– History of Automotive Industry

Studying the auto industry is inherently interesting: it’s massive, it’s competitive, and it’s only a few years older than a century. It is expected to undergo major changes in recent times due to the impact of globalization, increased regulations due to environmental concerns and rising fossil fuel prices due to the decrease in oil reserves.

The evolution of the automotive industry has been influenced by various innovations in fuels, vehicle components, social infrastructure, and manufacturing practices, as well as changes in markets, suppliers, and business structures.

The year 1600:

Some historians cite examples as early as 1600 of sail-mounted cars as the first vehicles to be powered by anything other than animals or humans. However, most historians believe that the key starting point for the automobile was the development of the engine.

First fuel engine in 1876:

The engine was developed following the discovery of new energy carriers, such as steam in the 1700s, and new fuels, such as gas and gasoline in the 1800s. Shortly after the invention from the 4-stroke internal combustion gasoline engine in 1876, the development of the first motor vehicles and the establishment of the first automobile enterprises in Europe and America took place.

First practical automobile in 1885:

The first practical automobile with a gasoline engine was built by Karl Benz in 1885 in Mannheim, Germany. Benz was granted a patent for his automobile on January 29, 1886, and began the first automobile production in 1888, after Bertha Benz, his wife, proved with the first long-distance trip in August 1888 (104 km (65 mi) from Mannheim to Pforzheim and back) that the horseless coach was quite suitable for everyday use. Since 2008, a Bertha Benz Memorial Road commemorates this event.

Birth of the automobile industry (1890 – 1910):

During the 1890s and early 1900s, the development of other technologies, such as the steering wheel and floor throttle, accelerated the development of the automotive industry by making vehicles easier to operate. Almost simultaneously, in America, the social infrastructure that would provide fertile ground for the proliferation of automobiles was being put in place. Driving licenses were issued, gas stations were opened, and car sales with loan structures were instituted. Famous vehicle designs such as Ford’s Model T were developed during this time, and in 1906 car designs began to abandon the car look and take on a more car-like appearance.

Establishment of the first automobile infrastructures (1910-1920):

During the 1910s, the development of technologies and social infrastructure continued in addition to new manufacturing practices and business strategies. Traffic lights began to appear in the United States and thousands of traffic signs were posted by BF Goodrich on over 100,000 miles of American roads. Henry Ford’s famous assembly line was launched in 1913, which made it possible to mass-produce vehicles and thus achieve growth in scale. Ford also introduced the concept of using interchangeable and standard parts to further enable the mass production process. Automakers also began to merge with other companies (eg, GM acquired Chevrolet) and expand into other markets (eg, GM of Canada).

The era of mass production and variety (1920-1930):

In the 1920s, infrastructure development, adoption of new manufacturing practices, and corporate mergers continued (eg, Benz and Daimler, Chrysler and Dodge, Ford and Lincoln). In the United States, the Bureau of Public Roads and the enactment of the Kahn-Wadsworth bill helped facilitate road construction projects and develop a national highway system. In manufacturing, mass production methods became more established, leading to the availability of a wide range of satisfying cars to the public. While Ford had focused on a single model, GM adopted a new production strategy to offer a greater variety of products, which helped the company increase its market share by wresting it from Ford.

The decade of new market players (1930-1940):

In the 1930s, several new vehicle brands were developed (eg, Ford Mercury, Lincoln Continental, Volkswagen) and trends in vehicle consumer preferences were established that differentiated the American and European markets. In the US market, consumers preferred luxury and powerful cars, while in Europe, consumers preferred smaller, low-cost cars. Also during this period, GM’s product variety strategy continued to give them a competitive advantage over Ford, allowing GM to continue to increase market share while Ford continued to lose theirs.

The end of the Second World War (1940-1950):

Many countries in Europe and Asia-Pacific have led to the development of new products and business strategies. In the 1940s, during World War II (WWII), car factories were used to manufacture military vehicles and weapons, thus stopping the production of civilian vehicles. After World War II, imports from most European countries and some Asia-Pacific countries, such as Japan, were decimated; This necessitated the development of new products and new business strategies such as those of Toyota, which began to develop just-in-time (JIT) manufacturing. Most of the early models produced were similar to pre-war designs as it took some time for factories to reorganize their operations to create new designs and models. Using this strategy, it was possible to improve return on investment by reducing inventory in progress and lowering the cost of ownership.

The era of Technological Innovations (1950-1960):

In the 1950s and 1960s, more technological innovations brought many changes to the automotive industry. Some new concepts were, new look and feel of automobiles, fiberglass bodies, higher compression ratio fuels, vehicle comfort, look and feel, emerging safety regulations and environment, vehicle speed limits, front seat belts and heating and ventilation equipment.

The era of fuel-efficient cars (1970-1980):

The 1970s were marked by stricter environmental regulations and the oil crisis of the early 1970s, which led to the development of low-emission vehicle technologies, such as catalytic converters. Foreign cars like the Japanese Honda Civic began to appear in the American market. Consumer interest in fuel-efficient vehicles was increasing due to high oil and fuel prices. Asian-made and highly fuel-efficient vehicles have started to gain market share in developed markets. This decade also marked the start of lean production by Japanese automakers.

Beginning of globalization (1980 – 1990):

During this decade, affordable and fuel-efficient vehicles continued to increase their market share. The American auto industry began to lose market share to premium, affordable, fuel-efficient cars from Japanese automakers. For this reason, vehicle manufacturing has become globalized as automakers began assembling vehicles from around the world. This trend accelerated in the 1990s with the construction of overseas facilities and mergers between multinational automakers. This global expansion has given automakers a greater ability to infiltrate new markets quickly and cheaply.

Variety and consumer empowerment (1990 – 2000):

The influence of globalization continued into the 1990s. Huge overseas assembly plants were built and many mergers took place between large multinational car manufacturers. This resulted in a greater variety of products in the market for consumers to choose from and increased competition among automotive players. Growing consumer sophistication and potential has led to new, more specialized markets with diverse consumer bases such as Southeast Asia and Latin America. This has further fueled global alliances and strategic business partnerships with foreign automakers.

The Era of Financial Troubles (2000 – Present):

It’s been a tumultuous decade for auto and light-duty vehicle manufacturers. Industry revenue growth has been very slow compared to past and skyrocketing fuel prices and growing environmental concerns have shifted consumer preferences from fuel-guzzling pickup trucks to smaller, more fuel-efficient cars. The global economic crisis that began in 2007 caused financial hardship for many of the world’s largest automakers and spread to other countries around the world, causing disease to rise and wealth to plummet. General Motors was particularly hard hit, filing for Chapter 11 bankruptcy in June 2009. Due to declining disposable income and growing pessimism about the future, demand for cars plummeted. Motor vehicle sales plummeted in 2008 and 2009, although they have since recovered strongly.