The automobile or automotive industry, more accurately the motor vehicle industry, comprises the manufacture and assembly of \Lautomobile\ls, \Lbus\les, \Lmotorcycle\ls, trucks, and components of motor vehicles. The petroleum and rubber industries are not included, nor are manufacturers of batteries and other electrical equipment, unless they are affiliated with a motor vehicle company. HISTORY: FROM 1890 TO WORLD WAR II Although the gasoline automobile first appeared in Germany, automotive production on a commercial scale began in France about 1890. Commercial production in the United States began around the turn of the century and was qualitatively inferior to that in Europe. In those days the industry was an assortment of small firms, each turning out a few cars by handicraft methods. American automobile plants were assembly operations that used parts made by independent suppliers. By contrast, European companies were more likely to build the entire car themselves. The early firms originated in various ways--from bicycle makers, carriage and wagon makers, machinery operations of all kinds, and tinkerers. Attrition was high; in the United States, for example, almost 2,000 separate concerns produced one or more cars. By 1920 the number had shrunk to about 100, and by 1929 to 44. In 1976 the Motor Vehicle Manufacturers Association had 11 members. This trend involved consolidation of some companies as well as elimination of the weakest firms. The same pattern emerged in Europe and Japan. At the outset it was uncertain whether the automobile would be powered by electricity, steam, or gasoline. At first, the electric car was popular, but its use was limited, because no battery existed that could drive the vehicle either far or fast, although some of the early speed records were set in electric cars. The steamer lasted into the 1920s. Simply stated, steam automobiles have never been competitive in cost with gasoline cars, either to build or to maintain, and there has always been concern, perhaps unfounded, about the risk of boiler explosions. The problem of cost might have been resolved by mass production, but although pioneers like Ransom E. Olds (1864-1950) and Henry \TFord\t considered steam power, they chose to reject it. United States During the first years of the 20th century the United States established a leadership position in automotive production that went unchallenged for half a century. This achievement was largely associated with Henry Ford. After some false starts, he founded the Ford Motor Company in 1903 and five years later brought out the famous Model T, the first car to meet the needs of a mass market. To produce this car in quantity and at low cost, Ford introduced the moving \Tassembly line\t technique of \Tmass production\t in 1913 and thereby secured a dominant position in the industry. The founding of General Motors in 1908 by William C. Durant (1861-1947) appeared to be of secondary importance; yet if Ford devised the technique, General Motors provided the organizational pattern for successful large-scale motor vehicle production over time. Durant lacked the managerial skill to execute a basically sound concept of a diversified structure that would produce cars in all price ranges; his ideas were systematized by Alfred P. Sloan (1875-1966) in the 1920s. An additional important Ford contribution to the growth of the American automobile industry was his successful challenging of the Selden patent, claimed to be a comprehensive patent on the gasoline automobile and controlled by the Association of Licensed Automobile Manufacturers. In 1911 the courts upheld Ford's claim that the Selden patent did not cover the four-cycle engine Ford was using. As a result, the industry adopted a policy (1915) of cross-licensing patents to avoid such litigation, a policy that remains in effect. Both Ford and General Motors were located in the Detroit area, as were other leading producers: Packard, Hudson, Maxwell (reorganized as Chrysler in 1925), and Dodge (acquired by Chrysler in 1928). The effect of this concentration was to make Detroit the center of American and, for a long time, world automotive production. During the 1920s General Motors overtook Ford as the leading manufacturer of motor vehicles because Henry Ford continued to produce the Model T for some years after it had passed its peak of popularity. The last Model T was built in 1927. Part of Ford's problem was the emergence of a large used-car market, which meant that a purchaser could buy a secondhand vehicle of higher quality and style for no more than a new Model T. Other companies faced the same situation and met it by devising the annual model, just different enough so that a used car would be clearly identifiable as such. In short, the status symbol became part of the automobile business. By the time of the great crash of 1929, the annual output of passenger cars in the United States had reached 5 million, and the ratio of registered automobiles to people was 1:5. Cars were produced in quantity by the moving assembly line, a method that required exact standardization and interchangeability of parts, precise synchronization of main and subassembly