For much of the last century, the United States automotive manufacturing industry had an enormous impact on the economy. The quantity of new cars manufactured and sold in the U.S. was a consistent indicator of the domestic economy.
However, with the great recession that began in 2007, new auto sales dropped off significantly as consumer spending declined. While Ford had accumulated a cash reserve of billions of dollars to bridge economic declines, other U.S. automakers, including Chrysler and General Motors (GM), prepared for bankruptcy until the United States government offered them a bailout with cash from the Troubled Asset Relief Program (TARP).
In early 2012, both Chrysler and GM reported a recovery from the recession with growth in domestic auto sales. Since then, the two manufacturers have paid back the government bailout loans and posted impressive profits.
A Historically American Industry
The American economy witnessed a transformation with the invention of the automobile and assembly line production introduced by Henry Ford. The mass production brought affordable cars to most Americans and expanded their mobility. The fledgling industry grew exponentially and created tens of thousands of new employment opportunities. The assembly lines required mass numbers of workers to construct the new vehicles.
Thus, the model T produced by Ford became the first popular automobile to be mass-produced and reasonably priced. The machine tool and steel industries experienced growth due to the demand for components and supplies for chassis, engine parts and other metal sections of the cars. In addition, manufacturing sprung up around auto paint, batteries, upholstery and other fixtures. These economic benefits spread outward through the economy as automobiles became the standard mode of transportation.
Economic Symbiosis
Many other industries benefited from the expansion of the automobile. For instance, insurance companies made millions of dollars in profits, and the marketing industry profited from advertising campaigns for the insurance companies. In addition, auto repair and maintenance became a major business sector. However, the petroleum industry benefited more than any other through the production and sale of gasoline.
With the advent of World War II, automobile manufacturers retooled to produce vehicles for the military. The Willys Company produced the Jeep, a versatile off-road vehicle. Chrysler produced tanks. After the end of the war, the federal government built the interstate highway system. At one time, a driver could cross the U.S. from Los Angeles to New York without seeing any stoplights.
American Drivers And The American Dream
With the expansion of the two-car family, modern American suburbia developed outside the metropolitan areas of large cities. Suburban construction boomed as families left the cramped city dwellings for spacious homes with large yards.
Veterans moved to the suburbs as well through government home loan programs designed for the military. Consumerism fueled the economic times as Ford’s assembly line techniques were applied to household appliances and furnishings. The trucking industry grew along with the construction of the interstate highways and suburbia. Auto manufacturers made significant profits from the manufacturing of semi-trucks.
A Strong Future In The Global MarketplaceÂ
The automobile industry spawned a huge economic boom in the United States with the need for entire industries and commercial enterprises to support the auto. In their heyday, U.S. automobile manufacturers made and sold more than 10 million cars.
For many decades, American car makers dominated the international markets as well. However, foreign auto manufacturers made inroads into the market place. American autos lost significant market share to them. Currently, the U.S. car industry has recovered its dominance through the help of TARP loans during the last economic crisis. Once again, they are the largest and most profitable auto manufacturers in the world.
Article Sources:
http://money.cnn.com
http://www.oica.net
http://theeconomiccollapseblog.com
