Decline in the American Automobile Industry

The American automobile industry has continued to see a consistent downfall in sales. Recently making up about one quarter of the nation’s economy, the decline in the industry has proved to be a major issue in the United States. Ford is still reeling, after a crisis that saw its chief executive dumped and the young great-grandson of Henry Ford take the wheel. Ford's profits were $7.2 billion in 1999; by 2001 it was losing $5.4 billion. GM has picked up some momentum, gaining market share, but mainly by discounting. GM started a price war to keep sales going after September 11th 2001, when car showrooms emptied of people. The trouble is, as its chief executive, Rick Wagoner, admitted earlier this year, discounts soon stop being effective sales boosters and suck down profitability. Japanese, South Korean, and German models account for half of car sales in America today. Detroit, Michigan is a major Mecca for the three major American car companies. Car sales are still at historically high levels; it is just that Detroit's share of these sales has slumped. But there is more to Detroit's weakness. The big three manufacturers have to deal with the powerful United Auto Workers Union, which has won its members great benefits, while employers are loaded with pension