Four or five years ago, America was a different place. Well, you could have said the same thing back then: the seemingly invincible trend of American economic expansion was launching the country into new heights of prosperity, as the abundance of good credit and easy loans drove people to buy big cars and big homes. But then, the bubble popped. As millions of Americans lost their savings and jobs, the government controversially bailed out the nation’s big banks, which were seen as “too big to fail,” but the bailout failed to avert a credit crunch that would squeeze the American economy and spike unemployment until just recently.
But the government made another controversial bailout that has proven far more effective. In 2009, auto-industry giants General Motors and Chrysler declared bankruptcy and were bought out by the American and Canadian governments for what has now become an $80 billion bailout. Ford Motor Company—the third of the American auto industry’s “Big Three” or “Detroit Three”—managed to evade bankruptcy, but still suffered major losses. All three automakers had to close plants, close dealerships, and lay off workers.
Though automakers worldwide suffered from the Great Recession, the American auto industry was hit particularly bad. Earlier in the decade, while German and Japanese automakers had developed several fuel-efficient hybrids, the Big Three had been working in a different direction. Despite rising gas prices, pickup trucks and SUVs remained America’s most popular cars throughout the decade, and the Big Three banked on this trend. But the Recession proliferated the fuel crisis and tightened American belts, driving people further towards fuel-efficient foreign imports (or public transportation).
When the Presidential Task Force on the Auto Industry began meeting with GM and Chrysler, hybrid and electric cars were its top priority. The auto industry collapse bore promise of a greener rebirth with efficient vehicles that would help the environment, reduce the fuel demand, and compete with foreign automakers.
It was tough for a while; in 2009, American automakers sold 10.4 million cars, down from 17.4 million at the start of the decade. But things got better: the Big Three stopped cutting jobs, they began marketing their brand new hybrid, plug-in, and battery-electric models, and in 2012, American automakers sold 14.5 million cars to reach a 5-year industry high. Since 2010, sales have jumped 13-15% each year, and that trend is expected to continue at least until the Big Three reach their former prowess. The Big Three are optimistic but hardened, knowing they can’t repeat the mistakes of the past. And while the recovering economy helped the industry’s recovery, that’s a two-way street: during the pit of the Recession, the Big Three were laying off hundreds of thousands of employees per month, but now they employ even more Americans than they did before. Well done!
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