percentage of ZEV cars sold, beginning with 2 percent in 1998, growing to 5 percent in 2001, and rising to 10 percent in 2003. Other states were considering adopting similar legislation to that in California. Moreover, the federal government continued to insist on compliance with the CAFE standards previously established by the Energy Policy and Conservation Act.

New passenger cars were required to average 27.5 miles per gallon, and light trucks needed to average 20.2 miles per gallon. Noncompliance by a manufacturer brought penalties of up to $7,700 per vehicle. According to the Environmental Protection Agency (EPA), the U.S. passenger car fleet averaged 26.9 miles per gallon in 1992, and U.S. light trucks averaged 20.4 miles per gallon. Imported passenger cars averaged 29 miles per gallon, and imported light trucks averaged 22.4 miles per gallon.

Some critics in the industry charged that fuel efficiency standards were contradictory to safety requirements. The Coalition for Vehicle Choice (CVC) was formed to counter legislative attempts to increase CAFE requirements to 40 miles per gallon. The CVC argued that high CAFE standards reduced the availability of family-sized vehicles and impeded efforts to enhance auto safety. To speed efforts at increasing vehicle safety, Congress passed the Intermodal Surface Transportation Efficiency Act in 1992. Its requirements included the installation of driver and front seat air bags in passenger cars by 1998 and in trucks, minivans, and sport-utility vehicles by 1999. The legislation also established rules concerning rollovers, brakes, child booster seats, head injury protection, and side impact protection.

Another issue facing domestic automakers during the early 1990s was the continued impact of foreign competition. Entering the mid-1990s, however, Japanese manufacturers were on the defensive, and Americans were increasingly attracted to the Big Three's pricing structure, while new features maintained buyers' interest. In 1994 General Motors, Ford, and Chrysler each introduced small and intermediate sized cars. With business prospects on the upswing, a boost in investment enabled the automobile industry, which had reported record losses in the 1980s, to recover its financial health during the 1990s.

Truck sales were another reason for the success enjoyed by General Motors, Ford, and Chrysler. In 1994 individual units of trucks sold by the Big Three automakers more than doubled the number of cars. While the quality of U.S. products was one reason for their success, the United States's 25 percent tariff on imported trucks was another important factor.

In 1993 General Motors, Ford, and Chrysler sold 14.2 million cars and trucks, which was the highest since 1989 and indicative of the turnaround the three Detroit-based automakers enjoyed in the early 1990s. Minivan sales represented one of the fastest growing market segments in the United States and Europe, with estimated U.S. minivan sales of 1.1 million units. Annual sales were forecast to increase substantially. Offering affordability to the public with price ranges of $14,000 to $28,000, the manufacturers realized increased profit margins.

In 1998, 15.55 million cars and light trucks were sold. This total, which comprised cars, sport-utility vehicles (SUVs), pickup trucks, and vans, was an increase of 2.8 percent from 1997. Light truck sales rose 8.1 percent for 1998, while car sales fell 1.6 percent.

Auto company mergers were abundant at the end of the twentieth century. The era of the U.S. Big Three ended on November 12, 1998. Germany's Daimler-Benz A.G. and Chrysler Corporation merged to form DaimlerChrysler A.G. Although billed as a merger of equals, the sale was quickly recognized more realistically as the largest foreign takeover in history of a U.S. firm. The merger created the world's third-largest automaker in terms of revenue. The companies would separate in 2007.

In March 1999, Ford Motor Company purchased Volvo's car operation, adding nearly 400,000 units to Ford's car volume. This acquisition, along with its outright ownership of the British line of Aston Martin and Jaguar and a 33.4 percent ownership of Mazda, strengthened Ford's presence. General Motors, meanwhile, acquired a 50 percent share of Sweden's Saab Automobiles A.B., adding it to the 49 percent it held of Isuzu Japan and its full ownership of Opel, as the automaker pursued global markets.

Depending on big suppliers to provide larger and more complete chunks of each vehicle, instead of hundreds of pieces that need to be pieced together, automakers changed the process of assembly in plants and reported productivity gains in the late 1990s. However, by the early years of the first decade of the 2000s the U.S. motor vehicle industry faced a number of challenges, including rising competition from foreign automakers and a sluggish economy. Rebates and inexpensive financing became a normal way of business as automakers struggled to maintain sales figures from the booming 1990s.

