Monday, June 12, 2017

volkswagen is the best car seller by far in the US and in the world 1970s and 1980s.


By 1969, imports had increased their share of the U.S. auto market, with Volkswagen selling 548,904 vehicles, followed by Toyota with 127,018 vehicles. In response to this, the domestic auto makers introduced new compact and sub-compact cars, such as the Ford Pinto and Maverick, the Chevrolet Vega, and the AMC GremlinHornet and Pacer. (Chrysler had to make do with importing cars from Mitsubishi Motors and their affiliated Rootes Group.) However, design and manufacturing problems infected a number of these cars and led to unfavorable perceptions of the cars.
The auto industry was severely affected by the 1973 oil crisis Arab embargo. Small fuel-efficient cars from foreign automakers took a sharply higher share of the U.S. auto sales market. Under the Energy Policy and Conservation Act[21] the federal government initiated fuel efficiency standards (known as Corporate Average Fuel Economy, or CAFE) in 1975, effective as of 1978 for passenger cars, and as of 1979 for light trucks. For passenger cars, the initial standard was 18 miles per gallon (mpg), and increased to 27.5 mpg by 1985.
General Motors began responding first to the high gas prices by downsizing most of their models by 1977. In 1979, the second oil price spike occurred, precipitated by political events in Iran, resulting in the 1979 energy crisis. By 1980, the economy slid into turmoil, with high inflation, high unemployment, and high interest rates. The automakers suffered large operating losses. Chrysler was hurt most severely and in 1979 received a bailout from the federal government in the form of $1.5 billion in loan guarantees. One quick fix was a Detroit-built version of their then-new French (Simca) economy car, the Horizon.[22] As a result of its financial difficulties, Chrysler sold its British and French subsidiaries, Rootes Group and Simca.
As bold and confident as the Big Three automakers were in the 1950s and 1960s, the American auto makers in the 1970s and 1980s stumbled badly, going from one engineering, manufacturing, or marketing disaster to another. Ford struggled when it was revealed that the Ford Pinto's gas tank was vulnerable to exploding when hit from behind. Ford knew about this vulnerability but did not design any safeguards in order to save a few dollars per vehicle. They rationalized that the cost of lawsuits would be less than the cost of redesigning the car.[23] GM had a string of miscues starting with the Chevrolet Vega, which developed a reputation for rapidly rusting and having major problems with the aluminium engine.[24] Cadillac damaged their reputation when the four-cylinder Cadillac Cimarron was introduced in 1981 (a gussied-up Chevrolet Cavalier at twice the price) and the "V8-6-4" engine didn't work as advertised.[25] GM's reputation was also damaged when it revealed in 1977 that they were installing Chevrolet engines in Oldsmobiles, and lawsuits from aggrieved Oldsmobile owners followed.[26] Likewise litigation ensued when a trio of diesel engines, designed from gasoline engines and used in GM cars from 1978 to 1985 suffered major problems. Class action lawsuits and efforts from the Federal Trade Commission resulted in buybacks of the cars from GM.[27] Chrysler also suffered damage to its reputation when its compact cars, the Plymouth Volaré and Dodge Aspen, were developed quickly and suffered from massive recalls and poor quality.[28]


