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Why U.S automobile company such as Ford had great lost in 2006 and how it influences on the U.S auto market - Essay Example

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In conclusion, U.S. automobile industry, one of the backbones of the U.S. economy, is in dire straits. U.S. car makers may have been the best decades ago but emerging overseas competitors are gradually seizing that position…
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Why U.S automobile company such as Ford had great lost in 2006 and how it influences on the U.S auto market
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Download file to see previous pages (Isidore) Plans to cut-off more jobs were also announced and more than half of its U.S. hourly workforce had already agreed to take one of its buy-out schemes in the next few months.

For the first time, Ford Motors is mortgaging its total assets to finance all of this restructuring. It hopes to raise $18 billion from its factories, equipment, office buildings, patents and trademarks, and stakes in subsidiaries; an amount that exceeds the company's total market value of all its outstanding stock by more than $2 billion. This move has never been done before as Ford Motors' credit line has always been good and it can borrow money without mortgaging its assets (Bunkley)

So what is really happening to Ford Motors and the U.S. automobile industry as a whole Why is it losing so much while its overseas counterparts like Toyota and Honda, are moving towards the opposite direction Declined Sales, Quality Issues, Marketing Strategy, Labor Cost Discrepancies, Productivity and Currency Exchange Rates are the principal factors.

Declined Sales - Overseas Automobile makers share in the U.S. market had steadily grown through the years. Chart 1 shows how Japan and the European markets had slowly crept up in market share from the 70s to the present, a trend that had Toyota surpassed Ford Motors as being the second biggest seller of automobiles in the U.S. This loss in the market share however, is not experienced by Ford Motors alone but by practically all U.S. automobile manufacturers as well. Honda has exceeded Chrysler in sales and is almost catching up with Ford. On the other hand, General Motors has not had the lowest share in new car and light truck sales since the 1920s. (Train & Winston)
The pickup trucks, though still considered as the nation's best selling vehicle, also experienced very low consumer demand in 2006. Ford Motors' F-series pickups, regarded as one of its main product lines had a major sales drop exceeding 100,000 units. (Isidore) This shows the magnitude of the dire state the U.S. car makers are facing. With surging oil prices in the world market, consumers are opting for the more fuel efficient smaller cars, vehicles that does not guzzle gasoline like light trucks do. With this preference shift, U.S. automakers, such as Ford Motors are left with many truck factories that can't afford to be operational but stay inactive.
Adjusting to the changes, U.S. car makers are not only closing their truck factories but have re-focused towards the smaller "cross-over" type cars which are scaled down versions of SUV. While GM announced its plans to shift towards building more small vehicles in the Beijing auto show last year, Ford Motors also confirmed that it will cease its Freestar minivan production and redirect its focus on building more crossover vehicles (CBC)
Quality Issue - Sales drop due to quality issues is totally another story. Of this year's "Top Picks" lists based on the annual Consumer report, all picks are vehicles made by Japanese automakers. It has been two years in a row that no American cars made it to the list. To merit a Consumer Reports' recommendation to the "Top Pick", the car must pass certain criteria like reliability, safety, ...Download file to see next pagesRead More
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