lines, and elaborate division of labor. The techniques involved were now for the first time integrated as a novel system of production and on a far larger scale than anything previously attempted. This technological revolution had repercussions in other industries. The needs of the automobile industry gave rise to continuous-process manufacture of plate glass and the continuous strip mill for sheet steel, as well as extensive development of alloy steels. Mass production also called for specialized \Tmachine tools\t. The principal output of the \Tpetroleum industry\t changed from illuminants to gasoline. The discovery of vast new oil fields in the early part of the 20th century was a major stimulus to the widespread use of gasoline-powered automobiles, since fuel became plentiful and cheap. The development of the auto industry had other effects, such as the growth of service enterprises: gas stations, repair shops, tourist camps, and motels. In addition, vehicles created a demand for \Troads and highways\t, and an extensive program of highway construction and improvement emerged, much of it financed by taxes on automotive fuels. Europe In Europe, the only other major center of automobile production at this time, growth was less rapid. European manufacturers tended to concentrate on luxury and sports cars. Just before World War I, William Morris (1877-1963) in Britain and Andre Citroen (1878-1935) in France began trying to emulate Henry Ford, but it was not until after the war that they achieved any substantial results. Even then they were handicapped by legislative restrictions not encountered in North America, which reflected a continuing attitude that automobiles were luxuries for the well-to-do. Consequently, European manufacturers operated on a considerably smaller scale than the Americans. In Britain, then the leading European producer, no company had enough annual output to justify installing a moving assembly line until 1932, when both Morris and Hillman did so. Indeed, two of the largest firms operating in Europe were the American companies Ford and General Motors. Ford had manufacturing plants in Europe before World War I, and General Motors acquired British Vauxhall and German Opel in the 1920s. Surprisingly, these trends, American and European, were little affected by the Depression of the 1930s. Production dropped sharply in the years immediately after the market crash in 1929, but registrations and motor vehicle use remained fairly stable. The principal effect worldwide was to accelerate the elimination of the smaller and weaker companies. In the United States, the Big Three (General Motors, Ford, and Chrysler) controlled 90 percent of the passenger automobile market by 1939. What was left was shared mainly by the Middle Five (Hudson, Nash, Packard, Studebaker, and Willys-Overland). The separate truck manufacturers fared somewhat better, because commercial vehicles come in such manifold and often highly specialized forms that they have never been as completely dominated by mass production methods as passenger cars, and mass production methods favor the big companies. During World War II the automotive industries of the various participants played a major role, in part because military operations were highly mobile and depended on motorized vehicles and, equally important, because the industry possessed productive capacity that could be applied to other military needs. For the United States in particular, the motor vehicle industry was the country's largest single resource in manufacturing capacity, and its contribution to the war effort was impressive. It produced $29 billion worth of military materials, which was one-fifth of the total American output. The list included not only vehicles and engines but aircraft, tanks, ammunition, and an endless variety of parts and components. THE MODERN INDUSTRY Since the middle of the 20th century, the automotive industry has been global in character, with the similarities between one country and another more pronounced than the differences. Once some degree of stability was achieved after World War II, motor vehicle production and use surged; Western Europe and Japan began to match the pattern established in the United States and Canada. One striking consequence was the steady erosion of the dominant position initially held by the United States. In 1950 the United States produced two-thirds of the world's motor vehicles. In 1980 its share of world production was just over one-fifth, although U.S. output was almost equivalent to the output of 1950. There have been some striking shifts in position among producing countries. In the 1960s West Germany overtook Great Britain to become the world's second largest motor vehicle manufacturer, a feat largely attributable to the phenomenal success of the \TVolkswagen\t. In the 1970s, Japan overtook West Germany and in the 1980s passed the United States to take first place among motor vehicle producers. Other countries with substantial automotive industries are Canada, France, Italy, Sweden, and the \TUSSR\t, although Soviet-produced cars have been a minor factor on the world market. Elsewhere, automobile manufacturing has largely been