Department Chair

Theodore F. Byrley, Ph.D., Chair and Associate Professor

Xue BaiFollow

Date of Award

12-2012

Access Control

Open Access

Degree Name

Applied Economics, M.A.

Department

Economics and Finance Department

Advisor

Xingwang Qian, Ph.D., Assistant Professor

Department Home page

http://economics.buffalostate.edu/

First Reader

Xingwang Qian, Ph.D. Assistant Professor

Second Reader

Theodore F. Byrley, Ph.D., Chair and Associate Professor

Third Reader

Ted P. Schmidt, Ph.D., Associate Professor

Abstract

The automotive industry had been severely affected by the tightening of credit caused by a subprime-lending crisis in the United States starting in the mid 2000's. Demand for automobiles had fallen sharply all over the globe, and sales plummeted to a three-decade low in 2011. This caused serious repercussions, and the damage spread all over the world. It was only with government assistance that the automotive industry quickly recovered after the recession.

This paper, will study the relationship between the global financial crisis and the automotive industry. It will focus on US car manufacturers as they are affected the most. It will also analyze other major markets around the world, notably Europe and Asia. This paper will reveal how auto manufacturers combatted the crisis, how governments managed to rescue and protect auto industries, and how autoworkers had to compromise. An analysis of their methods will be conducted. It has become clear that government help was essential yet not beneficial to the companies in question in the long run. Technology for environmental-friendly vehicles and quality improvement should be the long-term focus of car manufacturers compared to short-term profits.

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