Making and Selling Cars: Innovation and Change in the U.S. Automotive Industry

Conclusion

Producing and selling motor vehicles changed remarkably little in the United States through most of the twentieth century. Ford’s mass production techniques remained the basic form of arranging assembly plants. Hundreds of individual parts and components were attached to the frame or body by thousands of minimally skilled workers, each performing specific tasks in a logical sequence along a moving assembly line. And GM’s differentiation of products based on economic class remained the basic form of selling vehicles through most of the twentieth century. A handful of large manufacturers that had survived the industry’s early shakeout sold their vehicles to consumers through the intermediary of tens of thousands of dealerships owned by small independent businessmen. The U.S. market changed during the second half of the twentieth century . Demand for vehicles that were smaller, more energy efficient, higher quality, and more rugged shattered the ladder of success that GM had perfected and others had emulated. American consumer preferences varied more widely by place of residence, gender, ethnicity, and age. Faced with a changing market, one-half of America’s dealers went out of business during the second half of the twentieth century, leaving a smaller number of larger stores operating at smaller margins. Japanese manufacturers seemed best prepared to meet the diverse and complex demands of American consumers. Through lean or flexible production , Japanese companies could turn out a wide variety of products in small batches utilizing trained teams of workers who attached components manufactured by independent suppliers. But lean production could not generate the return on investment Japanese companies needed to re353 It is a dead moral certainty that infernal machine will frighten horses and endanger the lives of men, women, and children. —Encyclopaedia of South Dakota Conclusion main competitive over the long run with American and European companies . Surviving American, European, and Japanese firms broke down longstanding national barriers to combine elements of mass production and lean production into optimum or post-lean production. Changes in the production and sale of motor vehicles initiated in the last years of the twentieth century will expand in the twenty-first. With diffusion of modular assembly, automotive factories will no longer closely resemble those of Henry Ford’s day. At a modular assembly plant, vehicles can be constructed much more quickly in response to specific customers’ orders, whether arranged through a dealer or other intermediary or placed directly with the factory. Engineering, which changed remarkably little during the twentieth century, will generate the first substantial modification in the functioning of motor vehicles since the triumph of the internal combustion engine back in 1900. Zero-emission engines, variable transmissions , and electronic controls of vehicle operations and performance will alter the way vehicles are produced and sold, as well as how they are operated. A substantial growth in global production and sales of motor vehicles in coming decades seemed probable from the perspective of 2000. Projected growth in motor vehicle production and sales appeared especially strong for Asia and Latin America, where increased production was being put in place to meet demand fueled by rising incomes. In Europe and Japan, where motor vehicles outnumbered households—and, of course, North America, where motor vehicles even outnumbered licensed drivers—production and sales were still growing in 2000. In these regions the motor vehicle was destined to become such an ordinary commodity that a consumer routinely possessed more than one. The rosy production and sales forecasts of 2000 may or may not actually reach fruition. Asia’s volatility during the 1990s hinted at the hazard— if not folly—of forecasting future production and sales. Sales in Asia’s eight largest markets excluding Japan—China, India, Indonesia, Malaysia, Philippines, South Korea, Taiwan, and Thailand—more than doubled between 1990 and 1996, from 2.5 million to 5.7 million vehicles. Analysts in the mid-1990s saw no reason to doubt that sales in the region would continue to climb in the late 1990s, to an expected 8.8 million in 2000. But the bottom fell out of the Asian market between 1996 and 1998: overall sales in the region declined 27 percent in just two years (46 percent excluding China and India), and regional sales reached only 5.8 million in 2000. In the short run, the difference between selling 6 million vehicles and 9 Making and Selling Cars ✺ 354 Conclusion million vehicles in Asia meant the difference between profit and loss...