Automobile

The automobile, or car, was invented in the 19th century by Karl Friedrich Benz, a German engineer. But it was Henry Ford, an American, who made the automobile popular by mass-producing it on the world's first moving automotive assembly line in Detroit, which became the "Automobile Capital of the World" in the 1950s.

The term "car" covers a wide variety of vehicles from "micro-city" cars to full sized body on frame pickup trucks. They have become a status symbol for people and are widely customizable. They most commonly use internal combustion engines. Cars use roads in order to transport travelers from one place to another (compare trains).

Manufacture

Many of the world's major auto companies have plants in the U.S., and the U.S. companied have plants and subsidiaries across the world, a pattern begun by Ford in the 1920s.

It is often difficult to tell if a car is a domestically or foreign produced vehicle simply by the name of the manufacturer. For example, in 2006 Japan-based manufacturer Toyota had 14 manufacturing plants in North America producing parts and cars such as the Camry, while American manufacture General Motors has operations in Mexico producing trucks such as the Silverado and Suburban for export to the United States.

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

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" 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.

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 addition to the Big Three hundreds of large suppliers of parts are in financial crisis as well; most would go under if the Big Three go bankrupt.

Bankruptcy scenario

Bankruptcy of the Big Three would be very expensive to the economy as a whole and the federal government. It would mean loss of 240,000 very high paying jobs at the Big Three, a loss of 980,000 high-paying jobs at the suppliers and local dealers, and 1.7 million jobs throughout the economy. It would cause a decline in personal income of $151 billion the first year, and $398 billion over three years. The federal, state and local governments would lose tax revenue and spend on welfare programs a total of $156 billion over three years.

Fuel

President Bush has urged car manufacturers to produce cars that can run on renewable fuels such as ethanol and biodiesel, to cut down on America's dependence on foreign oil. Several manufacturers are also developing electric cars, hybrid cars and plug in hybrids.

Racing

Automobile racing is quite popular world wide, with several variations including:

• Open Wheel Racing (Example Formula1, ChampCar or the Indy Racing League)
• Rally Racing
• Stock Car Racing (Example NASCAR)
• Drag Racing
• Historical Racing

External links

• President Bush gives a speech on biodiesel
• General Motors Mexican operations

Bibliography

• Berger; Michael L. The Automobile in American History and Culture: A Reference Guide (2001) online edition
• Bonin, Huber et al. Ford, 1902-2003: The European History 2 vol Paris 2003. ISBN 2-914369-06-9 scholarly essays in English; reviewed in Len Holden, "Fording the Atlantic: Ford and Fordism in Europe" in Business History Volume 47, #1 Jan 2005 pp 122-127
• Brinkley, Douglas G. Wheels for the World: Henry Ford, His Company, and a Century of Progress (2003) excerpt and text search
• CAR Research Memorandum. "The Impact of the U.S. Economy of a Major Contraction of the Detroit Three Automakers" (Nov 2008) online edition
• Cooney, Stephen, and Breny Yacobussi, CRS Report for Congress, U.S. Automotive Industry: Policy Overview and Recent History (April 25, 2005) online
• May, George S. ed. The Automobile Industry, 1920-1980 (1989), 520ppl comprehensive encyclopedia
• Nevins, Allan and Frank Ernest Hill. Ford: The Times, The Man, The Company (vol 1, 1954); Ford: Expansion and Challenge, 1915-1933 (1957); Ford: Decline and Rebirth, 1933-1962 (1962), the standard history of the company and biography of Ford; ACLS E-book vol 1; ACLS E-book vol 2; ACLS E-book for vol 3
• Rae, John B.; American Automobile Manufacturers: The First Forty Years (1959) online edition
• Watts, Steven. The People's Tycoon: Henry Ford and the American Century (2005), major biography
• Whisler; Timothy R. The British Motor Industry, 1945-1994: A Case Study in Industrial Decline (1999) online edition