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_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________

 

Congressional Research Service (CRS)

 

The U.S. Motor Vehicle Industry: Confronting a New Dynamic in the Global Economy

Bill Canis, Specialist in Industrial Organization and Business

Brent D. Yacobucci, Specialist in Energy and Environmental Policy

March 26, 2010

http://opencrs.com/document/R41154/2010-03-26/download/1013/

[full-text, 72 pages]

 

Summary

This report provides an in-depth analysis of the 2009 crisis in the U.S. auto industry and its

prospects for regaining domestic and global competitiveness. It also analyzes business and policy

issues arising from the unprecedented restructurings that occurred within the industry. The

starting point for this analysis is June-July 2009, with General Motors Company (GM or new

GM) and Chrysler Group LLC (or new Chrysler) incorporated as new companies, having

selectively acquired many, but not all, assets from their predecessor companies.

 

The year 2009 was marked by recession and a crisis in global credit markets; the bankruptcy of

General Motors Corporation and Chrysler LLC; the incorporation of successor companies under

the auspices of the U.S. Treasury; hundreds of parts supplier bankruptcies; plant closings and

worker buyouts; the cash-for-clunkers program; and increasing production and sales at year’s end.

This report also examines the relative successes of the Ford Motor Company and the increasing

presence of foreign-owned original equipment manufacturers (OEMs), foreign-owned parts

manufacturers, competition from imported vehicles, and a serious buildup of global overcapacity

that potentially threatens the recovery of the major U.S. domestic producers. This report, which

establishes a context for examining the industry and analyzes a unique but highly specific period

in the U.S. automobile industry’s history, will not be updated.

 

Contents

Introduction ...............................................................................................................................1

Global Chaos as Credit Markets Tighten ...............................................................................1

State of the Economy: Auto Production and Sales Outlook ..........................................................2

Industry Hits Bottom in 2009 ................................................................................................4

Motor Vehicle Production................................................................................................4

Motor Vehicle Sales ........................................................................................................5

Supply Chain Shakeout .........................................................................................................8

Automobile Unions Continue to Shrink...............................................................................10

GM and Chrysler: Rescue and Rebirth ......................................................................................15

The Shape of New GM and New Chrysler...........................................................................16

Government and UAW VEBA Trustee Ownership of GM and Chrysler .........................17

Assets and Liabilities Left in Bankruptcy ......................................................................21

Creditor Fallout.............................................................................................................23

Controversy over the Size of Dealer Networks ..............................................................25

New Management and New Directions..........................................................................27

Ford Motor Company: A Different Path.....................................................................................32

Ford Strengthens Capital Base and Market Share.................................................................32

New Designs Yield Top Performers...............................................................................33

Forms of Federal Support..........................................................................................................34

Shape of Federal Support ....................................................................................................34

Auto Task Force’s Exit Strategy ..........................................................................................38

Foreign-Owned Automakers Adjust and Expand........................................................................41

Global Auto Markets: Prospects for the Detroit Three..........................................................43

The Toyota Standard ...........................................................................................................50

Worldwide Overcapacity: Will It Affect the U.S. Vehicle Market? .......................................53

New Environmental Standards: Will They Remake the Auto Industry? ......................................55

Fuel Economy and Greenhouse Gas Standards: Opportunities and Challenges.....................55

Cap-and-Trade Legislation: Net Cost or Net Benefit to Automakers?...................................58

Advanced Technology: Competitive Game Changer? ................................................................59

Electric Vehicles Promise Remake of the Industry ...............................................................59

Other Research and Development Directions.......................................................................60

Congressional Actions.........................................................................................................61

 

Figures

Figure 1. Geography of North American Auto Production............................................................3

Figure 2. New General Motors’ Ownership Structure Following Bankruptcy .............................20

Figure 3. New Chrysler’s Ownership Structure Following Bankruptcy ......................................20

Figure 4. Capacity Utilization in the U.S. Motor Vehicle Sector, 1972-2009 ..............................54

Figure 5. Estimated Cumulative Incremental Cost Through MY2016 for

Selected Manufacturers Under the Proposed Rule...................................................................56

Figure 6. Estimated Per-Vehicle Incremental Costs Through MY2016 for Selected

Manufacturers Under the Proposed Rule ................................................................................57

Figure D-1. Many Suppliers for Every Vehicle ..........................................................................67

 

Tables

Table 1. U.S. Auto Production Declines.......................................................................................4

Table 2. U.S. Motor Vehicle Sales, 2008 and 2009.......................................................................7

Table 3. Initial VEBA Payments by the Detroit 3.......................................................................15

Table 4. Auto Companies Before and After Bankruptcy.............................................................17

Table 5. GM and Chrysler Boards of Directors ..........................................................................28

Table 6. Federal Auto Industry Financing Program....................................................................35

Table 7. U.S. Motor Vehicle Sales by Manufacturer, 1988 vs. 2008 ...........................................42

Table 8. New Cars Registered in Japan: Top Five Brands in 2009 ..............................................46

Table 9. Top Foreign Brands Sold In Japan, 2009 ......................................................................47

Table A-1. North American Vehicle Assembly Plants.................................................................63

Table B-1. Who Owns What......................................................................................................65

Table C-1. Top 10 Sales Under “Cash for Clunkers”..................................................................66

 

Appendixes

Appendix A. Locations of North American Auto Manufacturing................................................63

Appendix B. The Global Automakers ........................................................................................65

Appendix C. Top U.S. “Cash for Clunkers” Sales ......................................................................66

Appendix D. Many Suppliers for Every Vehicle ........................................................................67

Contacts

Author Contact Information ......................................................................................................68

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
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