The only company that did not take any of the money was Ford. Ford is the only company that is stable economically even though it has suffered a decline in the demand for its products due to the global economic recession. The most profitable company in the auto industry is Honda. Its gross margin in 2009 was 25.88% (Hoovers).
The American auto industry has been giving ground to the top Japanese automakers, Toyota and Honda, for years. The American auto industry dates back over 100 years. Despite their experience the Japanese since the 1980’s have been dominating the four-cylinder economy car marketplace. They utilized lean manufacturing processes and superb quality standards which increased their productivity. The American auto industry due to its longevity and slow reaction to market changes had many structural cost problems. The cost of labor and labor cost are much higher than other foreign marketplaces. The American auto unions are very powerful and influence which forces the auto makers to pay premium labor prices for direct labor. Outsourcing is a market tendency in the domestic market. There is an opportunity in the domestic auto market for new entrants that want to participate in the supply chain of automakers because American automakers are looking for ways to reduce cost by streamlining their operations. Traditionally American automakers produced the majority of their parts in-house. The business environment has changed and the automaker no longer desire to participate in the market for used car parts. A new entrant in the marketplace for used auto parts can penetrate and achieve market share growth faster than normal.
The auto industry is going through some harsh times. To stimulate the demand for new cars the US government in created the “Cash for Clunkers Program” which took off the streets nearly 690,000 gas wasting vehicles. In the auto industry companies are consolidating their auto models to create