Michael Valentin 03/08/15
The automotive industry has been at the forefront of the American economy for
many years. This industry has shaped our development, and influenced American
culture. Now, ensnared by globalization and other dominant factors, it faces a
difficult reality. The big three are very significant, Chrysler, Ford, and General
Motors were American symbols. They are credited for a significant percentage of all
American jobs; they put numerous blue-collar families into the middle class, and
helped America cultivate into the giant of the twentieth century. Unfortunately, the
firms are not what they once were and are traveling down a dangerous path. There
are three major problems that these firms are facing. The energy crisis, foreign trade
policy, and finally, the perception gap are all the tribulations of the industry. If these
three problems are deciphered, the American automotive industry may be able to
exit out of volatility. The energy crisis began in 1973 when the Organization of
Petroleum Exporting Countries (OPEC) cut off the supply of oil to the United States.
This was carried on to the late seventies where another energy crisis began. In an
effort to save energy the U.S. government began to set standards for fuel economy.
This affected the auto industry in ways that the big three could not imagine.
American car sales decreased due to fuel standards being suddenly changed.
Subsequently, prices began to dwindle into the mid 1980s and the American car
companies began to relax. That comfortable situation changed abruptly when oil
prices soared in the 1980s, and the Japanese gained a firm grasp on exporting
attractive, low-cost, fuel-efficient vehicles to America. This was the beginning of a
new era in automotive history. Before this time, fuel-consumption and air-quality
was not demanded by the American consumer. Due to the fact that foreign car
manufacturers perceive to have the edge on fuel efficiency and emission standards,
the foreign industry has an advantage in that sector of automotives. The American
industry is capable of taking over by creating alternative energy sources. Alternative
energy sources for cars, such as natural gas, electricity, ethanol, vegetable oil,
sunlight, and water, contend for consumer use. The US pioneered the alternative fuel
source in 1996 when GM released the EV1, an emission free car. In 2004 the Ford
Motor Company became the first U.S. automaker to produce a hybrid vehicle. The
Ford Escape Hybrid, introduced for the 2005 model year, was both the first hybrid
made in the United States and the first hybrid sport-utility vehicle. The US must
pursue this area of research into further development if it wants to regain control of
