Auto Industry: Analysis the American

Auto Industry: Analysis

The American automotive industry is facing a public relations crisis, given the recent bankruptcy of two of its major cornerstones, General Motors and Chrysler, and the near-failure of the third, the Ford Motor Company. However, the American auto industry's problems run far deeper than a mere lack of cash. For many years, American automakers have resisted innovation and instead relied upon their political muscle with legislators. For example, when California was about to lower its emissions requirements in the 1990s, instead of accepting the challenge of meeting the stricter standards like Toyota, GM lobbied against the measure. When GM was successful, it stopped production of its new electric car. Toyota, aware that sustainability would be an issue in the future, persevered in researching hybrid technology, and the result was the Prius (Lifton 2008). When gas prices began to skyrocket, sales of the Prius did likewise. Even though gas prices have declined, recession-wary consumers do not wish to buy the types of behemoth vehicles that were American manufacturer's bread and butter, like SUVs. GM has been forced to sell its infamously huge Hummer brand to cut costs and satisfy the Obama Administration's demand that it streamline the company, in exchange for bailout funds.

American manufacturers are facing additional pressures to which foreign firms are no subjected: unlike foreign manufactures, they must negotiate with powerful unions who demand the continuance of health insurance and pensions for retired workers, and attractive benefit packages for current workers. Abroad, in Europe and Asia, such amenities are provided by the state, not corporations. Additionally, Japanese car makers have benefited from a national culture that stresses loyalty to one's employer, often at the expense of individual rights.