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.

World history

Germany

Daimler-Benz is the industry's oldest firm, building automobiles since the late 1880s; its current structure dates from 1926. In 1998 it bought the American Chrysler, then sold out in 2007 at a heavy loss as it never integrated the new car in its line.

In the popular market, Opel and Volkswagen are most famous. Opel was a bicycle company that started making cars in 1898; General Motors bought it out in 1929, but the Nazi government took control and GM wrote off its entire investment. In 1948 GM returned and restored the Opel brand.

Volkswagen is dominant in the popular market; it purchased Audi in 1964. VW's most famous car was the small, beetle-shaped economical "people's car" with a rear-mounted, air-cooled engine. It was designed in the 1930s by Ferdinand Porsche upon order from Adolf Hitler, who was himself a car enthusiast. However production models appeared only after the war; until then only rich Germans had automobiles. By 1950 Volkswagen was the largest German automobile producer.

Germany is famous for its upscale sedans. They are designed for high-speed cruising over the autobahns. They feature well-designed suspension systems that provide both a soft ride and good handling characteristics on winding country roads. Engines are designed for sustained high-speed operation, though in general they are weak on acceleration.

Daimler-Benz produces the upscale Mercedes-Benz, long a famous name in racing. BMW (founded 1916) and Porsche are major factors in the luxury market. Porsche formed his own company, which today produces expensive, high-quality sports cars.. In 2008 the Porsche company sought control of the much larger Volkswagen company; Porsche cornered the market for Volkswagen stock and made profits of tens of billions of Euros, while apparently gaining control of the bigger company.

Japan

Japan, with its large population squeezed into very high density cities with good public transit, has limited roadways that carry very heavy traffic. Hence most automobiles are small in terms of size and weight. Nissan began making trucks in 1914, and sold cars under the "Datsun" brand until it switched to "Nissan" in the 1980s. It opened its first U.S. plant in Tennessee in the early 1980s and a British plant in 1986. It is 44% owned by Renault of France. Honda, which began with motorcycles, emerged after World War II. Its luxury cars carry the "Acura" brand. Toyota began making cars in the 1930s and is now the world's largest producer. Its luxury models carry the "Lexus" brand. Toyota is famous for its innovative, quality-conscious management style, and its hybrid gas-electric vehicles, especially the Prius, which was launched in 1997. Other major companies include Subaru, Mitsubishi, and Mazda. Japan became the world's leading auto maker in 1980, the first year since 1905 that the United States had been outproduced by any other nation.

Britain

The auto industry developed late in Britain and for the first half of the 20th century the small output of British-owned companies focused on luxury and upscale models notably Rolls-Royce and later Bentley as well as Jaguar and Rover. The stress was on high quality hand-made craftsmanship, regardless of high cost.

Beginning 1925 William Morris, later Viscount Nuffield, began to mass produce small cars of modest power under the "M.G." nameplate. Morris modeled his methofds after Henry Ford, and sought high volume production of inexpensive cars geared to the urban middle class. In 1953 M.G. merged with Austin to form the British Motor Corporation, the largest producer, which also produced the Austin, Austin-Healey, Morris, Riley, Wolseley. It added Jaguar in 1966. BMC specialized in small, economy sedans and sports cars, with 4 cylinder engines. It merged in 1968 with rival Leyland. Another rival was the Rootes group, with the brands Sunbeam, Talbot, Hillman, Singer, and Humber.

Ford opened a plant as early as 1911 and soon had 40% of the British market. In 1931 Ford opened the largest auto plant in Europe near London. Ford eventually acquired Aston Martin, Jaguar and Land Rover. By 2008 it was selling off those divisions. Rootes was taken over by Chrysler in the late 1960s and its brands phased out by the 1970s. The Chrysler operations were taken over by Peugeot in 1978. Nissan opened a plant in 1986.

After 1945 and the end of the Second World War, American and British firms dominated the European market. In 1950, of 523,000 cars produced in Britain, 398,000 were exported. By the late 1950s, however, the Germans were back, followed soon by the French and Italian producers, and Britain lost most of its continental market. By 1970 Japanese firms identified the British market as the first major European market to attack because of the relative weakness of the domestic car industry.

When the domestic auto industry was largely nationalized in 1975, British Leyland was the holding company that controlled 40% of production. It was renamed Rover; it went bankrupt in 2005, ending the era of mass production by British makers. The Chinese purchased the MG brand, while Jaguar went first to Ford and now to TATA Motors.

The gentry who bought cars before 1939 found driving was easy on rural Britain’s smooth road surfaces in its generally mild weather. The rural roads are famously narrow and winding, so cars were small with stiff springs for good handling characteristics on them. High taxes on gasoline aand crowded streets encouraged smaller, fuel-efficient cars in the cities.

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
• Farber, David. Sloan Rules: Alfred P. Sloan and the Triumph of General Motors (2005) excerpt and text search
• 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
• Pelfrey, William. Billy, Alfred, and General Motors: The Story of Two Unique Men, a Legendary Company, and a Remarkable Time in American History (2006), on Billy Durant and Alfred Sloan excerpt and text search
• Rae, John B.; American Automobile Manufacturers: The First Forty Years (1959) online edition
• Setright, L.J.K. Drive On!: A Social History of the Motor Car (2004), international overview; excerpt and text search
• 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

Memoirs

• Iacocca, Lee. Iacocca (1970) excerpt and text search, best-selling memoir by outspoken head of Ford and Chrysler
• Sloan, Alfred. My Years with General Motors (1964), excerpt and text search influential study of GM by its powerful head from 1923 to 1956