Collapse and Recovery in the American Auto Industry

The American auto industry suffered more severely than others in the recent global financial crisis, with two of the three domestic auto manufacturers entering bankruptcy. The reasons for this disproportionate level of distress include an excessive level of debt, a misplaced focus on the light truck market, and management’s adherence to beliefs about the auto industry that proved to be obsolete. Now that the bankruptcy process is over, the American OEMs are looking forward to a strongly-rebounding marketplace. If the OEMs can avoid the mistakes of the past, they may indeed return to a position of long-term health.