The Motor City. 1930s Detroit. In October 1929, as the roaring twenties came to an end, the stock market crashed and caused the worst economic depression in the history of the United States. The effects of the Great Depression were widespread, and they touched every facet of American life. The new, rapidly expanding automobile industry was not immune. The economic changes within the industry and across the country brought social and cultural changes that would impact much of the future of automobiles.
All throughout the 1920s, increases in disposable income and the new affordability of automobiles meant that many more people were able to purchase cars. As a result of this increase in demand, a huge number of independent auto dealers and manufacturers were created, and the industry was expanding rapidly. When the stock market crashed and the effects of the depression took hold, everything changed. At the worst points of the depression, 1 in 4 Americans were unemployed. People were having financial troubles all across the country, and purchasing luxury goods like automobiles was out of the question.
Due to the plummeting demand for new cars, many of the independent automobile manufacturers were not able to stay in business. As these companies failed, the “Big Three”—Ford, General Motors, and Chrysler—first emerged as leaders in the automotive industry (Dreyer, 2009). At the time of the depression, these companies were already large enough that they had the financial means to survive the severe economic downturn. When the depression ended, there was a large increase in “replacement demand” (Hayford, 1934). More families could afford to purchase cars, and those who already had them were looking to upgrade to newer models. Ford, GM, and Chrysler were ready to fill that demand, and solidified themselves as industry leaders. They would remain dominant throughout much of the 20th century, and they continue to shape the industry today.
The effects of the Great Depression also set the stage for another huge moment in the American automotive industry. During the depression, automobile companies had to make financial sacrifices to stay in business, and the working conditions of their employees worsened. Hours got longer, pay cuts were rampant, and strikes and walkouts became more prevalent (Dreyer, 2009). This would lead to eventual unionization of the automotive workers in the late 30s and early 40s. The formation of the UAW in 1935 and its huge growth in subsequent decades drastically changed the landscape of the industry for both auto companies and their workers, a topic I will explore further in future posts.
Both the emergence of the Big Three and the unionization of the auto industry after the Great Depression shaped the American automobile industry in important ways, and undoubtedly affected the future of what had become one of the most important parts of the American economy.
Citations:
Dreyer, Rachael. "Automotive History." Bentley Historical Library. University of Michigan, 1 July 2009. Web. 16 Feb. 2015.
Hayford, F. Leslie. "The Automobile Industry." The Review of Economics and Statistics 16.2 (1934). JStor. Web. 16 Feb. 2015.
All throughout the 1920s, increases in disposable income and the new affordability of automobiles meant that many more people were able to purchase cars. As a result of this increase in demand, a huge number of independent auto dealers and manufacturers were created, and the industry was expanding rapidly. When the stock market crashed and the effects of the depression took hold, everything changed. At the worst points of the depression, 1 in 4 Americans were unemployed. People were having financial troubles all across the country, and purchasing luxury goods like automobiles was out of the question.
Due to the plummeting demand for new cars, many of the independent automobile manufacturers were not able to stay in business. As these companies failed, the “Big Three”—Ford, General Motors, and Chrysler—first emerged as leaders in the automotive industry (Dreyer, 2009). At the time of the depression, these companies were already large enough that they had the financial means to survive the severe economic downturn. When the depression ended, there was a large increase in “replacement demand” (Hayford, 1934). More families could afford to purchase cars, and those who already had them were looking to upgrade to newer models. Ford, GM, and Chrysler were ready to fill that demand, and solidified themselves as industry leaders. They would remain dominant throughout much of the 20th century, and they continue to shape the industry today.
The effects of the Great Depression also set the stage for another huge moment in the American automotive industry. During the depression, automobile companies had to make financial sacrifices to stay in business, and the working conditions of their employees worsened. Hours got longer, pay cuts were rampant, and strikes and walkouts became more prevalent (Dreyer, 2009). This would lead to eventual unionization of the automotive workers in the late 30s and early 40s. The formation of the UAW in 1935 and its huge growth in subsequent decades drastically changed the landscape of the industry for both auto companies and their workers, a topic I will explore further in future posts.
Both the emergence of the Big Three and the unionization of the auto industry after the Great Depression shaped the American automobile industry in important ways, and undoubtedly affected the future of what had become one of the most important parts of the American economy.
Citations:
Dreyer, Rachael. "Automotive History." Bentley Historical Library. University of Michigan, 1 July 2009. Web. 16 Feb. 2015.
Hayford, F. Leslie. "The Automobile Industry." The Review of Economics and Statistics 16.2 (1934). JStor. Web. 16 Feb. 2015.
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