The US Auto Industry Crisis

In the era of cheap and abundant oil GM and Ford dominated the top industries in both the US and the world. There are various reasons why these two companies are now in crisis, but here I will focus on how difficult it will be for them to recover.

First, over half of the automobiles sold recently in America have been SUVs. These vehicles guzzle gasoline and pollute the environment horribly. Yet for several years both Ford and GM have focused on manufacturing these automobiles because they could sell them at high prices and reap huge profit margins. It will not be easy for these companies to adjust to high oil prices by converting their manufacturing facilities to produce less expensive cars yielding much thinner profit margins. If oil prices continue to remain high, consumers will continue to turn away in increasing numbers from SUVs, leaving GM and Ford the last players in a rapidly shrinking market.

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