History of the Automobile Industry

One would think the history of the automobile would track the history of the car. It certainly did not start out that way. Let’s take a closer look at the history of the automobile industry.

An industry needs a starting point. In the case of the automobile, there were many false starts that began as far back as the 1700s. It wasn’t until the very late 1800’s that we saw the first automobile that could be used in a functional manner. The creator of that vehicle was Karl Benz. He was the father of Mercedes Benz.

Ironically, the cars created by Karl Benz were not a big hit in German. That could have been a disaster, but he hit upon the idea of licensing parts of the design out. This led to a French industrialist launching the vehicle in France where it was big hit. Benz then started entering licensing agreements with people and entities throughout Europe and North America. This was effectively the start of the automobile industry. It had one major problem, however. It took a lot of time to build an automobile and that made them expensive. Only the rich could really afford them…at least for a while.

If there is one figure that really lords over the history of the automobile industry, it is the infamous Henry Ford. Ford came up with an idea that made cars cheap and accessible to the general public. The idea? The assembly line. Instead of building one car at a time, cars were sent down a line one after the other and built piecemeal. This reduced the production time by more than 12.5 times. It was so fast that most early Fords could only be purchased in black because that was the only paint that would dry fast enough! By 1914, an assembly line worker could by a Ford Model-T for as little as four months pay. Imagine that today! Regardless, every major auto manufacturer in the world now uses this approach.

This new approach resulted in big capital outlays. It also spurred on competition. The total number of car manufacturers in the United States numbered over an astounding 200. There were 17 left 20 years later. There are only three today of which Chrysler is in bankruptcy and General Motors is about to join it. Ford could be the last classic American car company standing before all is said and done.

The history of the automobile industry also has a strong geographic element to it. The market in the United States is by far the biggest when it comes to sales. As a result, every manufacturer wants to be in it. The American companies dominated for years, but then reliability and fuel mileage issues started chipping away at their dominance. They failed to respond well and Japanese manufacturers Honda and Toyota were able to grab a huge foothold in the market with their compact, reliable cars that had tremendous mileage.

The American companies also lost the upper end of the market. This was primarily due to the European companies such as BMW and Mercedes that came in with elegant cars that performed well and were very reliable. The Americans have hung tough in the truck market, but that is really about it.

2008 will be looked back at as one of the major turning points in the history of the automobile. A near recession in the United States and its subsequent impact around the world resulted in mass damage to the auto industry. As sales dropped by more than 50 percent, even stalwarts like Toyota and Mercedes lost billions. The future of the industry is difficult to tell. There will obviously be an auto industry, but the exact makeup of what it will look like five, ten or fifteen years from now is anyone’s guess.

<< Back to History of Cars