GM vs. Ford: Decline of the Big Three in Global Auto Sales
This paper examines the long-term decline of the American "Big Three" automakers—General Motors, Ford, and Chrysler—in global automobile and light truck sales. Drawing on scholarly research and 2008 worldwide production statistics, the paper identifies three primary causes of decline: rising labor costs, the reduction of international trade barriers, and foreign competitors' earlier adoption of fuel-efficient hybrid technology. The analysis finds that by 2008, GM ranked second globally with 8.2 million vehicles produced, Ford fourth with 5.4 million, and Chrysler thirteenth with only 1.8 million. The paper concludes with a recommendation that the Big Three aggressively pursue hybrid vehicle conversion to recapture lost market share.
- Statement of the Problem: Framing the Big Three's long-term competitive decline
- Background Information and Literature Review: Three scholarly sources on labor, trade, and hybrids
- Methodology: Research approach using scholarly journals
- Statistical Analysis of Global Production: 2008 global production rankings for GM, Ford, Chrysler
- Conclusions and Recommendations: Hybrid strategy recommended to recapture market share
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What makes this paper effective
- Clearly frames three distinct causal factors — labor costs, reduced trade barriers, and hybrid technology adoption — and ties each to a specific scholarly source, giving the argument an organized, evidence-based foundation.
- Uses concrete 2008 global production rankings (GM at 8.2 million, Ford at 5.4 million, Chrysler at 1.8 million) to ground abstract claims in measurable data.
- Ends with a forward-looking, actionable recommendation (aggressive hybrid conversion) that links directly back to the cited research, giving the conclusion logical closure.
Key academic technique demonstrated
The paper demonstrates a cause-and-effect analytical structure: it first establishes historical background through a literature review, then validates its causal claims with statistical evidence, and finally extrapolates to a policy recommendation. This sequence — context → evidence → prescription — is a foundational approach in applied business and economics writing.
Structure breakdown
The paper opens with a problem statement situating the auto industry's difficulties since the 1970s. A literature review section annotates three scholarly sources, each representing one causal factor. A brief methodology section explains the research approach. The statistical analysis section interprets 2008 global production data. The conclusion synthesizes findings and offers an industry recommendation. The format closely mirrors a short research report with defined sections and a reference page.
Statement of the Problem
Since the 1970s, American automobile manufacturers have faced a number of significant challenges. Oil prices, the cost of labor, and globalization have collectively created a dramatic shift in the business model for the industry. As a result, the Big Three automakers — General Motors, Ford, and Chrysler — began facing serious difficulties competing against foreign automobile manufacturers. There were periods, such as the 1980s and 1990s, when the industry appeared to have learned from the lessons of the past, only to revisit those same problems nearly three decades later.
To determine why the different manufacturers continue to face similar situations requires conducting an analysis of the causes that have contributed to the current state of affairs and examining various statistics to support or refute those findings. Together, these two elements provide the greatest insight into how the U.S. auto industry fell into a long-term decline, losing large portions of market share to foreign competitors. Both industry insiders and the general public stand to gain a more precise understanding of how these lessons can be applied to become more competitive in the future.
Background Information and Literature Review
To determine the underlying causes of why the different automobile manufacturers find themselves in such a difficult position, it is necessary to examine the root factors at work. Three pieces of scholarly research — from economists, analysts, and industry insiders — are evaluated below.
Singleton, C. (1992). Auto Industry Jobs in the 1980s. Monthly Labor Review, 115, 124–137.
This article traces the history of the American auto industry through the early 1990s. Early on, the cost of labor was a major issue affecting the overall fortunes of automakers. When these companies were new and experiencing rapid growth, labor costs were relatively low. As the companies became more successful, however, labor costs increased dramatically, and management lost focus on producing high-quality vehicles. These two factors allowed Japanese automakers to capture 33% of the U.S. market share by the early 1990s. This source is significant because it illustrates how high labor costs, combined with a reduced focus on product quality, enabled foreign competitors to take market share from the Big Three.
Mannering, F. (1991). Brand Loyalty and the Decline of American Automobile Firms. Brookings Papers on Macroeconomic Activity, 67–114.
This article discusses how the American automobile industry managed to increase sales during the 1980s, primarily in Europe, where higher trade barriers limited Japanese competition. Researchers argue that the industry faces a serious long-term threat, because once those trade barriers come down, one of the Big Three's strongest markets would become vulnerable to foreign competitors. Compounding this problem, many Japanese automakers were already building manufacturing plants in the United States, positioning themselves to gain domestic market share as well. This source is significant because it highlights how globalization and the reduction of trade barriers would eventually push the U.S. auto industry toward financial crisis.
Greene, D. (2004). The Potential of Hybrid and Diesel Powertrains. Department of Energy. Oak Ridge, TN: Government Printing Office.
This report examines how hybrid technology can be applied to both gasoline-powered and diesel vehicles. Researchers modeled the total effect of converting 930 vehicle models to a hybrid drivetrain system and found a gradual improvement in sales of 4% to 15% in the early years of adoption. Over the long term, as the technology became more widely implemented, a demographic shift of as much as 40% in auto market composition was projected. This source is significant because it demonstrates how rapidly rising oil prices could accelerate market transformation — and it identifies an opportunity for the Big Three to rebuild market share through aggressive adoption of hybrid technology.
Statistical Analysis of Global Production
To fully appreciate the combined effects of high labor costs, increased foreign competition in key markets, and the rise of hybrid vehicles, it is useful to examine overall worldwide vehicle production in 2008. The numbers make the trend clear: both General Motors and Ford experienced declining sales and shrinking global market share. Worldwide production for GM reached 8.2 million vehicles, placing it second globally — behind Toyota. Ford produced 5.4 million vehicles globally, ranking fourth — behind Volkswagen. Chrysler's total worldwide production stood at just 1.8 million vehicles, placing it thirteenth on the list, behind both Hyundai and Honda ("Motor Vehicle Production," 2008).
When the Big Three's rankings are viewed in the context of total global vehicle production, it becomes evident that the causal factors identified in the literature review are actively contributing to declining output. Once sales begin to slow, production is reduced dramatically as manufacturers are forced to take severe measures to stop the financial deterioration they were experiencing. The global financial crisis of 2008 brought these pressures to a head, culminating in government bailouts and industry restructuring.
References
Greene, D. (2004). The potential of hybrid and diesel powertrains. Department of Energy. Oak Ridge, TN: Government Printing Office.
Mannering, F. (1991). Brand loyalty and the decline of American automobile firms. Brookings Papers on Macroeconomic Activity, 67–114. Retrieved from https://www.jstor.org/stable/2534791
Motor vehicle production. (2008). Retrieved May 29, 2010, from OICA website:
Singleton, C. (1992). Auto industry jobs in the 1980s. Monthly Labor Review, 115, 124–137.
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