In 1981, Japanese automakers entered into a so-called "Voluntary restraint agreement" limiting the number of autos that they could import to the U.S. to 1.68 million per year.[29] One side effect of this quota was that the Japanese car companies began developing luxury cars that had higher profit margins, such as Toyota's LexusHonda's Acura, and Nissan Motor Company's Infiniti divisions. Another consequence was that the Japanese car makers began opening auto production plants in the U.S., with the three largest Japanese auto manufacturers all opening production facilities by 1985. These facilities were opened primarily in the southern U.S., in states which disadvantaged unions through right-to-work laws. The UAW failed in its substantial union-organizing efforts at these plants. The Big Three also began investing in and/or developing joint manufacturing facilities with several of the Japanese automakers. Ford invested in Mazda as well as setting up a joint facility with them called AutoAlliance International. Chrysler bought stock in Mitsubishi Motors and established a joint facility with them called Diamond-Star Motors. GM invested in Suzuki and Isuzu Motors, and set up a joint manufacturing facility with Toyota, called NUMMI (New United Motor Manufacturing, Inc.).
On the evening of June 19, 1982, while celebrating his Bachelor party at the Fancy Pants strip clubVincent Chin, a 27-year old Chinese American from Detroit, Michigan, was approached by two Chrysler employees, Ronald Ebens and his stepson Michael Nitz, both of whom mistook him for a Japanese person and blamed the global presence of Japanese automobiles for the loss of jobs in the American automotive industry (particularly blaming Chrysler's increased sales of Mitsubishi models as captive imports). One of the club's dancers heard Ebens proclaim, "It's because of you little motherfuckers that we're out of work." The fight between Ebens, Nitz and Chin continued into Detroit's outskirts after they were kicked out of the club. It took Ebens and Nitz 20 to 30 minutes to find Chin before they finally spotted him at a nearby McDonald's restaurant. Ebens beat Chin with a baseball bat four times, cracking his skull. Chin was rushed to Henry Ford Hospital, where he died in a coma on June 23. His 500 wedding guests attended his funeral instead. Ebens and Nitz both received a three-year probation for their deadly crime, but neither served jail time.[30]
Despite the financial and marketing upheavals during the 1970s and 1980s, the decades led to technological innovations and/or widespread use of such improvements as disc brakesfuel injection, electronic engine control units, and electronic ignitionFront-wheel drive became the standard drive system by the late 1980s.
By the mid-1980s, oil prices had fallen sharply, helping lead to the revitalization of the American auto industry. Under the leadership of Lee Iacocca, Chrysler Corporation mounted a comeback after its flirtation with bankruptcy in 1979. The Minivan was introduced in the 1984 model year by Chrysler with the Plymouth Voyager and Dodge Caravan, and proved very popular. These vehicles were built on a passenger-car chassis and seated up to seven people as well as being able to hold bulky loads. Chrysler also introduced their "K-cars" in the 1980s, which came with front-wheel drive and fuel-efficient OHC engines. In 1987, Chrysler bought American Motors, which produced the Jeep. This proved to be excellent timing to take advantage of the Sport utility vehicle boom. Ford also began a comeback after losses of $3.3 billion in the early 1980s. In 1985, the company introduced the very successful, aerodynamic Taurus. General Motors, under the leadership of Roger Smith, was not as successful as its competitors in turning itself around, and its market share fell significantly. While Ford and Chrysler were cutting production costs, GM was investing heavily in new technology. The company's attempts at overhauling its management structure and using increased technology for manufacturing production were not successful. Several large acquisitions (Electronic Data Systems and Hughes Aircraft Company) also diverted management attention away from their main industry. (Ford and Chrysler also joined in the acquisition and diversification trend, with Ford buying Jaguar CarsAston Martin, The Associates (a finance company), and First Nationwide Financial Corp. (a savings and loan). Chrysler purchased Lamborghini, an interest in Maserati, and Gulfstream Aerospace jets.) GM started the Saturn brand in the late 1980s as a way to retake sales from imported cars. While Saturn initially succeeded, GM later neglected to provide it much support. Around this time GM also began development on the General Motors EV1 electric car, which debuted in 1996.


The 1990s began the decade in a recession, which resulted in weak auto sales and operating losses. In addition, the Invasion of Kuwait by Iraq caused a temporary jump in oil prices. However, the automakers recovered fairly quickly. In the mid-1990s, light truck sales (which included Sport utility vehiclesPickup trucks and Minivans) began to rise sharply.[31] Due to the Corporate Average Fuel Economy standards differentiating between passenger cars and light trucks, the automakers were able to sell large and heavy vehicles without fear of the CAFE fines. Low oil prices also gave incentives for consumers to buy these gas-guzzling vehicles. The American automakers sold combined, and even separately, millions of pickup trucks and body-on-frame SUVs during this period. Imports such as the Toyota 4Runner, Land Cruiser, Tacoma, and Nissan Pathfinder and Frontier were also popular during this time period.
The automakers also continued their trend of purchasing or investing in foreign automakers. GM purchased a controlling interest in Saab in 1990 and Daewoo Motors in 2001, and invested in Subaru in 1999 and Fiat in 2000. They also purchased the Hummer name from AM General in 1998. Ford purchased Volvo in 1999 and Land Rover in 2000. GM and Ford also established joint ventures with Chinese auto companies during this period. GM's joint ventures are with Shanghai GMSAIC-GM-Wuling Automobile, and FAW-GM Light Duty Commercial Vehicle Co Ltd. Ford's joint ventures are with Chang'an Ford and Jiangling Ford.
While the American automakers were investing in or buying foreign competitors, the foreign automakers continued to establish more production facilities in the United States. In the 1990s, BMW and Daimler-Benz opened SUV factories in Spartanburg County, South Carolina and Tuscaloosa County, Alabama, respectively. In the 2000s, assembly plants were opened by Honda in Lincoln, AlabamaNissan in Canton, Mississippi, Hyundai in Montgomery, Alabama and Kia in West Point, GeorgiaToyota opened an engine plant in Huntsville, Alabama in 2003 (along with a truck assembly plant in San AntonioTexas) and is building an assembly plant in Blue Springs, Mississippi. Volkswagen has announced a new plant for Chattanooga, Tennessee. Also, several of the Japanese auto manufacturers expanded or opened additional plants during this period. For example, while new, the Alabama Daimler-Benz and Honda plants have expanded several times since their original construction. The opening of Daimler-Benz plant in the 1990s had a cascade effect. It created a hub of new sub-assembly suppliers in the Alabama area. This hub of sub-assemblies suppliers helped in attracting several new assembly plants into Alabama plus new plants in nearby Mississippi, Georgia and Tennessee.
In 1998, Chrysler and the German automaker Daimler-Benz entered into a "merger of equals" although in reality it turned out be an acquisition by Daimler-Benz. Thus the Big Three American-owned automakers turned into the Big Two automakers. However, a culture clash emerged between the two divisions, and there was an exodus of engineering and manufacturing management from the Chrysler division. The Chrysler division struggled financially, with only a brief recovery when the Chrysler 300 was introduced. In 2007, Daimler-Benz sold the company to a private equity firm, Cerberus Capital Management, thus again making it American-owned.


