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The History of American Technology -- Fall 1998

The Automobile Industry, Since 1960



U.S. automobile production was down at 7.9 million units. The rest of the world was up with almost 16.4 million new vehicles produced. Effectively, Detroit's overwhelming domination of the world market had ended. The lion's share of the non-U.S. production was in Europe, with Germany (just over 2 million) replacing the British (1.8 million) as the world's second largest producer. Fourth place France accounted for almost 1.4 million. The Japanese were enjoying phenomenal growth in what was still a very small industry--the 482,000 Japanese vehicles produced represented nearly a 700% growth in production over the 1955 figures. Still, the Japanese figures gave them just under 3% of total production.


Studebaker-Packard introduced seat belts as standard equipment on all models, the first U.S. auto manufacturer to do so.

Ford introduced the sporty Mustang in a desperate attempt to generate sales. The pet project of an ambitious young executive, Lee Iacocca, the Mustang was less the result of systematic product development than it was a hurry-up effort to get something that would sell onto the market. Inspired by Chevrolet's strange success with its Monza--a luxury version of the slow-selling Corvair, the Ford engineers threw together basic assemblies and parts--many developed for the compact Falcon--and made the Mustang available with a wide array of optional extras. Introduced at a base price of $2,300, buyers purchased an average of $1,000 worth of optional extras, making Mustang sales very profitable for Ford.

Unable to continue competing even on the basis of the economies of scale developed in a 1954 merger, the combined Studebaker and Packard automakers ceased production.


Vehicle Air Pollution and Control Act set standards for allowable auto emissions, launching an era of ever closer regulation of the auto industry.

U.S. auto industry production had rebounded to more than 11.1 million, but the expansion of the world market meant that the U.S. was still losing market share to foreign competition. The U.S. was producing fully 45% of world output, but that was a decline from the 48% share in 1960, 67% in 1955, and almost 76% in 1950. The Japanese producers were becoming a significant force in production capability, but remained a minor factor in the market. The nearly 1.9 million units produced in Japan had moved the Japanese ahead of the French to become the world's 4th largest producer (after the U.S., Germany, and Britain) but Japanese production was still just 7% of the world total.


Clean Air Act tightened regulations on auto emissions.

Radical realignments appeared in the statistics on world automobile production. In a world market that absorbed nearly 29.7 vehicles, the U.S. was still the largest producer (8.3 million), but Japan had emerged in undisputed second place with nearly 5.3 units produced. Germany had slipped to third place (3.8 million). The French (2.75 million) had passed the British (just over 2 million)to hold the number 4 slot. In addition to the realignments in the rankings (1 - U.S.; 2 - Japan; 3 - Germany; 4 - France; 5 - Britain), a dramatic redistribution of market share had also emerged with the development of the Japanese industry. With 8.3 million units, the U.S. share of the world market had sunk to just under 28%. Japan's nearly 5.3 million units gave them nearly 18%. Germany at just over 3.8 million owned over 15%, which actually represented an increase over the 12% they had held as the number two producer just 5 years earlier. The French were also improving on their 1965 share (6.7%). With a production of almost 2.2 million, they had claimed over 9%. Only the British had joined the U.S. in losing both production numbers and market share, but the British decline was not nearly as steep as what had happened in the U.S. In 1965, as the third leading producer the British manufactured nearly 2.2 million cars (8%). In 1970, they produced just over 2 million (6.7%). During the same period the U.S. had slipped from over 11.1 million units to just under 8.3 million for a decline in market share from about 45% to something just under 28%. The story in these figures is fairly clear: The world market was growing dramatically; the U.S. industry was shrinking; the world market was realigning at the expense of U.S. carmakers.


The realignment in the world auto industry continued. The rankings established in the late 1960s held: 1 -- U.S. (almost 9 million cars); 2 -- Japan (over 6.9 million); 3 -- Germany (nearly 3.2 million); 4 -- France (2.86 million); 5 -- Britain (1.65 million). Nevertheless, the trend in shifting market shares showed the Japanese continuing to gain ground: U.S = 27%; Japan = 21%; Germany = 9.5%; France = 8.6%; Britain = 5%. The U.S. was barely holding its share, and Japan was gaining at the expense of Europe.


Nearly 70% of all automobiles sold in the U.S. had V-8 engines. Just under 22% had 6-cylinders, and 8.5% had 4-cylinder engines.


Japan accounted for more than half the cars imported into the United States, with total sales passing 1.5 million units.


