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US AUTO INDUSTRY CRUMBLES

American cars now number just one in three sold

The sub-prime crisis in 2007 was one of the catalysts. The resulting US economic downturn has proved to be the last straw for the US auto industry.

Detroit has cut production by more than 10% each year, from 9.5 million units in 2007 to just 6 million units expected this year.

In the face of rising employment and health care costs, GM, Ford and Chrysler have had to adapt by cutting jobs sharply. The economic morale of the Detroit community has dipped sharply and there seems no end in sight. Of the more than 300,000 jobs lost in the past five years, half were in this region.

Home builders, retail stores and appliance manufacturers are among those to have felt the pinch, along with the component suppliers to the major auto manufacturers.

The ever increasing focus on climate change hasn’t helped either and it’s been the Asian manufacturers who have rolled out sexy new alternate fuel vehicles that appeal to the newly cost-conscious American consumer, now that fuel prices have doubled.

Toyota, Hyundai and Honda have been the leaders in smaller, low-cost hybrid fuel vehicles for the past six months. Although some of their cars are produced in the US, in non-union plants down south, the vast majority come in from Asia.

American manufacturers now account for less than one third of cars sold in US markets, down from 50% in 2007 and more than 90% in the first 70 years of the 20th century.

US gasoline prices are expected to double again in the next five years.

The US auto industry could well follow the sudden downward trend seen in Europe during the last 12 months and, when the US economy picks up again, there could be no more US automobiles for consumers to buy.

Warning: Hazardous thinking at work

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