From Bailouts to Cutting Edge Innovations Can the North American Auto Industry Reinvent Itself?

by on January 18th, 2011
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There is no doubt in anyone’s mind that the American domestic auto industry is in for some major changes in the coming decade. Just what those changes will be are anyone’s guess. It became painfully clear that what the Big Three North American manufacturers had been doing wasn’t working when, in 2008, Detroit’s auto makers went knocking on the Fed’s door for bailout money. Economic times were rough and consumers weren’t buying cars in the numbers they had in the past. The Auto giants were left reeling with inventory they were finding difficult to sell and were hit with a financial crisis of proportions they had never experienced before forcing both General Motors and Chrysler into bankruptcy.

The Big Three are major employers across North American both in the actual cars produced and the suppliers that make parts for the automakers. Even one of the automakers failing would have been catastrophic to the domestic economy. This reality nearly happened to Chrysler in the late 1970’s. They were hemorrhaging cash and needed to dramatically reinvent themselves to survive and went to the feds for a loan which was approved by President Carter in 1980.

From the near failure of Chrysler in 1980, consumers received a breath of fresh air. Not only did Chrysler come back fighting but it also introduced Americans to a whole new way of transporting their families with the cheap and efficient K cars and the minivan. Gone were the days of large boat like 1970’s station wagons. Minivans were comfortable, flexible and gave a whole new twist as driving as a family.

We are in a similar time of change only this time it is not just Chrysler that is having troubles but all three of Detroit’s players. I really believe that we will see major leaps in innovation in the coming years. The bailout package handed out, has allowed the auto manufactures to restructure their operations and become leaner and cleaner companies. Hard financial times are the times that lead to innovation.

General Motors is just one example of how post bail out automotive companies transformed themselves. It has restructured and refocused and now has only four core brands. It no longer competes with itself for sales like it previously did with Chevy and Pontiac. Profits were up 11% in 2011. In addition to the increase in profits, GM introduced the innovative Volt which is the first production plug electric car in North America.

I believe that the Volt is just the beginning of the new wave and interesting vehicles that will domestic auto industry has in the works for consumers. Now more than ever before, there are more players in the automotive industry. Asian and European companies design, build and manufacture their products in and for the North American market. The Big Three not only have stiff competition from each other to drive innovation but also from the other manufacturers who push will push new frontiers on safety and fuel innovations.

I have no doubt that the car I will be driving in the future will benefit from the innovations born of the most recent auto bailout. Just Chrysler changed the way we move our families after its near bankruptcy in 1979, I look forward to the interesting new products and fuel types that will be born of our generation’s rebirth of the auto industry.

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