From the US to Asia, and everywhere in between, the auto market is floundering. Several factors have contributed to the industry's plight: the petrol price hike in the summer of 2008, the credit crunch, declining consumer confidence, the increasing cost of materials, and new environmental standards – all of which entail an overall rise in production costs.
But for Detroit's "Big Three", which have shed a total of 150,000 jobs since 2005, the roots of the decline run back almost a generation. Following the oil crises of 1973 and 1979, Japanese auto manufacturers took the US market by storm with more reliable and fuel-efficient models. Soon, Toyota had become the number-two selling auto brand in the US.
Detroit manufacturers were slow to rein in spiralling costs. After much bargaining with trade unions, cost-cutting deals were finally fleshed out in 2006, though they are unlikely to see any effects on the bottom line before 2010. Nor will US carmakers be in a position to meet market demands for more fuel-efficient cars before then.