Rising unemployment levels and decreasing consumer confidence were among the many challenges facing U.S. industries in the early years of the first decade of the 2000s. To stimulate demand, the auto industry introduced a number of special consumer incentives in 2001, including zero-percent financing and cash-back offers. Although helpful in the short-term, such tactics normally are not sustainable long-term because they represent hefty interest income reductions for automakers. In 2001, both Ford and DaimlerChrysler posted net losses, and by late 2002 some analysts reported that the initial success of these incentives was waning. Increased production levels, coupled with a slowdown in sales, led to rising inventory levels.

Moving into the middle years of the first decade of the 2000s, the balance sheets of Ford and DaimlerChrysler were improving, but the overall health of the industry was in question as cutthroat competition was squeezing prices. In addition, market saturation and increasing material costs threatened to undermine profitability. Legacy costs, including huge health care and retirement payments to auto industry workers, threatened to further burden automakers. However, after a short strike against GM in September 2007, the UAW agreed to assume the cost of legacy health care benefits as part of its contract agreement.

In 2004 the industry rolled out approximately 16.9 million automobiles, surpassing the 16 million mark for the sixth consecutive year. Of that total, approximately 60 percent were passenger cars and 40 percent were in the light truck category (mini-vans, pickups, and SUVs). The Big Three held 57.2 percent of the U.S. market, an all-time low, a significant decrease from 73.2 percent in 1995. Overseas-based Toyota, Honda, Nissan, and Hyundai were all gradually gaining ground on the Big Three, a trend that continued as foreign-based automakers stepped up production in the United States during the middle of the first decade of the 2000s. South Korean auto manufacturer Hyundai opened its first U.S. assembly plant in Alabama in the first quarter of 2005, and Japanese maker Toyota opened a new plant in San Antonio, Texas, early in 2005.

U.S. auto makers hoped to drive up revenues with the introduction of new models. A new trend in the industry was the SUV-wagon hybrid, which had the features of an SUV but the handling and ride of a passenger car. With gas prices surpassing $2 per gallon early in 2005 and reaching more than $3 per gallon in 2006, the large, truck-based SUVs were losing their appeal.

The global economic recession, which began in late 2007, had a devastating effect on the auto industry worldwide. All of the major automakers reported decreases in sales. Toyota posted the smallest decrease at 4 percent, while GM, Ford, and Chrysler each reported losses of nearly 10 percent. For the first time in automotive history, Ford was relegated to fourth place in sales after being outsold by Volkswagen.

In late 2008, the situation had deteriorated so far that each company in the Big Three sought government financial aid. Although the request to Congress was unsuccessful, GM and Chrysler later received Troubled Asset Relief Program (TARP) funds assistance, which was still not enough to keep either company out of bankruptcy in 2009. Although 2008 was Ford's worst year in history, ending with a staggering $14.6 billion loss for the company, Ford ultimately declined to pursue government money in favor of fixing its own problems from within the company.

Current Conditions

At the end of the first decade of the 2000s, the industry struggled to keep afloat in an economy crippled by a recession and a credit crisis. According to data from the U.S. Department of Commerce, in 2009 U.S. light vehicle sales fell to their lowest point since 1982. Sales were 10.4 million units in 2009, down 21 percent from 2008, which was down 18 percent from 2008. The Big Three had fallen far from the glory days of the early years of the first decade of the 2000s when sales averaged 16.8 million units. Peak sales of 17.3 million units had been posted in 2000.

The economy began to show signs of recovery in 2010, and the auto industry also began to recover slowly. Light vehicle sales increased 11 percent in 2010 to 11.5 million units. Detroit's Big Three were all on better financial footing in 2010, ending the year with positive sales figures. They sold 5.2 million units for a combined 45 percent of market share, an increase of 13.5 percent from 2009. Individually, GM lead with a 19.2 percent share of the U.S. market, followed by Ford with 16.5 percent and Chrysler with 9.4 percent.

