The Automobile Industry in the Year 2000

Paper Summary:

It has long been understood between analysts that among the major industries in the United States, none acts so nearly as a barometer for the economy in general as does the automobile industry. The paper shows that the year 2000 was no exception to this rule. Auto sales followed the bullish U.S. stock market to unprecedented heights, only to cool off as interest rates hiked up, the Dow Jones and the NASDAQ grew more volatile and gas prices skyrocketed. On September 27, Daimler-Chrysler reported that Chrysler would have a third quarter loss, the first loss since the 1991 recession in the United States.
The paper shows that the consumers, not as confident in the wake of these relatively new trends, reacted according to custom: by keeping their money in their pocketbooks and off of the car lot, creating the first slowdown in US auto sales in nearly two years. It shows however, that a slowdown in car sales does not indicate a fallout; to many, the slowdown in auto sales simply marks a shift from blistering sales to robust sales - hardly a shift worth fretting over. Ultimately, the automobile industry did well in 2000.

From the Paper:

"By January of 2000, it was time to assess the year past and future. Automakers in 1999 had sold a record 16.9 million cars and light trucks, outpacing by a wide margin the previous 1986 record of 16 million. Bob Rewey, Ford Motor's vice president for global consumer services, summed up the auto industries party-line, stating that "A strong economy, confident consumers and innovative products were the major factors driving "sales and earnings in 1999"(Eldridge, 2000, p. 2B). The upcoming year, however, did not produce much optimism. Auto sales had slipped before the turn of the millennium, rousing some conservative hopes for 2000. Automakers, noting the meteoric success of 1999, felt that the economy might not hold up indefinitely, and seemed to believe that a correction was on the horizon; "while automakers hope for a strong year," wrote Earle Eldridge in USA Today, "they don't expect 2000 to be better than 1999"(Eldridge, 2000, p. 2B)."

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