The Challenges in American Automobile Industry in the 1980s:
Crisis, Consolidation, and Competition
Originally there had been dozens if not hundreds of automobile companies in the US at the turn of the 20th century. Over the next few decades, car companies came and went: Nash, Oakland, Maxwell, DeSoto, Stutz, Pierce-Arrow, Packard, Studebaker, Willys, Franklin, Tucker, and Auburn were all early makers of automobiles that most of you have never even heard of.
In the middle to late- 20th century, many of these car companies were either bought out by larger rivals or disappeared entirely. By the 1920s the development of highways spurred automobile manufacturing. The 1950s were notable for the post-war economic prosperity as well as the passage of the Interstate Highway Act; both of these spurred more automobile manufacturing.
By the 1980s, American car manufacturing was centered in the so-called “Big Three” which were usually referred to as Ford, GM, and Chrysler in common conversation. In reality, these corporations controlled many different makes and models of cars, some of shared basic design platforms and components across makes.
By the 1980s, Ford actually included Lincoln and Mercury. By the mid late 1980s- early 1990s, Ford also acquired stakes in Jaguar, Aston Martin, Volvo, and Land Rover. By the 1980s, Ford had also acquired a 30% stake in Mazda. In 2008, Ford sold Aston Martin, Jaguar, and Land Rover.
By the 1980s, General Motors (GM) included Chevrolet, GMC, Oldmobile, Buick, Pontiac, Cadillac, Vauxhall and Opel (sold in Europe). One of the most popular GM makes in the 1980s was Oldsmobile, whose Cutlass and Delta 88s were very popular. During the late 80s- early 90s, GM also partnered and invested in Toyota and Suzuki as well as partially spinning off Saturn. GM also produces light and medium trucks with Isuzu.
Chrysler included Dodge, Mercury, Plymouth, and Jeep. In the 1980s, Chrysler bought AMC from the French auto maker Renault in order to gain the Jeep line, which became the Jeep-Eagle line in the 1980s. By the 1980s, Chrysler had also acquired stakes in Mitsubishi (and since Mitsubishi sometimes cooperates with Isuzu, there’s a tie there as well). In 1997, Daimler Benz (makers of Mercedes) bought Chrysler, although it was later partially sold to a private equity company. Chrysler no longer makes AMCs (look up the Gremlin for a really weird car) or Eagles, which for a while were a spin-off partially independent brand like Saturn was for GM.
The problems for the Big Three auto makers in the 1980s stemmed from three basic things.
First, the oil crisis from 1973-1974 oil crisis and the 1979 energy crisis. Together these led to the government imposing fuel efficiency standards on the American auto companies in the 1980s, which meant that they had to reduce engine sizes (from 8 cylinders to usually 4), weight of the cars (by reducing the amount of steel on the bodies and engines and replacing it with lighter materials such as plastic, aluminum, etc., as well as for the first time offering compact and subcompact size cars), and the aerodynamics of the cars (by removing fins and sharp corners on the bodies and making them smoother and more rounded).
Second, manufacturing costs and quality issues, on top of these new smaller cars, went against American preferences. Notorious clunkers included these http://www.freerepublic.com/focus/news/773102/posts and these http://money.usnews.com/money/blogs/flowchart/2008/12/19/the-cars-that-drove-detroits-customers-away (seriously, the Vega, the Pinto, and the Mustang II…. Oh the horror! Look it up. I dare you.) The 1971-1980 Pinto had a gas tank outside the frame of the car in the rear, and if you got hit from behind it could explode. The Chevette. The X-cars (see 1980 Buick Skylark for the ugliest rear of a car before the Pontiac Aztek). The Cadillac Cimarron. The Olds Cutlass Diesel. The Dodge Omni. They were ugly AND they didn’t work most of the time.
The third problem for American car manufacturers was the increasing competition from the Japanese… especially Datsun (Nissan), Toyota, and Honda (which we had primarily known in the early 70s as makers of lawn mowers and motorcycles). These cars got great mileage AND they lasted forever. They were also kind of cute. My family had an orange 1977 Honda Civic CVCC five door hatchback that had 185,000 miles on its little 4 cylinder engine when we sold it. It was unkillable. It got nearly 40 miles to the gallon of gas. The only bad part was my dad’s big hands and thick fingers wouldn’t fit into many of the spaces to fix things like when the throttle cable broke, so he would have to have me actually fix things while he gave instructions. I learned a lot from that car. By the end of the 1980s, most American and Japanese car manufacturer had cooperative agreements or actual investments in each other, so there really was no longer such as thing as an American car. Hondas were made in Tennessee. Isuzus were made in Oklahoma and Indiana. Chrysler cars had Mitsubishi parts. Chrysler built Crown Victorias in Canada. And high American labor costs eventually drove manufacturing further out of the country, including to Canada and Mexico. Look at St. Louis, for example. How many shuttered car plants do we have now?
Fro more information, see this:
http://www.tysto.com/articles08/q3/20080720cars.shtml
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