The US auto industry and the Big Three

We have a proud car culture in the United States, but surprisingly not many people know all that much about this country’s automotive history. In this history lesson, we’ll focus on the automotive industry rather than the history of the automobile itself.

When it all started

In the 1890s the American automobile industry took off and quickly grew to become the largest automobile industry in the world thanks to mass production and the size of the domestic market (although that title was taken from the US to Japan in the 1980s and then from Japan to China in 2008 ).

The US automobile industry actually began with hundreds of manufacturers, but by the late 1920s three companies stood out from the rest:

  1. General Motors
  2. ford
  3. Chrysler

The Big Three

These three companies continued to thrive after the Great Depression and World War II. Henry Ford began building cars in 1896 and founded the Ford Motor Company in 1903. Ford took advantage of the first conveyor-based assembly line in 1913 and improved mass production of its Model T. The assembly line reduced costs significantly, and the Model T sold so well that it made Ford the largest automobile company in the United States

General Motors was founded in 1908 by William Durant (formerly a carriage manufacturer). In its early years, GM acquired Buick, Oldsmobile, Oakland (later Pontiac), Cadillac, and a number of other automakers. Durant also wanted to take over Ford, but Henry Ford chose to keep his company independent. After becoming a little too “acquisitive”, Durant overexpanded the company and was forced out of the business by a group of banks that took controlling ownership of the company. Durant then teamed up with Louis Chevrolet and founded Chevrolet in 1913, which became an instant success. Durant retook control of GM after acquiring enough stock, and GM acquired Chevrolet in 1917. This didn’t last long, however. Durant was ousted again in 1921. In the late 1920s, GM overtook Ford as the largest automaker.

Walter Chrysler, former President of Buick and former CEO of GM, took control of Maxwell Motor Company in 1920, rebuilt it and reorganized it as Chrysler Corporation in 1925. Chrysler acquired Dodge Brothers in 1927 and introduced the DeSoto and Plymouth brands in 1928 thanks to the dealer network and manufacturing facilities that came with the Dodge acquisition. In the 1930s, Chrysler overtook Ford to become the second largest automaker.

1950s and beyond

By 1950, America was producing nearly 75 percent of all automobiles in the world. However, by the early 1970s, US auto companies (particularly the Big Three) were hit hard by increasing competition from foreign automakers and high oil prices. The companies occasionally recovered in subsequent years, but the crisis peaked in 2008, prompting Chrysler and General Motors to file for bankruptcy and be bailed out by the federal government. While Ford was also hit by the crisis, it chose to get through on its own and didn’t take the bail. Because of this, we have great respect for Ford. They didn’t make it easy for themselves.

With 16.98 million vehicles, 2014 was the largest (seasonally adjusted annualized) sales in history.