The car industry hits the brakes

The auto industry is one of the hardest-hit victims of the global financial crisis. Tens of thousands of jobs are at stake worldwide. Detroit's once-mighty GM is on the brink of collapse, while in France, Renault employees fear job cuts. From the US to Asia, and everywhere in between, the auto market is floundering. Several factors have contributed to the industry's plight: the petrol price hike in the summer of 2008, the credit crunch, declining consumer confidence, the increasing cost of materials, and new environmental standards – all of which entail an overall rise in production costs. But for Detroit's "Big Three", which have shed a total of 150,000 jobs since 2005, the roots of the decline run back almost a generation. Following the oil crises of 1973 and 1979, Japanese auto manufacturers took the US market by storm with more reliable and fuel-efficient models. Soon, Toyota had become the number-two selling auto brand in the US. Detroit manufacturers were slow to rein in spiralling costs. After much bargaining with trade unions, cost-cutting deals were finally fleshed out in 2006, though they are unlikely to see any effects on the bottom line before 2010. Nor will US carmakers be in a position to meet market demands for more fuel-efficient cars before then.