Changes

Major car companies include Ford, General Motors(or GM), [[Chrysler]], [[Toyota]], [[Nissan]], [[Honda]], [[Mazda]], [[BMW]], [[Mercedes-Benz]]. Major American based manufacturers include [[Ford Motor Company|Ford]] and [[General Motors]], produce several brands such as [[Ford Mercury|Mercury]], [[Lincoln (car)|Lincoln]], [[Chevrolet]], and [[Hummer]], however these often have many of the same "platforms" or basic car components.

Major car companies include Ford, General Motors(or GM), [[Chrysler]], [[Toyota]], [[Nissan]], [[Honda]], [[Mazda]], [[BMW]], [[Mercedes-Benz]]. Major American based manufacturers include [[Ford Motor Company|Ford]] and [[General Motors]], produce several brands such as [[Ford Mercury|Mercury]], [[Lincoln (car)|Lincoln]], [[Chevrolet]], and [[Hummer]], however these often have many of the same "platforms" or basic car components.

==Industry trends==

==Industry trends==

The "Big Three" (General Motors, Ford and Chrysler) have done poorly in recent years.  They have lost most of the market to imports and "transplants" (cars made in U.S. factories owned by foreign makes).  The first signs came when Volkswagen and Honda started importing cheap, well-made cars in the 1960s. Detroit convinced Congress to impose quotas, and the foreign companies responded by opening their own plants in the U.S.  The "transplants" were built in the South and are non-union. Facing steady financial losses, The Big Three have closed many factories and drastically cut employment, especially in Michigan. They are handicapped by union contracts which require them to "buy out" union workers when plants close, at a typical cost of %100,000 to $150,000 each. Health care and pension costs add $1500 to the cost of each vehicle made by the Big Three, and their wage levels are much higher than the transplants.  Average annual wages for production workers at the Big Three were $67,480 in 2007, and $81,940 for skilled workers.  GM spun off some of its divisions into independent companies, such as Delphi in 1999.  The spin-offs have shared Detroit's downturns, as have the U.S. owned plants in Canada.   

The "Big Three" (General Motors, Ford and Chrysler) have done poorly in recent years.  They have lost most of the market to imports and "transplants" (cars made in U.S. factories owned by foreign makes).  The first signs came when Volkswagen and Honda started importing cheap, well-made cars in the 1960s. Detroit convinced Congress to impose quotas, and the foreign companies responded by opening their own plants in the U.S.   

 

The "transplants" are built in the South and are non-union. Facing steady financial losses, The Big Three have closed many factories and drastically cut employment, especially in Michigan. They are handicapped by union contracts which require them to "buy out" union workers when plants close, at a typical cost of $100,000 to $150,000 each. Health care and pension costs add $1500 to the cost of each vehicle made by the Big Three, and their wage levels are much higher than the transplants.  Average annual wages for production workers at the Big Three were $67,480 in 2007, and $81,940 for skilled workers.  GM spun off some of its divisions into independent companies, such as American Axle  in 1995 and Delphi in 1999.  Ford spun off Visteon in 2000. The spin-offs have shared Detroit's downturns, as have the U.S. owned plants in Canada.   

Meanwhile the transplants have been growing. Led by Toyota, Nissan and Honda, by 2003 the transplants were producing more vehicles than the Big Three. The transplants built new factories and adding to the employment rolls in non-union plants in the South, especially Kentucky and Tennessee. The United Automobile Workers (UAW) has shrunk steadily since 1980, falling from 1.5 million members to 600,000.<ref> CRS Report for Congress, ''U.S> Automotive Industry: Policy Overview and Recent History'' (April 25, 2005) [http://ncseonline.org/NLE/CRSreports/05apr/RL32883.pdf online]</ref>

Meanwhile the transplants have been growing. Led by Toyota, Nissan and Honda, by 2003 the transplants were producing more vehicles than the Big Three. The transplants built new factories and adding to the employment rolls in non-union plants in the South, especially Kentucky and Tennessee. The United Automobile Workers (UAW) has shrunk steadily since 1980, falling from 1.5 million members to 600,000.<ref> CRS Report for Congress, ''U.S> Automotive Industry: Policy Overview and Recent History'' (April 25, 2005) [http://ncseonline.org/NLE/CRSreports/05apr/RL32883.pdf online]</ref>

 

==Financial crisis==

==Financial crisis==

In 2008 a series of damaging blows drove the "Big Three" (GM, Ford and Chrysler) to the verge of bankruptcy. Part of the cause was very high labor costs (much higher than the foreign plants in the U.S.), which prevents lower prices. The Big Three had in recent years stressed expensive, fuel-guzzling SUVs and large pickups. They were much more profitable than smaller, fuel-efficient cars. When gasoline prices shot past US$4 per gallon in 2008, Americans stopped buying the big cars, and the Big Three saw their sales plummet.  The [[Financial Crisis of 2008]] played a role as no one was willing to loan GM the money to buy Chrysler. Consumer credit has tightened and it became much harder for people with average or poor credit to obtain a bank loan to buy a car, so sales fell further.  Stock prices fell as shareholders worried about bankruptcy; GM's shares fell to 1942 levels. Intense debate is underway about a massive bailout, that would be in addition to a $25 billion loan Congress passed in September 2008 to assist in increasing fuel efficiency.   

In 2008 a series of damaging blows drove the "Big Three" (GM, Ford and Chrysler) to the verge of bankruptcy. Part of the cause was very high labor costs (much higher than the foreign plants in the U.S.), which prevents lower prices. The Big Three had in recent years stressed expensive, fuel-guzzling SUVs and large pickups. They were much more profitable than smaller, fuel-efficient cars. When gasoline prices shot past US$4 per gallon in 2008, Americans stopped buying the big cars, and the Big Three saw their sales plummet.  The [[Financial Crisis of 2008]] played a role as no one was willing to loan GM the money to buy Chrysler. Consumer credit has tightened and it became much harder for people with average or poor credit to obtain a bank loan to buy a car, so sales fell further.  Stock prices fell as shareholders worried about bankruptcy; GM's shares fell to 1942 levels. Intense debate is underway about a massive bailout, that would be in addition to a $25 billion loan Congress passed in September 2008 to assist in increasing fuel efficiency.