Only $1.5 billion in federally guaranteed loans staved off bankruptcy for the beleaguered Chrysler Corporation as imports of fuel-efficient cars to the U.S. continued to grow. The slump in the auto industry represented a major factor in the overall economic slump in the U.S.


Japan emerged as the world's leading producer of automobiles with just over 11 million units produced in a world-wide total of over 38.6 million. The Japanese production gave them 28.5% of the world market. Slipping to second place among world producers for the first time since taking the lead from France in 1904, the U.S. produced just over 8 million for a market share just shy of 21%. German production of nearly 3.9 million units meant that its automakers were recovering to early 1970s levels, but share had dropped to 10% from nearly 13% in 1970. The French industry did well with almost 3.4 million vehicles, and their 9.7% market share meant the French industry had even grown slightly (9.3% in 1970) in its competitiveness. Great Britain suffered badly, producing just 1.3 million units, which meant a return to levels of production typical of the mid 1950s. The British market share stood at just 3.4%.

Japanese automakers held a 30% share in the U.S. market.

Japan surpassed the U.S. in auto sales, becoming the world's largest auto producer.

Annual losses at Ford North America passed the $1 billion mark, prompting the company to commit to a dramatic modernization and redesign effort. One of the most important results of the Ford commitment to change itself and the U.S. auto industry appeared in 1986 with the introduction of the Ford Taurus and the Mercury Sable, the cars that led Ford back to market share and profitability. Ironically, the Taurus and Sable designs were actually inspired by automobile nostalgia. The styling for the Taurus was an update of the streamlined and aerodynamic 'look' of the '49 Ford. The peculiar lighted grill of the Sable was a conscious effort to evoke the look of vintage 1949 Mercury. By outselling the Honda Accord in the mid 1990s, the Taurus became something of an updated Model T--the top selling car in America.


The military took delivery of the last Jeeps from American Motors, which had acquired the Jeep when it had acquired Kaiser, which in turn had earlier absorbed Willys-Overland, the original (1941) manufacturer of Jeeps.


Since 1978, the total investment of the U.S. auto industry in new plants, equipment, and designs had totaled more than $69 billion.


Sales of the Jeep CJ had fallen from a 1978 high of 80,000 units to less than half that number. American Motors announced it was discontinuing the line. Popular outcry from the small, but devoted, market forced the company to back down.


Chrysler Corporation purchased American Motors, ending the effort that had begun in the 1954 merger of Nash and Hudson. American Motors was effectively bankrupt at the time of the Chrysler acquisition, and the only truly valuable asset in the takeover was the trademark on the popular Jeep line of vehicles, which had grown out of World War II production of military transport.


In the restructured world market for automobiles, the Japanese continued as the largest producer (12.7 million units; 26%) but market share had slipped just a bit from 1980. The U.S. remained number 2 (11.2 million), but market share had rebounded to 23%. Germany and France stood very close together with their production figures (3.9 million for Germany and 3.4 million for France). Each held close to 10% of the market. Although Britain posted higher production numbers in 1980, its manufacturers continued to slip in their grip on the market (1.3 million in 1980 -- 3.3%; 1.5 million in 1988 -- 3.2%). The real story in the 1980s involved the continued strong growth in the worldwide market for automobiles. The increase from just over 38.6 million units in 1980 to 48.3 million in 1988 represented a 25% growth in a very large worldwide market. That was off somewhat from the 33% growth of the 1970s that had powered the Japanese expansion during the 1970s, but the growth seemed to allow the establishment of a new kind of stability in the market. The assault on the U.S. market share that began in the late 1950s had destroyed U.S. dominance, and the growth trend in the Japanese industry appeared to crest. After a surge in the 1960s and 1970s, the combined European production remained in the 20% range--just about where it had been in the days of U.S. dominance.

U.S. automakers produced 13 million cars and trucks


Emission control legislation for Southern California projected the phasing out of gasoline-fueled automobiles by the year 2010. They are to be replaced with electric vehicles and upgraded mass transit systems.

By the end of the 1980s, nearly 20% of all imported cars sold in the U.S. were 'captive' imports, that is, they were manufactured abroad but sold in the U.S. under domestic nameplates.


Over 11% of the manufacturing capacity for automobiles was owned by foreign competitors producing their 'imports' domestically for the U.S. market. Most experts agreed that the U.S. possessed greater manufacturing capacity for automobiles than what the market required.


The "Hummer," the military's High Mobility Multipurpose Wheeled Vehicle, went on the market for civilian use. Actor Arnold Schwarzenegger bought the first of the non-military Hummers.