A Microeconomic Analysis of the Full-Size Automobile Market...

This preview shows page 1 - 3 out of 12 pages.

Economics & Business Journal: Inquiries & Perspectives 152 Volume 1 Number 1 October 2008 A Microeconomic Analysis of the Full-Size Automobile Market Jeffrey Thomas Shepherd Lipschultz University of Nebraska at Omaha The author, an undergraduate student at The University of Nebraska at Omaha, would like to acknowledge in deepest gratitude the following persons whose support made this study possible: Dr. William Corcoran, Alexandra Lipschultz, Elizabeth Lipschultz, Dr. Jeremy Lipschultz, Janet Pol, Rosalie Saltzman, James Shaw, Faye Shepherd, Michelle Tai, and Erica Tesla. Introduction The automobile production industry in the United States is in a clear state of turmoil, particularly in the case of domestically owned firms. Sharon Silke Carty attributed problems in the industry, one example being the bankruptcy of parts supplier and former General Motors holding Delphi, to “escalating raw material prices, reduced automaker production and soaring benefi ts and labor costs.” According to Carty, this bankruptcy did not bode well for GM, itself in beleaguered condition. 1 The other remaining domestically owned automobile production firm at the time of the collection of the data presented herein, 2 the Ford Motor Company, is also in poor condition; Dorinda Elliott attributed the companies’ weak positions to successful foreign competition. 3 Ford and GM have responded to their often-unprofitable conditions by employee and output cuts. Ford, as an example, reduced output by 21% in the fourth quarter of 2006. 4 At 1 Sharon Silke Carty, “Analyst: Delphi's Chapter 11 filing pushes GM closer to brink,” USA Today , October 11, 2005. 2 On May 14, 2007, the US-based private equity firm Cerberus purchased an 80% holding in Chrysler Group from the German DaimlerChrysler conglomerate, the product of a 1998 acquisition of Chrysler Corp. by Daimler-Benz, returning the company to American ownership and control ( The Economist, “Putting the shine back on,” May 14, 2007). Since data collection took place during Daimler’s control of Chrysler, Chrysler Group products will be considered to have been produced by a foreign firm except in forward-looking views of domestic market share. 3 Dorinda Elliott, “Can this man save the American auto industry?” Time , January 30, 2006. 4 The Economist, “Engaging reverse gear,” August 26, 2006.
Image of page 1

Subscribe to view the full document.

Student Paper: Full-Size Automobile Market Lipschultz Economics & Business Journal: Inquiries & Perspectives 153 Volume 1 Number 1 October 2008 first glance, this might appear to be the result of macroeconomic or industry conditions, but Toyota Motor’s February 2007 announcement that the company will open an eighth North American factory with a 150,000-unit production capacity in 2010 suggests that the automobile market as a whole is not depressed.
Image of page 2
Image of page 3
You've reached the end of this preview.
  • Summer '16
  • Mr Kamau
  • Ford Motor Company, Ford Crown Victoria

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern