Strategy of Ford Motor Company

Approximately one and onehalf years ago, the Value Line Investors Service predicted that the automobile industry would, within the ensuing four years, enter a slow growth stage, in which the demand for new autombiles would decline somewhat in 1989, and to an even greater extent in the 19901992 time period.1 In early1990, this prediction has materialized for 1989, and appears to be materializing somewhat more rapidly than had been anticipated for the 19901992 time period.2 By the beginning of the 1990 model year, the domesticmarket had contracted dramatically.3 The investment community

1M. Schlein, "Auto & Truck Industry," Value Line Investment Survey, 23 September 1988, 101102, 241.

2M. Leach, "Auto & Truck Industry," Value Line Investment Survey, 22 December 1989, 101102.

3D. P. Levin, "U.S. Auto Sales Drop by 23.1%," The New York Times, 15 November 1989, C1.

thought that the country was experiencing "a fullblown automotive recession with plenty of implications for the industrial sector," and that, should fall season sales continue at the present rate, "it would be tantamount to the b

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United States, the market share for foreign automobiles in the country did not shrink to any significant degree. As perceived (by American consumers) higher quality of product in foreign automobiles, whether or not jutified, maintained demand for imports in the face of increasing prices. In the early1980s, Honda Motor Company of Japan devel oped an automobile manufacturing facility in the United States. The decision to invest in the United States was, in part, in response to pressures brought to bear by the American government on the Japanese government and Japanese manufacturers participating in American markets. The efforts of the American government were, for the most part, reactions to a seriously deteriorating international trade balance for the United States. In bilateral trade, the greatest trade imbalance for the United States was with Japan. In the early years of the Reagan recession, sales of new automobiles in the United States plummeted. At the same time, a combination of high gasoline prices, declining income levels, and the threat of unemployment caused sales of fuel efficient, foreignmade automobiles to hold up better than those of almost all Americanmade models. One result was a significant market s
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Approximate Word count = 2238
Approximate Pages = 9 (250 words per page)

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