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The U.S. auto industry and the big three

We have a proud automobile culture in the United States, but surprisingly not many people know too much about the automotive history of this country. For this history lesson, we will focus on the automotive “industry” rather than the history of the automobile itself.

When everything started

In the 1890s, the American auto industry began and, thanks to the use of mass production and the large size of the domestic market, it quickly became the largest auto industry in the world (although this title would be taken away by Japan from the USA in the 1980s and then Japan for China in 2008).

The US motor vehicle industry actually started with hundreds of manufacturers, but in the late 1920s, three companies stood out from the rest:

  1. General motors
  2. Ford
  3. Chrysler

The big three

These three companies continued to prosper, even after the Great Depression and World War II. Henry Ford began making automobiles in 1896 and founded the Ford-Motor Company in 1903. Ford used the first conveyor-based assembly line in 1913, improving mass production of its Model T. The assembly line reduced costs significantly and The Model T sold so well that it propelled Ford to become the largest auto company in the US.

General Motors was founded by William Durant (formerly a carriage manufacturer) in 1908. In the early years, GM acquired Buick, Oldsmobile, Oakland (later to become Pontiac), Cadillac, and several other auto companies. Durant also wanted to acquire Ford, but Henry Ford chose to keep his company independent. Having become a bit “happy with the acquisitions,” Durant over-extended the company and was ousted by a group of banks that acquired a majority stake in the company. Durant then partnered with Louis Chevrolet and founded Chevrolet in 1913, which became a quick success. Durant regained majority control of GM after acquiring enough shares, and GM acquired Chevrolet in 1917. However, this did not last long. Durant was ousted again in 1921. In the late 1920s, GM overtook Ford as the largest automaker.

Former Buick chairman and GM executive Walter Chrysler took control of Maxwell Motor Company in 1920, revamped and reorganized it into Chrysler Corporation in 1925. Chrysler acquired Dodge Brothers in 1927 and, in 1928, introduced the DeSoto and the Plymouth brands thanks to the dealer network and manufacturing facilities that came with the Dodge acquisition. In the 1930s, Chrysler overtook Ford to become the second-largest automaker.

1950 and beyond

In 1950, the United States produced nearly 75 percent of all the world’s automobiles. However, in the early 1970s, American auto companies (especially the Big Three) were hit hard by increased competition from foreign automakers and high oil prices. In the following years, the companies occasionally recovered, but the crisis reached its peak in 2008, prompting Chrysler and General Motors to file for bankruptcy reorganization and be bailed out by the federal government. Although Ford was also affected by the crisis, it decided to go ahead on its own and did not withdraw the bond. In fact, we have a lot of respect for Ford as a result of this. They did not take the easy route.

The year 2014 saw the largest sales (seasonally adjusted annualized) in history with 16.98 million vehicles.

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