Why has the American Auto industry been in trouble; is it a supply or demand issue?

Feb 3rd, 2012
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Assignment 1: Why are US carmakers in trouble? Why has the American Auto industry been in trouble; is it a supply or demand issue? Explain your answer. What is/was the impact of the Auto Bailout; did it work? The recent events in the automotive industry, the drastic decrease in car demand, the inability of the car companies to remain profitable and the ultimate, international bailouts of the largest car manufacturers, can be linked to the laws of economics, especially the laws of demand and supply. The automotive industry crisis has its beginnings in 2004 and has occurred due to rising gas costs and decreasing demand of larger cars made predominantly by the three largest American car manufacturers; General Motors, Chrysler, and Ford.

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Assignment 1: Why are US carmakers in trouble?Why has the American Auto industry been in trouble; is it a supply or demand issue? Explain your answer. What is/was the impact of the Auto Bailout; did it work?The recent events in the automotive industry, the drastic decrease in car demand, the inability of the car companies to remain profitable and the ultimate, international bailouts of the largest car manufacturers, can be linked to the laws of economics, especially the laws of demand and supply. The automotive industry crisis has its beginnings in 2004 and has occurred due to rising gas costs and decreasing demand of larger cars made predominantly by the three largest American car manufacturers; General Motors, Chrysler, and Ford. Until 2004, those manufacturers enjoyed continuously growing demand and the profits have been increasing due to the sales within the SUV and large car segments. The increasing demand was fuelled by the growth of the economy, personal wealth and low priced gas. The American car manufacturers concentrated their research and development, production lines, car design and marketing efforts on the large cars a

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