Foreign car makers held 55 percent of the U.S. market. Foreign auto suppliers rose rapidly in popularity during the first decade of the 2000s and reached parity with U.S. auto makers in 2007. After 2007, foreign deals outsold U.S. deals in the domestic marketplace. Japanese auto manufacturers held 38.8 percent of the U.S. market in 2010, down from 40.5 percent in 2009. The decline was primarily attributable to quality problems at Toyota that depressed the top automaker's sales, as well as slow sales for Isuzu and Suzuki. Korean auto manufacturer Hyundai (and its subsidiary Kia) recorded impressive growth in the U.S. market at the end of the first decade of the 2000s and early 2010s, although its market share was still under 8 percent. German-based manufacturers also reported impressive growth, based primarily on the popularity of Volkswagen.

Poor sales had a negative effect on the production segment, as Ward's Auto reported that 25 production facilities closed between 2005 and 2010. However, prior to the crisis, these closings allowed production to operate at higher utilizations and increased efficiency. The Federal Reserve Board reported that the utilization rate was 76 percent between 1972 and 2010, but between 1995 and 2010, the rate was more than 80 percent and often was close to 90 percent. However, during 2009, utilization rates dropped to less than 44 percent, but many of the closings were temporary. According to research conducted by IHS Global Insight's Automotive Group, the production of light vehicles in the United States was expected to reach 8.1 million in 2011 and exceed 10 million by 2014. As a result, some new or retooled plants were expected to come back on line.

Industry Leaders

General Motors.
By the end of 2010, GM had repaid about one-half of the loans it had received from the U.S. government and reestablished itself as the nation's top auto company, selling 2.2 million vehicles during the year. GM offered domestic automobiles under the names Chevrolet, Pontiac, Buick, Cadillac, GMC Truck, and Saturn. After undergoing a six-week bankruptcy and accepting a controversial multibillion bail-out from the federal government in 2009, GM staged a successful initial public offering in 2010 and became a publicly traded company again. Its international sales, which accounted for nearly three-fourths of its revenues, were a key focus of the company's growth plan. Overall company revenues totaled $135.6 billion in 2010.

Ford Motor Company.
Ford Motor Company was established in 1903 by Henry Ford. Early models bore alphabetic designations. His first offering, the Model A, was introduced in 1903, and the company introduced the Model C the following year. The Model N was introduced for the 1906 and 1907 season and boasted speeds up to 45 miles per hour and a fuel economy of 20 miles per gallon. It sold for $600. The Model N was followed by an upgraded Model R and a refined Model S. Arguably the most famous car in automotive history, Ford's Model T was introduced for the 1908 and 1909 seasons. The Model T, which was Ford's ninth model in six years, dominated the industry for 18 years.

Ford reported worldwide revenue of $120.9 billion, up from $103.9 billion in 2009. Net profit in 2010 was $6.6 billion. Unlike its counterparts, GM and Chrysler, Ford took steps early enough to deal with the impending financial crisis to avoid bankruptcy and bailout. In anticipation of lower demand and declining sales, the company took on a large amount of debt when interest rates were low, shuttered 14 plants, and shed 57,000 jobs over the course of the recession. In 2010 Ford's cash from automotive activities outpaced its debt by $1.4 billion.

Chrysler.
In 2007 the decade-long merger of two longtime industry stalwarts, Daimler from Germany and Chrysler from the United States, came to end when private-equity firm Cerberus Capital Management purchased Chrysler for $7.4 billion. The Daimler-Chrysler merger was supposed to have brought savings and increased marketing power. A common platform had been envisaged, but Chrysler's varied offerings and Daimler's luxury sedans brought few synergies. In 2006 Chrysler posted a $1.5 billion loss and fell to fourth place in the U.S. market behind Toyota.