The 2000s began with a recession in early 2001 and the effects of the September 11 attacks, significantly affecting auto industry sales and profitability. The stock market decline affected the pension fund levels of the automakers, requiring significant contributions to the funds by the automakers (with GM financing these contributions by raising debt). In 2001, Chrysler discontinued their Plymouth brand, and in 2004 GM ended their Oldsmobile division.
In 2005, oil prices began rising and peaked in 2008. With the American automakers heavily dependent upon the gas-guzzling light truck sales for their profits, their sales fell sharply. Additionally, the finance subsidiaries of the Big Three became of increasing importance to their overall profitability (and their eventual downfall). General Motors Acceptance Corporation, the GM finance division, began making home mortgage loans, especially subprime loans. With the subsequent collapse of the sub-prime mortgage industry, GM suffered heavy losses.
The Automotive industry crisis of 2008–10 happened when the Big Three were in weak financial condition and the beginning of an economic recession, and the financial crisis resulted in the automakers looking to the federal government for help. Ford was in the best position, as under new CEO Alan Mulally they had fortuitously raised $23 billion in cash in 2006 by mortgaging most of their assets. Chrysler, purchased in 2007 by a private equity firm, had weak financial backing, was the most heavily dependent on light truck sales, and had few new products in their pipeline. General Motors was highly leveraged, also heavily dependent on light truck sales, and burdened by high health care costs.[32]
The CEOs of the Big Three requested government aid in November 2008, but sentiment in Congress was against the automakers, especially after it was revealed that they had flown to Washington D.C. on their private corporate jets. In December 2008, President Bush gave $17.4 billion to GM and Chrysler from the Troubled Asset Relief Program as temporary relief for their cash flow problems. Several months later, President Obama formed the Presidential Task Force on the Auto Industry to decide how to handle GM and Chrysler. Chrysler received a total of $12.5 billion in TARP funds and entered Chapter 11 bankruptcy in April 2009.
Automaker Fiat was given management control and a 20% ownership stake (adjusted to 35% under certain conditions), the U.S. and Canadian governments were given a 10% holding, and the remaining ownership was given to a Voluntary Employee Beneficiary Association (VEBA), which was a trust fund established to administer employee health care benefits.
The Automotive Task Force requested that GM CEO Rick Wagoner resign (although he was replaced by another long-time GM executive, Frederick Henderson). GM received a total of $49.5 billion in TARP finds and entered Chapter 11 bankruptcy in June 2009. The U.S. and Canadian governments received a 72.5% ownership stake, a VEBA received 17.5%, and the unsecured creditors received 10%. As part of the bailout GM and Chrysler closed numerous production plants, and eliminated hundreds of dealerships and thousands of jobs. They also required a number of major labor union concessions. GM also sold off the Saab division and eliminated the PontiacHummer, and Saturn Corporation brands. In addition to the $62 billion that the automakers received from TARP, their financing arms, GMAC and Chrysler Financial received an additional $17.8 billion.[33] In addition to the funding from the United States government, the Canadian government provided $10.8 billion to GM and $2.9 billion to Chrysler as incentives to maintain production facilities in Canada.[34]
Ford did not request any government assistance, but as part of their downsizing sold Volvo in 2010 and phased out their Mercury division in 2011. (They had previously sold Aston Martin in 2007, and Land Rover and Jaguar Cars in 2008). Under the Advanced Technology Vehicles Manufacturing Loan Program Ford borrowed $5.9 billion to help their vehicles meet higher mileage requirements.


Ford went through 2012 having recovered to the point of having 80,000 total U.S. employees, supplying their 3,300 dealerships. In comparison, Chrysler had 71,100 U.S. employees supplying their 2,328 dealerships during that year.[5]
Data for the beginning of 2014 put the four companies of GM, Ford, Toyota, and Chrysler, in that order, at the top as having the most U.S. car sales. In terms of specific types of vehicles, the new decade has meant Chrysler having an emphasis on its Ram trucks and the Jeep Cherokee SUV, both of which had "hefty sales" for 2014 according to a news report.[35]

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