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The mass-produced automobile is generally and correctly attributed to Henry Ford, but he was not alone in seeing the possibilities in a mass market. Ransom E. Olds made the first major bid for the mass market with a famous curved-dash Oldsmobile buggy in 1901. Although the first Oldsmobile was a popular car, it was too lightly built to withstand rough usage. The same defect applied to Olds’s imitators. Ford, more successful in realizing his dream of “a car for the great multitude,” designed his car first and then considered the problem of producing it cheaply. The car was the so-called Model T, the best-known motor vehicle in history. It was built to be durable for service on the rough American country roads of that period, economical to operate, and easy to maintain and repair. It was first put on the market in 1908, and more than 15 million were built before it was discontinued in 1927.
When the design of the Model T proved successful, Ford and his associates turned to the problem of producing the car in large volume and at a low unit cost. The solution was found in the moving assembly line, a method first tested in assembling magnetos. After more experimentation, in 1913 the Ford Motor Company displayed to the world the complete assembly-line mass production of motor vehicles. The technique consisted of two basic elements: a conveyor system and the limitation of each worker to a single repetitive task. Despite its deceptive simplicity, the technique required elaborate planning and synchronization.
The first Ford assembly line permitted only very minor variations in the basic model, a limitation that was compensated for by the low cost. The price of the Model T touring car dropped from $950 in 1909 to $360 in 1916 and still lower to an incredible $290 in 1926. By that time Ford was producing half of all the motor vehicles in the world.
Spread of mass production
Ford’s success inspired imitation and competition, but his primacy remained unchallenged until he lost it in the mid-1920s by refusing to recognize that the Model T had become outmoded. More luxurious and better-styled cars appeared at prices not much higher than that of the Model T, and these were increasingly available to low-income purchasers through a growing used-car market. In Britain, William R. Morris (later Lord Nuffield) undertook to emulate Ford as early as 1912, but he found British engineering firms reluctant to commit themselves to the large-scale manufacture of automotive parts. Morris in fact turned to the United States for his parts, but these early efforts were cut short by World War I. In the 1920s Morris resumed the production of low-priced cars, along with his British competitor Herbert Austin and André-Gustave Citroën and Louis Renault in France. British manufacturers had to face the problem of a tax on horsepower, calculated on a formula based on bore and the number of cylinders. The effect was to encourage the design of small engines that had cylinders with narrow bore and long stroke, in contrast to the wide-bore, short-stroke engines favoured elsewhere. This design handicapped the sale of British cars abroad and kept production from growing. It was not until 1934 that Morris Motors finally felt justified in installing a moving assembly line; the Hillman Company had preceded Morris in this by a year or two.
Large-scale organization
Although the appearance of mass production in the automotive industry coincided with the emergence of large-scale business organization, the two had originated independently. They were related, however, and influenced each other as the industry expanded. Only a large firm could make the heavy investment in plant and tooling that the assembly line required, and Ford was already the largest single American producer when it introduced the technique. The mass producer in turn enjoyed a cost advantage that tended to make it increasingly difficult for smaller competitors to survive. There have been exceptions, but the trend has been consistent.
General Motors
General Motors Corporation (GM), which ultimately became the world’s largest automotive firm and the largest privately owned manufacturing enterprise in the world, was founded in 1908 by William C. Durant, a carriage manufacturer of Flint, Michigan. In 1904 he assumed control of the ailing Buick Motor Company and made it one of the principal American producers. Durant developed the idea for a combination that would produce a variety of models and control its own parts producers. As initially formed, General Motors included four major vehicle manufacturers—Buick, Cadillac, Oldsmobile, and Oakland—and an assortment of smaller firms. The combine ran into financial trouble in 1910 and was reorganized by a financial syndicate. A similar combination, the United States Motor Corporation, was formed in 1910, collapsed in 1912, and was reorganized as the Maxwell Motor Company. General Motors survived. A new reorganization took place after Durant, with backing by E.I. du Pont de Nemours and Company, regained control in 1916. Durant, who had previously established the Chevrolet Motor Company, brought Chevrolet into GM in 1918.
Rise of the Big Three
At the end of World War I, Ford was the colossus, dominating the automotive scene with the Model T not only in the United States but also through branch plants throughout the world. British Ford was the largest single producer in the United Kingdom. GM was emerging as a potential major competitor in the United States. No other automotive firms of comparable size existed.
