The Auto Crisis - What really caused it
The Auto Crisis - What really caused it
The Auto Crisis - What really caused itThe auto crisis impacted many local American families and further contributed to the global recession. Unfortunate as it was we need to revisit this crisis to ensure that the same mistakes are not made again by knowing exactly what caused it so that we can continue on the right path to recovery. While there are many speculations as to what caused the auto crisis many would agree that the three main causative agents were: the high cost of health care, the crackdown on credit, and the lack of auto companies to recognize that energy efficient vehicles were the way of the future.
How health care contributed to the auto crisis
The high cost of health care in America is detrimental to the survival of many businesses. Auto makers that have many employees who are fully covered experience the devastating blow of health insurance on their profits or even their ability to stay afloat. The cost of health insurance for auto maker employees has to be reflected in the vehicles and since health insurance is not cheap the prices cannot remain competitive with those of imported vehicles. High priced vehicles in a bad economy can only be bad for business.
How the credit crunch contributed to the auto crisis
The crackdown on credit meant that less money was available for lending to customers and since many people depend on credit to buy a car this immediately reflected in the sales of automobiles. The fact that the stock market was left with free reign and lending institutions were betting against themselves contributed greatly to the credit crisis which saw many Americans losing homes and businesses; there was no room in the average American's mind to think of buying a new vehicle.
How underestimation of the power of energy efficient vehicles contributed to the auto crisis
The energy efficient vehicle wave led by overseas companies was gravely underestimated by both the government and auto makers. This wave had a lot of support from celebrities and came about in a time when people were very concerned about conservation and protecting the environment. The fact that the automotive companies chose not to ride this wave resulted in tremendous losses for their businesses.
The overall crash of the auto industry was devastating for both businesses and citizens alike. It is important that this does not happen again since the government has used tax payers money as the means of bail out for these companies.
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