Recession started to effect on global scale economy from the mid of 2008. This resulted in declining automobile sales and triggered widespread automotive industry crisis. This recession majorly affected the US automotive car industry. Many US car manufacturers face the problem of bailout and restructuring.
As per the New York Times, recession occurred mainly to US car industry because of bad business practices by “Big Three” U.S. automakers. These are:
- General Motors
- Ford
- Chrysler
This fact can be justified by the example of Asian car manufacturer. These foreign-owned car companies also manufacture automobile in US and experienced no such problems. They have deep pockets and ample credits.
Because of following reason the US Big Three suffered in the recession:
- Expensive automobile fuels price in the 2003-2008 oil crisis led to turn from SUV’s (sport utility vehicles)
- High labor costs and their other counterparts like salaries, benefits, healthcare, and pensions.
- Uncompetitive cost structures
The year 2008 heavily destructed the US automobile industry.