Looking down the road with the auto industry

Abstract

M any people see the 1980s as the most challenging decade in the history of the American auto industry. U. S. manufacturers entered the decade facing both strong competit ion from foreign competitors and the need for massive capital outlays during a period of severe financial pressures. Buffeted by energyrelated concerns in 1979, auto sales were further affected by a downturn in economic activity and the imposition of credit restraints in 1980. With imported makes accounting for a record share of the market when sales shifted abruptly toward smaller cars, domestic production fell to levels not seen since the early sixties. The inauspicious start in 1980 recalls other decades in recent history which have also begun badly. Twenty years ago the economy was in the midst of a downturn during which vehicle sales fell 10 percent between 1960 and 1961. Nevertheless, the 1960s ended up being a highly successful decade for automobile manufacturers. In early 1971, GM was recovering from the effects of a devastating ten-week strike which resulted in lost sales of over one million units. This, combined with a mild economic downturn in 1970, caused car and truck sales for the year to decline more than 12 percent below 1969 levels. Still, the 1970s was a period of record sales for the industry. Based on the scope of the industry's current problems, it might appear more difficult to be optimistic about the eighties. Unlike the short-term aberrations that marred the start of the previous two decades, the challenges facing the automobile industry in this decade will necessitate major changes in automotive products and manufacturing organizations.