During the next decade there was a striking transformation. The depression of 1921 had far-reaching effects on the American automotive industry. GM was plunged into another financial crisis. Alfred P. Sloan became president of the corporation in 1923 and raised it to its unchallenged first place in the industry. Among other steps, he gave GM a staff-and-line organization with autonomous manufacturing divisions, which facilitated management of a large corporate structure and became the model for other major automotive combinations. Henry Ford also went through a crisis because the 1921 crash caught him involved in the construction of a large new plant (River Rouge) and in the process of buying out his stockholders. Ford weathered the storm (though many of his dealers, unable to sell cars and not permitted to return them, went out of business), but the Ford Motor Company had reached its crest.
The third member of the “Big Three” automotive manufacturers in the United States was created at this same time. When the Maxwell Motor Company failed in the 1921 depression, Walter P. Chrysler, formerly of General Motors, was called in to reorganize it. It became the Chrysler Corporation in 1925 and grew to major proportions with the acquisition of the Dodge Brothers company in 1928. When Ford went out of production in 1927 to switch from the Model T to the Model A (a process that took 18 months), Chrysler was able to break into the low-priced-car market with the Plymouth.
The independents
By 1929 the Big Three supplied three-fourths of the American market for motor vehicles; most of the remainder was divided among the five largest independents—Hudson, Nash, Packard, Studebaker, and Willys-Overland. In less than 10 years the number of automobile manufacturers in the United States dropped from 108 to 44. Some of the minor carmakers had technological or personal interests, including Nordyke and Marmon, makers of Marmon luxury cars, and E.L. Cord, who marketed front-wheel-drive cars between 1929 and 1937. The depression years of the 1930s eliminated all but the largest independent manufacturers and increased still further the domination of the Big Three. Motor vehicle production declined from a peak of more than five million in 1929 to a low of just over one million in 1932. It rose again slowly but had not returned to the 1929 figure when World War II broke out.
While these years were difficult economically, they saw some significant developments within the industry. Greater emphasis was placed on style in passenger-car design, with the general trend in the direction of incorporating the body, bumpers, and mudguards into a single pattern of smoothly flowing lines. A number of technical features came into general use: the V-8 engine, introduced by Ford in 1932; three-point engine suspension; freewheeling (permitting the car to coast freely when the accelerator was released); overdrive (a fourth forward speed); and, on a limited scale, automatic transmission.
Growth in Europe
The period from 1919 to 1939 also brought significant growth in automobile manufacturing in Europe, though on a considerably smaller scale than in the United States. The European industry was moving in the same directions as the American industry, toward a mass market for motor vehicles, but it made slower progress for a variety of reasons: lower living standards with less purchasing power, smaller national markets, and more restrictions in tax and tariff policies. Still, the same trend toward concentration was discernible. British automotive production rose from 73,000 in 1922 (both private and commercial vehicles) to 239,000 in 1929, while the number of producers declined from 90 to 41. Three firms—Austin, Morris, and Singer—controlled 75 percent of the British market in 1929.
The apparent analogy to the American experience was temporary. British production had not yet reached the level at which the economies of scale gave the larger firms as commanding a lead as in the United States. There were other factors that created a somewhat different situation. During the 1930s British automotive production continued to increase steadily, in contrast to American production, and so the smaller companies were not forced to compete for a shrinking market. Output reached almost half a million in 1937, and at the end of the decade there were six major British producers instead of three: Morris, Austin, Standard, Rootes, Ford, and Vauxhall. The last two represented entry by American firms. Vauxhall had been bought by GM in 1925; Ford had been in Britain since 1911, had lost ground in the 1920s, and had later recovered. The Rootes Group, based on Hillman and Humber, was a combine formed by a family that had built a large automobile sales concern and then moved from sales to production. The replacement of Singer by Standard was simply the rise of one company and the decline of another, as evidence that open competition could still change the structure of the British automotive industry.
In France three major firms—Peugeot, Renault, and Citroën—emerged in the 1920s. Citroën accounted for 40 percent of French automotive production in 1925 but had reached that dominating position at the cost of financial stability. When André Citroën died before the decade ended, his company came into the hands of Michelin Tire. A new French firm, Simca, rose to prominence in the 1930s. The German automobile industry suffered from the dislocation of World War I and Germany’s subsequent economic difficulties. The major developments of the 1920s were the merger of Daimler and Benz in 1926, after the founders of those firms had died (their bitter rivalry for the distinction of being the inventor of the gasoline automobile made any such union during their lifetimes unthinkable), and the entry of General Motors onto the German scene through the acquisition of the Adam Opel company in 1929. The Germans were ardent admirers of Henry Ford and his methods, which they termed Fordismus, but Ford never succeeded in becoming a power in the German automotive world. During the 1930s the Nazi regime sought to emulate Ford by undertaking mass production of a low-priced car, the Volkswagen, but the onset of war interrupted this project. Italian automobile manufacturers gained a reputation for highly engineered sports cars and racing cars, but Italy had no mass market and therefore achieved only small-scale production at that time.