an offshoot of the big manufacturing firms in the major producing countries. The heaviest concentrations of motor vehicles in use are in North America, Western Europe, Japan, Australia, and New Zealand, with ratios of 1 car to 2 to 4 persons. China, by contrast, numbers 1 car per 2,000 people--although if trucks and buses are included, the ratio rises to 1 per 359. Production Methods The assembly-line technique, first introduced by Ford, has become virtually universal. Almost all passenger automobiles and most commercial vehicles (see \Ttrucking industry\t) are made in this way. The technique has been greatly refined so that, instead of the rigid uniformity with which the Model T was turned out, a wide variety of options can be programmed into individual bodies and chassis. Automation was introduced, initially for the manufacture of engines, in the early 1950s. Computer-controlled robot welding machines were first used in the 1970s; computerized machining of engine parts is a technology of the late 1980s. Concentration of Production Because only large firms can compete successfully in domestic and world markets, the U.S. pattern of concentration of production within a few giant companies has become worldwide. Of the U.S. independents, for example, Nash and Hudson survived by merging as American Motors in 1954. Studebaker and Packard merged in the same year, but the new firm abandoned automobile manufacturing in 1964. In Great Britain, Morris and Austin joined in 1952 to become the British Motor Corporation (BMC), and two other combines were formed around Leyland Motors and Rootes. Leyland and BMC united in 1968 as British Leyland (BL) Motors, but in the mid-1970s, BL was taken over by the government, which--under the Conservatives' privatization policy--managed to sell off most of the unprofitable automobile groups by the late 1980s. BL was renamed Rover Group in 1986. The German automobile industry is dominated by Volkswagen, followed by Opel (General Motors), Ford, Daimler-Benz (Mercedes), and BMW (Bayernische Motoren Werke). The French industry has long been focused on Renault (nationalized in 1944), Citroen, Simca, and Peugeot, which merged with Citroen in the 1970s. Fiat, founded in 1899, remains the major Italian automobile manufacturer. Japan's automotive production centers on three firms: Toyota, Nissan (Datsun), and Honda. Crisis Years For years the U.S. automobile industry emphasized speed, power, and styling in its products. About 1960, however, as first the Volkswagen and then other small foreign cars penetrated the U.S. market, competition pushed U.S. manufacturers into making compacts, cars that--while not as small as the small imports--were considerably smaller than the average American car had been in the years following World War II. The market trend to smaller cars developed slowly until a second gasoline crisis in the spring of 1979 brought an abrupt increase in consumer demand for compacts and the new, even smaller, subcompacts. U.S. manufacturers were not prepared for a rapid changeover to smaller models, and when the oil shortage was followed by a prolonged downswing in the economy, the U.S. industry suffered severely. Chrysler, which had already been losing ground, was saved from bankruptcy only by a federally guaranteed $1.5 billion loan. By 1980 the Japanese had captured almost one-quarter of the U.S. market, and high-priced cars from Europe--particularly from Sweden and Germany--were creaming off a significant percentage of the luxury- and sports-car market. So desperate was the U.S. industry's situation that, in the 1982 contract negotiations between the manufacturers and the United Auto Workers, the union made important wage concessions and provided "give-backs" of some benefits, in an effort to help the industry back to profitability. The Chrysler and British Leyland crises demonstrated that governments will not allow major motor vehicle producers to fail, when that failure might cause economic catastrophe. In 1981 the U.S. government persuaded the Japanese to impose restrictions that had the effect of substantially raising the selling prices on all cars, although they also gave U.S. firms time to retool and modernize. From 1978 to 1984 the U. S. industry spent about $69 billion worldwide to redesign their products and modernize their plants. The year 1984 had record automobile sales, and American cars continued to sell well in the following years, spurred by manufacturers' offers of low finance charges and cash refunds. Although the Japanese industry operated under a quota, cars from newer national industries did not. South Korea began exporting its Hyundai models in quantity in 1984. The South Korean firms Daiwoo, in a joint venture with General Motors, and Kia, working with Ford and Japan's Mazda, have also been successful exporters to the United States. Mergers and Internationalization The process of industrial concentration through buyouts and mergers--a process that is almost as old as the U. S. industry itself--continued in the 1980s. In 1987, Chrysler bought American Motors, hoping to gain from the smaller manufacturer's success with the four-wheel-drive Jeep. Manufacturing agreements