Cerberus Capital Management wasted little time re-engineering Chrysler, bringing in new management at the highest levels to replace long-time Chrysler executives as well as those associated with Daimler. The new management planned to de-emphasize big trucks and SUVs. An alliance with Chery, a Chinese automaker, promised a future with smaller cars and a more global outlook. By 2009, however, Chrysler had filed for Chapter 11 bankruptcy protection and announced a plan for a partnership with Italian automaker Fiat. In 2010 Chrysler, like a cat with nine lives, showed an uptick in performance and improved its market share to 8.8 percent. Fiat held about a 25 percent share of Chrysler with an increasing alliance anticipated if sales continued to increase. Overall, Chrysler received $13.8 billion in bail-out money from the U.S. government, which it began to repay in 2011 and pledged to repay in full ahead of the planned 2014 deadline.

Workforce

In 2000, the peak year for industry employment, there were roughly 300,000 employees in the auto industry. In 2010 that number was nearly cut in half to just 151,000. If motor vehicle bodies, trailers, and parts are included in the calculation, the total number of employed workers in 2000 was 1.3 million, compared to 674,000 in 2010.

Unions in the Automotive Industry.
The United Auto Workers (UAW) union represents many employees within the automotive industry. In 2011 there were 390,000 active and approximately 650,000 retired union members, represented by about 750 local unions. Organization of auto workers began after the Depression. During the Depression, growing labor unrest resulted, as companies cut workers' pay, shortened work weeks, fired people irrespective of their seniority, and rehired only younger workers. Workers also expressed job dissatisfaction, as companies increased the pressure to speed productivity. In 1933 Congress passed the National Industrial Recovery Act, which gave labor the right to organize and bargain collectively. Although the Act was declared unconstitutional in 1935, the rights to bargain collectively and ensure union elections was again secured when Congress passed the Wagner-Connery Act (Wagner Act), establishing the National Labor Relations Board.

In 1936 the American Federation of Labor (AFL) granted the United Automobile Workers of America its charter. The union later became the United Automobile, Aerospace, and Agricultural Implement Workers (UAW) and was affiliated with the Committee for Industrial Organizations (CIO). Ford was the last of the major auto producers to bargain with the UAW. Elections were held at the Ford Rouge plant in 1941 following years of sometimes violent conflict between union organizers and antiunion forces. Union activity increased following World War II, when auto production resumed. Workers joined together to maintain pay levels achieved during the war. Walter Reuther, the UAW's leader, fought for wage packages with a cost of living index and pension plans. Among other issues in the early 2010s, the UAW was focusing on the reopening of plants closed during the recession, the future of Social Security, the security of workers' pension plans, and maintaining workers' health and medical care benefits.

America and the World

Almost from its inception, the automobile industry has been international in scope. Ford began assembly in Britain in 1911 and by 1914 was the largest British auto producer. General Motors established an export company in 1911 to sell the company's products overseas. Following World War I, Ford built assembly plants in Denmark, France, Germany, Italy, Spain, and Sweden. General Motors purchased existing corporations, including Vauxhall in Britain and Opel in Germany. Ford and General Motors entered the Japanese market in 1925 and 1927, respectively. Chrysler established Chrysler de Mexico in 1938 to import and distribute Chrysler products.

The first foreign companies to sell products in the United States offered luxury and sport models, such as Rolls-Royce, Mercedes, Jaguar, and Porsche. The first foreign car to penetrate the mainstream market with a small family car was the Volkswagen Beetle. By 1968 Volkswagen accounted for 62 percent of all imports, but the German manufacturer began losing ground to Japanese producers.

United States-Japan Automotive Framework Agreement.
In August 1995, the United States-Japan Automotive Framework Agreement was implemented. The five-year agreement was crafted to increase U.S. and other foreign access to the Japanese motor vehicle and parts market. According to the U.S. Department of Commerce, the three main goals of the Agreement were improved access to Japan's motor vehicle distribution system, increased purchases of U.S. parts by Japanese automakers, and deregulation of Japan's $60 billion replacement parts market.

North American Free Trade Agreement (NAFTA).
In the U.S. market, analysts expected increased exports for the revitalized domestic producers, in part because of the passage of the North American Free Trade Agreement (NAFTA), which in its first few months resulted in a dramatic surge in U.S. car sales to Mexico. In keeping with the Clinton administration's policy to open foreign markets for the U.S. automotive industry, NAFTA was signed in 1993 and implemented on January 1, 1994. Increased market access for U.S. automotive products in Mexico was imperative, especially since trade in motor vehicles was essentially one way--from Mexico into the United States. In the years following the implementation of NAFTA, the U.S. automotive industry reported significant benefits.

