When it comes to
automakers in the United States, one term that will be consistently brought up
is the term “Big Three”. The “Big Three” consists of the auto
companies Ford, General Motors, and Chrysler. Other than producing the most vehicles in
Northern America, these three automakers have a huge influence on the overall
economy. Because they are huge employers, the economy will grow due to their
high union wages and benefit packages.
The Big Three have been
hurt from perceived poorer quality and reliability compared to their Japanese competitors.
They have also been slow to bring new vehicles to the market, while the
Japanese are considered the leaders in productivity and introduction to more
sustainable cars (1). Falling sales and market share have resulted in the Big
Three's plants operating below capacity, which lead to production cuts, plant
closures and layoffs (1). They have had to rely solely on offering high buyer
incentives and subsidized leases to sell vehicles. These desperate actions
drove down a significant portion of the Michigan economy (1). CBC News explains,
“Promotional strategies, including rebates, employee pricing and 0% financing,
have boosted sales but have also cut into profits.” (1)
In the
1990s, North American automakers made a big commitment to large sport utility
vehicles (1). For a while, that was the segment that was selling. SUV sales
peaked in 1999 and have been declining ever since (2). The gasoline price spiked
hurt sales of SUVs even more, which only continued into April 2008. Sales of
trucks dropped 17 per cent while sales of large SUVs suffered by 29 per cent
(2). The Big Three’s primary product is now being overshadowed by Toyota’s and
other automakers’ econ-friendly small and compact cars that have a much higher
gas mileage. As stated in the CBC News, “New products, more efficient plants,
fewer employees, renegotiated contracts and government loans may help the Big
Three succeed.” (1)
