The Automotive Industry 1945-1960 - Term Paper Example

“After World War II there was a striking expansion of motor vehicle production. During a 35-year period the total world output increased almost 10-fold. Among individual countries the United States was the leading producer until the recession of the early 1980s” (Automotive Industry) Science and Technology developed rapidly during the period of 1945-1960 so that industrial sector, especially the automobile industry got huge benefits. “The American work force also changed significantly. During the 1950s, the number of workers providing services grew until it equaled and then surpassed the number who produced goods.

And by 1956, a majority of U.S. workers held white-collar rather than blue-collar jobs” (The Post War Economy: 1945-1960) “Gross national product, a measure of all goods and services produced in the United States, jumped from about $200 thousand-million in 1940 to $300 thousand-million in 1950 to more than $500 thousand-million in 1960” (U.S. Department of State). A substantial portion of the GDP growth during this period was contributed by the automotive industry. Even though recent recession caused some problems in American automotive industry, it is still one of the largest employment sectors for Americans.

It should be noted that cold war started between America and Soviet Union immediately after the end of WW2. However, United States enjoyed phenomenal economic growth during the cold war period. America cemented its place as world’s wealthiest nation during this period mainly because of the contributions of the automotive industry. This paper analyses the effect of the Cold war on the Auto Industry, both at the business to business level and business to consumer level. Between 1945 and 1960 some 30 million Americans moved to the suburbs, the growth of which was a huge boon to the auto industry.

By the early 1950s the auto industry faced a crisis of falling unit demand, as most families now owned a car. At the same time working people’s discretionary spending was rising. Given these factors, the Big Three (GM, Ford and Crysler) moved to increase each car’s size and array of new gadgets, and at the same time increase the frequency of the introduction of new models (Rooke). GM, Ford and Crysler are the three automobile companies which put strong foundations to the growth in American automobile industry.

These companies have introduced many new models of vehicles during the period of 1945 -1960. These three companies started to compete each other and the result was the huge growth in American automobile sector. Consumers started to get vehicles with greater fuel economy and better safety measures because of the competition between the three. “By 1950 the Big Three offered their customers 243 different new car models. With a major body change costing upwards of $200 million, by 1955 the Big Three controlled 94% of the entire US market”(Rooke).

It is an accepted fact or economic principle that when competition increases, consumers will be benefitted since heavy competition forces companies to reduce the prices of their product and services. However, this principle was not true during the period of 1945 -1960, at least in American automobile sector. Even though competition intensified between the big three, instead of a price dip a price hike occurred for different car models in America during this period. This phenomenon was occurred mainly because of the huge economic growth that happened in America after the end of