The automotive industry in World War II
During World War I the productive capacity of the automotive industry first demonstrated its military value. Motor vehicles were used extensively for transport and supply. In addition, automotive plants could readily be converted into facilities for manufacturing military equipment, including tanks and aircraft. For all of the belligerents the conversion of automotive facilities was an afterthought, improvised after the beginning of hostilities, and the American industry, involved only for a short time, never fully utilized its capacity.
More preparation was made for using the resources of the various automotive industries as World War II approached. The British government built “shadow factories” adjacent to their automotive plants, equipped to go into military production (principally aircraft) when war came, with managerial and technical personnel drawn from the automotive industry. France attempted conversion, but belatedly and inefficiently. The German automotive industry, which built the military vehicles needed for blitzkrieg, was not fully converted to military production until 1943. In the United States the preparation for industrial mobilization was negligible until 1940; in fact, there was no serious effort even to restrict civilian automobile production until after the attack on Pearl Harbor in December 1941. Still, the American automotive industry represented such a concentration of productive capacity and skill that, once its resources had been harnessed to war production, its contribution was tremendous. Between 1940 and 1945 automotive firms made almost $29 billion worth of military materials, a fifth of the country’s entire output. The list included 2,600,000 military trucks and 660,000 jeeps, but production extended well beyond motor vehicles. Automotive firms provided one-half of the machine guns and carbines made in the United States during the war, 60 percent of the tanks, all the armoured cars, and 85 percent of the military helmets and aerial bombs.
It had been assumed that automotive facilities could be readily converted for aircraft production, but this proved more difficult than anticipated. Automobile assembly plants did not readily accommodate airframes, nor could an automobile engine factory be converted without substantial modification. These problems were eventually resolved, and automobile companies contributed significantly to aircraft production.
Britain was better prepared to use the resources of its automotive industry, at that time the world’s second largest. The shadow factories became operative, and Austin, Morris, Standard, Daimler, Ford, and Rootes participated in filling the wartime demand for aircraft and aircraft engines. Leyland Motors and Vauxhall built tanks. Lord Nuffield made a notable contribution to the production effort by establishing a system for repairing aircraft, employing the sales and service organization of Morris Motors, and it was subsequently extended to a large number of small contractors.
The automotive industries of the other belligerents were smaller in scale, and their facilities for armaments manufacture were proportionately greater than in the United States or Great Britain. Consequently, the automotive firms in these countries were concerned chiefly with meeting the insatiable demand for vehicles. The various Ford properties that came under German control, along with Volkswagen, which turned out the German equivalent of the jeep, were employed in this manner. Renault, a tank manufacturer since World War I, built tanks for France and later for Germany.
The automotive industry after 1945
After World War II there was a striking expansion of motor vehicle production. During a 35-year period the total world output increased almost 10-fold. The most significant feature of this increase was that most of it occurred outside the United States. Although American production continued to grow, its share of world automotive production fell from about 80 percent of the total to 20 percent. Among individual countries the United States was the leading producer until the recession of the early 1980s. In 1980 Japan, which had had little automotive manufacturing before the war, became the leading producer, with the European Economic Community (EEC) ranking second. The United States regained the lead in vehicle production in 1994, since by that time Japanese manufacturers were building more of their products in factories in their major overseas markets, such as the United States, in response to economic and political pressures in those markets. However, in the early 21st century, China became the leading manufacturer of cars.
The industry in the United States
At the end of World War II the American automobile industry had intact facilities, somewhat enlarged by construction for military needs. There was also a great demand for automobiles. This situation invited several attempts by newcomers to enter the industry, but all proved unsuccessful. The most promising, Kaiser-Frazer Corporation, lasted some 10 years but lacked the financial, technical, and sales resources to compete when the automobile market returned to normal. By the mid 1950s Kaiser-Frazer had stopped producing everything but Willys Jeeps, an operation that it had acquired by buying Willys-Overland. The manufacture of Jeeps continued as a subsidiary of Kaiser Industries until 1970, when the division was sold to American Motors Corporation (AMC) in a transaction that gave Kaiser financial interest in AMC.