General Agreement on Tariffs and Trade (GATT).
In 1994 the U.S. Congress agreed to the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). According to the U.S. Department of Commerce, the Agreement greatly enhanced the export potential of the U.S. automotive industry by improving access to both major and developing markets. Among achievements resulting from GATT were a 27 percent reduction in the motor vehicle tariffs of major markets, a 58 percent reduction in the automotive parts tariffs of major markets, and the "binding" of automotive tariffs in many developing countries, including Brazil, Argentina, India, and Indonesia. The U.S. automotive industry reported positive export results following the January 1995 implementation of the Uruguay Round, especially in developing markets.

Agreement on Global Technical Regulations.
In March 1998, negotiators agreed on a global means for governments to develop and harmonize regulations on motor vehicles' design and performance. While offering an opportunity for the cooperative development of safety and environmental regulations through globally uniform governmental technical regulations, it provided a predictable framework for a global automotive industry. Established under the auspices of the United Nations Economic Commission, the negotiators were representatives from the United States, Japan, and the European Community.

Research and Technology

In the fierce competitive environment of the international automotive industry, any edge in design, engineering, or technology assumes tremendous importance and can result in shifts of market share worth millions of dollars. Timely research and swift technological adaptation are vital in a wide array of automotive niche markets. Consequently, the industry invests more in research and development than any other industry, according to the Alliance of Automobile Manufacturers.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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Available Now! Labor Productivity Benchmarks And Vertical Gap Analysis On Audi AG.
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...competing firms in the Motor Vehicles and Passenger Car Bodies Manufacturing industry...for Audi AG in the Motor Vehicles and Passenger Car Bodies Manufacturing industry...following and many other Motor Vehicles and ...
Toyota Motor Corporation And The Two: Global Gap Analysis And Labor Productivity Benchmarks Published.
Internet Wire; April 16, 2002; 700+ words
...competing firms in the Motor Vehicles and Passenger Car Bodies Manufacturing industry...Corp. and other Motor Vehicles and Passenger Car Bodies Manufacturing companies...companies in the Motor Vehicles and ...
Available Now! Labor Productivity Benchmarks And Vertical Gap Analysis On Tower Automotive Inc.
Internet Wire; August 22, 2002; 700+ words
...competing firms in the "Motor Vehicles and Passenger Car Bodies Manufacturing" industry...Automotive Inc. in the "Motor Vehicles and Passenger Car Bodies Manufacturing" industry...and many other "Motor Vehicles and ...
Released: Financial And Labor Productivity Benchmarks On General Motors Corporation By ICON Financial Advisory Services, LLC.
Internet Wire; April 22, 2002; 700+ words
...economic sector? Reports for the following Motor Vehicles and Passenger Car Bodies Manufacturing companies and many others...between General Motors Corporation and other Motor Vehicles and Passenger Car Bodies Manufacturing companies. The ...
Financial And Labor Productivity Benchmarks For Ford Motor Company Published.
Internet Wire; April 30, 2002; 700+ words
...same economic sector? Reports for over 40 Motor Vehicles and Passenger Car Bodies Manufacturing companies are available now...measures between Ford Motor Company and other Motor Vehicles and Passenger Car Bodies Manufacturing companies. The ...
Released: Financial And Labor Productivity Benchmarks On Honda Motor Co. Ltd. By Icon Financial Advisory Services, LLC.
Internet Wire; July 29, 2002; 700+ words
...economic sector? Reports for the following "Motor Vehicles and Passenger Car Bodies Manufacturing" companies and many others...between Honda Motor Co. Ltd. and other "Motor Vehicles and Passenger Car Bodies Manufacturing" companies. The Gross ...
Monthly sector analysis.(Statistical Data Included)
Acquisitions Monthly; August 1, 2002; 700+ words
...02 (US) - Manufacturer Investor group broadband wireless system 37: TRANSPORTATION EQUIPMENT 3711: Motor vehicles and passenger car bodies Avtovaz (5.0) (RS) - Russia (RS

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