Globalization Of The Automobile Case Study

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The history of the automobile begins with the technological advances that occurred in the USA with Henry Ford’s Model T. Since then, the automobile market has had its ups and downs, but it has no doubt flourished into an industry that is the cornerstone of many economies. The world economic collapse due to the Great Depression caused consolidation in the manufacturing market. However, after World War II, an expanding highway network fueled by economic growth as well as television advertising spurred sales for car companies in many countries. The globalization of the industry accelerated during the late 1990 's due to the establishment of overseas plants and the merging of large multinational corporations. Over the years, a trend has been emerging where the largest automobile manufacturers build production plants in developing countries to lower production costs. These countries include China, Malaysia, and others located in Southeast Asia. For example, "The Big Three" automakers (GM, Ford and …show more content…

The Japanese also responded to the quota by selling larger cars and improved their build quality. Overall, the price of Japanese cars in the United States rose, and the rent was captured by the Japanese firms. The United States’ losses were about $3.2 billion in 1984, which were transfers to Japan rather than efficiency losses. The financial crisis in 2008 hurt the automotive industry hard, causing many manufacturing facilities to shut down. GM and Chrysler both entered bankruptcy, and Congress decided to give government aid to the failing companies. They received the aid through the Troubled Asset Relief Program and Ford was helped through the Term Asset-Backed Securities Loan Facility. In 2013, the government sold the last of its shares in GM. The firms have survived and are back on their feet, although Chrysler was taken over by Fiat in

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