The trend of the automotive industry to mergers and large-scale organization, and to a situation in which each producer could affect but not control the market, continued unchecked. In 1954 Nash and Hudson joined to form AMC. The company enjoyed temporary prosperity in the late 1950s when it introduced the first American compact car, the Rambler, in response to growing imports of small foreign cars. A merger of Studebaker and Packard in 1954 was less successful. The new company stopped production in the United States in 1964 and in Canada two years later.
Declining sales and heavy financial losses pushed the Chrysler Corporation close to bankruptcy in the late 1970s. Attempting to avert the company’s collapse, the U.S. government granted Chrysler $1.5 billion in loan guarantees. In return Chrysler surrendered supervisory control to the government’s Chrysler Loan Guarantee Board. By exercising such control, the U.S. government became a de facto partner of the country’s third largest automaker. The government’s influence was short-lived as Chrysler, under the leadership of Lee A. Iacocca, returned to profitability and repaid its government loans in 1983, seven years early.
By the early 1980s the automotive industry in the United States was concentrated in four major firms—GM, Ford, Chrysler, and AMC—and one important manufacturer of commercial vehicles, International Harvester Company. A few producers of specialized vehicles remained, along with an assortment of companies that made automotive parts and components.
Increasing competition from imported cars and from new manufacturing operations established by European and Japanese firms continued to reduce the share of the American market controlled by the four domestic manufacturers through the remainder of the 20th century. Germany’s Volkswagen opened an assembly operation in the United States in the late 1970s but closed it a decade later. Japan’s Nissan Motor Corporation established a plant in the early 1980s to build its popular small pickups and later added car production. Another Japanese automaker, Honda Motor Company, followed with a car manufacturing operation adjacent to its motorcycle plant; it later added a second car facility in the United States and a car plant in Canada. Japan’s Toyota Motor Corporation formed a joint venture with GM called New United Motor Manufacturing Incorporated, which built small cars for both Toyota and GM. Toyota also opened two plants of its own in the United States—one for cars and small vans and the other for pickup trucks and sport utility vehicles—and a car-making facility in Canada. A number of other Japanese manufacturers opened plants in the United States as joint-venture operations.
Many of the Japanese-owned American plants were built in response to limitations imposed on exports of cars to the United States by Japan’s Ministry of International Trade and Industry. The restrictions followed threats of sanctions by the United States in the wake of Chrysler’s near collapse and heavy losses by Ford and GM. Called the Voluntary Restraint Agreement (VRA), it spelled out how many cars each Japanese producer could ship to the United States in a single year. The VRA took effect in 1981 and was renewed annually through the early 1990s. A similar agreement was in effect in Canada during the 1980s.
In 1979 Renault of France acquired a 46 percent interest in AMC to increase its small presence in the United States and gain access to AMC’s line of popular Jeep vehicles. Mounting financial pressures, however, prompted Renault to sell its AMC stake to a reinvigorated Chrysler in 1987. Chrysler quickly acquired all outstanding AMC stock and made the company a division. In 1998 Chrysler was merged with Germany’s Daimler-Benz AG, which then became DaimlerChrysler AG; the joint venture ended in 2007.
In 2008 the U.S. auto industry seemed close to collapse amid the global financial crisis. Through the Troubled Assets Relief Program (TARP), billions in loans were made available to GM, Chrysler, and Ford; only the last automaker did not accept the government relief. Despite the assistance, GM filed for Chapter 11 bankruptcy protection in June 2009. It emerged from bankruptcy reorganization the following month and went through a period of downsizing that helped it rebound. Chrysler also filed for bankruptcy in 2009, and shortly thereafter the Italian automaker Fiat bought a share of the automaker, eventually becoming a majority shareholder in 2011.
Technically, the initial decades after World War II were marked by improvement and refinement rather than by important innovation. Diesel engines were increasingly used on trucks and buses. Automatic transmissions became virtually standard equipment for passenger cars, and power brakes and power steering found widespread acceptance, as did luxury features such as air-conditioning. In the early 1960s Chrysler experimented with a gas turbine engine for passenger automobiles, but it had too many technical problems for general use. By the early 21st century, automakers were facing new design issues, as growing concerns about climate change had resulted in a push for more fuel-efficient cars, including electric vehicles.
Styling became increasingly important in automotive design as a marketing device. The general trend in styling became established late in the 1920s when cars began to lose their square, boxlike lines and to develop flowing curves. In time the new design encompassed both body and chassis, integrating such formerly separate features as mudguards, running boards, and bumpers. A combination of pressures made American cars of the 1950s high-powered and ornate, with extravagant use of chrome and exaggerated tail fins; these features were abandoned when the public found the simpler lines of imported cars more attractive.
