Essay on The History Of The Automobile

Essay on The History Of The Automobile

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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 Chrysler) have merged and partnered with other European and Japanese vehicle manufacturers, producing vehicles in each other’s countries to save transportation costs.
This is an example of horizontal FDI, or Foreign Direct Investment, which a company replicates its production elsewhere in the world. For example, in the 1980s, Toyota produced almost all of its cars in Japan and then exported them to other countries. Rising demand over the years paired with higher trade costs caused Toyota to expand its production overseas. Toyota has replicated its production process in many different countries, such as the United States, Canada, China, and Brazil.
The event that sparked the demand which fueled Japan’s FDI was the oil embargo in the 1970s, w...

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Government officials in China have initiated policies that are intended to encourage the continuing development of China 's domestic automobile manufacturing industry. Nevertheless, there are significant trade barriers for foreign competitors in the way of tariff policies that are applied to foreign auto imports. This restrictive trade environment has contributed to the serious problem of illegal imports of foreign cars into China. In the past China relied on its foreign partners to develop new vehicles but Chinese automakers are looking to create new policies and methods through foreign joint-ventures to continue the development of China 's automotive industry. These conditions present a significant challenge for China 's automotive industry, and it is expected to take a considerable amount of time before China becomes a global competitor in the automotive market.

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