Sunday, July 15, 2007

Market share and the " Big Three"

Before the 1970s, the United States basically dominated the automobile market. The big three include General Motors, Ford, and Daimler Chrysler. In 1962, half the cars sold in America were made by GM. Now its market share is roughly 25 percent. In 1999, the Big Three had a 71 percent market share. According to the Washington Post, their share is now 58 percent and falling. Twenty-three percent of those working for auto companies in North America now work for companies other than the Big Three. GM says its health care package, negotiated with the United Auto Workers, puts it at a $5 billion disadvantage against Toyota. Japan's government, not Japanese employers, provides all health care in Japan. This could lead much of corporate America to push the federal government to assume more health care costs. This would be done in the name of "leveling the playing field" to produce competitive"fairness." Every dollar GM spends on health care cannot be spent on developing cars, like hybrids. We know that any large market share and limited competition is not true competition. How would you define this "competitve fairness?" The Asian motor companies that are in the market are a part of these woes. They had easy entry into the market and are able to produce cars at lower total costs. GM and the other American companies are held down by the expensive packages the unions require. Should we save American automakers by raising taxes to fund universal health care, or is GM over its head? This problem sounds like a web of slippery slopes.

1 comment:

Greg Delemeester said...

[This comment is by Chunzi.]

One of the reasons why Asian cars especially Japanese cars can enter into American market is during the threat of the reducing natural resources, at that time the Japanese cars entered the world market by its economic gas save and cheap price. Nowadays, Japanese cars are still one of the top choices for consumers. As having both the top technology of saving gas and the cheap price and they are not bothered by the health care insurance for the works, American cars must more expensive than Japanese car. Saving American automakers by raising taxes to fund universal health care or forcing Japanese government to rise the value of Japanese money are both helpful methods of saving American car producers.
But as the auto motor markets is not perfect competitive, American car companies will have to figure out a way of differ their products to Japanese cars such as they have to improve their technology on saving gas and lower the cost of making cars. Or it would be very hard for American car companies compete with Japanese cars.
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