have quickened the pace of internationalization, to the point where very few cars can be described as having been made entirely in one country. The three major U. S. auto firms own factories throughout the world and, in addition, have subassemblies and entire cars manufactured by foreign affiliates. Most of the latter are Japanese or South Korean, although Europe and, increasingly, Latin America also participate in these ventures. The rebuilding and modernizing of automobile factories within the country has greatly increased U. S. production capacity. Yet despite the prosperity of the industry, many plants are once again threatened with layoffs and closings. At the end of the 1980s an estimated 20% of all auto imports into the United States were "captive imports"--cars sold under U. S. brand names but manufactured in other countries. Auguring particularly ill for the domestic U. S. industry, U. S. auto firms have increased their production of sophisticated high-tech parts in countries like Mexico and Taiwan, where work was once confined to simple manufacture and assembly. Foreign automakers have established links in the United States with U. S. firms, and all major Japanese manufacturers have opened their own factories within the United States, so that in 1990 some 11% of North American manufacturing capacity was owned by foreign corporations. The U. S. industry thus faces greatly increased competition and the prospect of overcapacity in the last decade of the 1990s. Production Methods The assembly-line technique introduced by Henry Ford continues to be used almost universally in Europe and America. Automation was introduced on the assembly line in the early 1950s, computer-controlled welding robots in the 1970s, and computerized machining of engine parts in the late 1980s. The Japanese ability to impose high standards of quality control while at the same time improving productivity is challenging the standard assembly-line techniques. The success of the General Motors-Toyota plant--the New United Motor Manufacturing, Inc., or NUMMI--in Fremont, Calif., and of several other Japanese auto manufacturing plants in the United States is considered a triumph for their "team" approach to mass manufacturing. At NUMMI, after U.S. workers are trained in a range of skills, they form small teams that are each responsible for the assembly of a major portion of a car. The team approach requires an educated work force, considerable training inside the factory, and a commitment on the part of management that trained personnel will not be subject to the layoffs and rehirings customary in conventional U.S. auto firms. This new approach to manufacturing had proved so satisfactory that workers in one Japanese-owned plant voted against unionization in 1989. Safety, Pollution, and Fuel Conservation Since the 1960s the automobile industry has been subject to legislation limiting the types and quantity of exhaust emissions and dictating safety standards. The use of seat belts and the probable installation of air bags in many car models in the 1990s are among the results of this legislation (see \Tsafety, automotive\t). Pollution caused by automobile exhausts has proved more difficult to deal with. Although more efficient engines and the use of \Lcatalytic converter\ls and fuel-injection systems have reduced some noxious emissions, overall auto emissions continue to create problems for such cities as Los Angeles and Tokyo. A plan for stricter emissions-control in Southern California, announced in 1989, anticipates the phasing out of gas-fueled cars by the year 2010. Their place would be taken by electric cars and a new mass-transport system. In the meantime, new engine technologies and the use of alternative fuels such as methanol and propane are intended tao reduce pollution significantly. At the end of the 1980s, fuel conservation was no longer the issue it had been in the 1970s. Larger cars were popular once again, as were gas-guzzling small trucks and four-wheel-drive vehicles. Federal efficiency requirements for new cars and trucks were made less stringent. Yet prototypes for highly efficient vehicles had been made by every major automotive manufacturer. They employed such already-existing technologies as turbochargers that use waste energy to improve engine efficiency; advanced diesel engines; sleeker, aerodynamic designs; and the increased use of plastics and lightweight materials. Some of these prototypes reached fuel efficiencies of more than 160 km (100 mi) per gallon on the highway. John B. Rae Bibliography: Cole, R. E., The American Automobile Industry: Rebirth or Requiem? (1984); Flink, James J., The Automobile Age (1988); Philips, R., et al., Auto Industries of Europe, the U. S., and Japan (1982); Rae, John B., The American Automobile Industry (1984); Sinclair, Stuart, The World Car: The Future of the Automobile Industry (1983); Tolliday, S., and Zeitlin, J., eds., The Automobile Industry and Its Workers (1987); Whipp, R., and Clark, P., Innovation and the Auto Industry (1986); Winston, C. M., Blind Intersection: Policy and the Automobile Industry (1987); Yates, Brock, The Decline and Fall of the American Automobile Industry (1983).