Data Collections

The article Seeds of Destruction: The Decline and fall of the US Car Industry gives insight to the first vulnerabilities of the US automakers and the increase of market share to foreign competition. The US automakers set into a pattern of producing high volume vehicles that made the companies money but what they failed to see is the future and change of what the American buyers wanted. The “Big Three”, GM, Chrysler and Ford would scorn small cars and their buyers. The neglect of flexibility and pursuit of cost efficiency opened the door to the foreign competition. As shown in the table below, in 1963 the US produced nine times the number of vehicles that Japan did. By 1980 Japan took over the leader in production in the world and has not let up.

Table 1: Imported Cars (US)

Year Sales Market Share

1953 2,927 0.51 %

1963 385,624 5. 10 %

1973 1,776,900 15.20 %

1983 2,385,734 27.54 %

1987 2,265,500 31.10 %

2001 2,167,418 25.01 %

2006 2,413,660 29.68 %

2007 2,432,687 29.85 %

2008 2,365,697 33.59 %

2009 1,924,149 33.80 %

Source: Automotive News — Annual Reports

Quality is one of the main reasons the market share shifted. The American automaker focused on volume and quality or customer satisfaction became second. The automakers not only pushed themselves, but their suppliers as well for quick turnaround times or their contracts would be pulled. This created another quality issue with suppliers and the parts that were received were shoddy quality. This started the breakdown of public trust and loyalty. The marketplace for the Japanese increased and they seized the moment.

First time buyers were attracted to the cheaper small car models with better gas mileage which the Japanese automakers were prepared to deliver. The American automakers left this need unfilled, therefore, losing this opportunity of sales and customers. Once the Japanese and other import automakers obtained loyalty and trust of the customers, they...