American Auto Companies' Future

The American automotive industry was a cornerstone of the American economy for much of the twentieth century. The automobile transformed the United States not only in terms of the personal freedom that it introduced through affordable personal transportation, but also in the quality of life that it made possible for the millions of workers employed directly and indirectly by the industry. Labor unions, management theories, retirement planning, and home ownership were all greatly influenced by the growth of the American automobile industry, and the influence expanded around the world. Today, America's three largest automobile manufacturers are facing financial challenges that could lead to bankruptcy, a situation that was unimaginable in the middle of the twentieth century. This research considers some of the problems that have landed the companies in this situation and evaluates some of the alternatives that could help save the industry.

The Quality Gap-Real and Perceived

American car manufacturers suffer from a quality gap with European and Japanese automakers, especially with Japanese cars that tend to be price competitive with American vehicles. In its annual car issue, Consumer Reports could not recommend a single vehicle from Chrysler, including Dodge and Jeep vehicles. Chrysler vehicles as a whole were rated as "below average" in reliability. Ford, on the other hand, improved dramatically in its reliability rating and

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n gasoline. Chrysler has built minivans during the same period that also get poor gas mileage, but which proved popular with consumers. It is true that American consumers turned away from SUVs when gas prices soared to more than $4 per gallon, but when gas prices fell, consumers then abandoned the Prius and other high-mileage vehicles (Tankersley, 2009). What can be learned from the American auto industry commitment to the SUV is the industry's inability to introduce fuel-efficient cars as part of their overall marketing strategy. Japanese and European auto makers exist in home markets where the price of gas is far greater than in the United States. There is pressure to produce fuel-efficient cars even outside alternative fuel and hybrid vehicles-consumers in these countries must take into account fuel efficiency when they purchase Toyotas or BMWs. American car makers, on the other hand, fight fuel standards and emission standards as being too costly, and have been slow to embrace alternative fuel vehicles. As a result, standard production Toyotas and Hondas were more efficient than standard production Fords for many years, and the American manufacturers must now catch up to their foreign counterparts. It is not th

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