The US Automobile Market after the “Great Recession”: Back to Business as Usual or Birth of a New Industry?

Abstract

Between December 2007 and June 2009, the US economy was hit by the “Great Recession”, the worst economic crisis since the Great Depression of the 1930s. As a consequence, the US automobile industry has gone through a crisis of unrivalled magnitude: during the recession, light-vehicle sales lost 6 million units and two of the “Big Three” automakers — GM and Chrysler — went bankrupt. Since then, the US economy has recovered progressively and the automobile market is bouncing back to its pre-recession level. In fact, the automobile industry has better recovered than the rest of the economy, the growth of which is weak and uncertain. GM and Chrysler emerged from bankruptcy as new slimmeddown companies with fewer brands, plants and workers, and less debt and market share. The rejuvenated Big Three returned to profit in 2009 (Ford) or 2010 (GM and Chrysler) when the US market was still below 12 million vehicles sales a year. These companies are making bigger profits now that the market is expanding again and are on the way to reaching 16 million units in the near future. GM and Chrysler have repaid their loans and have gone public again, a move that has given the US government a way to sell part of its stake in the companies’ stock.