1 Initialization
Numerous laws and political actions made over the previous few decades have affected the auto sector. Simple emission rules, incentives for particular car models, and political developments around the world are all included in these. This essay discusses a few significant historical developments and how they affected the automotive sector. Additionally, future opportunities for progress and lessons learned from these earlier developments are sought after.
2 Paper Organisation
Chapter 3 of the essay provides a study of the energy crises of the 1970s and 2008. Chapter 4 examines and discusses regulations, including the EURO norms and fleet consumption, and their influence after providing this perspective on political influence on the automotive industry. The topic of electrification and government subsidies is then covered in Chapter 5, which represents a rather recent area of government laws. A final recent topic of discussion is China’s car rules, which are covered in chapter 6 of the essay. On this basis, a timeline that spans the oil crisis and current advances in China and the advanced industrial nations is produced.
3 1973’s Oil Crisis
3.1 The Crisis’s Caused by Politics and Rules
Political actions made by the so-called Organisation of Arab Petroleum Exporting Countries (OAPEC) were to blame for the 1973 oil crisis. They started an oil embargo that resulted in a 70% price hike for barrels at first and a steady decline in production. Political goals resulting from the Yom Kippur War between Israel, Egypt, and Syria were the focus of the embargo. Egypt and Syria launched an unexpected onslaught, but Israel was able to repel the attackers. Israeli soldiers were continually receiving supplies from the USA at that time. The OAPEC nations desired that the US persuade Israel to leave its seized territories and to establish a lasting peace in the region. They intended to accomplish that goal by gradually tightening the embargo up until the political objectives were achieved. The embargo and the sharply rising price of oil had a significant negative impact on other countries that produce automobiles, such as Germany and Japan. After the Washington Oil Summit, the embargo was removed in March 1974, but the repercussions of the oil crisis persisted through the 1970s and into the 1980s, when the OPEC nations fell in to national interests like Saudi Arabia’s attempt to increase its market share.Additionally, neither of the nations on whom embargoes were imposed underwent the dramatic change in policy that the Arab governments had hoped for. (Molavi, 2009; Quandt, 2005, p. 104; Licklider, 1988, p. 214–216)
Impact on the Automotive Industry, Section 3.
3.2.1 GERMANY AND WESTERN EUROPE
One of the sectors in the region that was most impacted was the car industry in Western Europe. In spite of hefty fuel taxes in Western European nations, automakers began building bigger, less fuel-efficient cars in the late 1960s. More people could now buy these types of cars because to rising income, which also prompted the manufacturers to make the appropriate production choices.
The oil crisis, however, destroyed this estimate. Market trends showed a shift away from more economical vehicles and away from upscale brands and inefficient vehicles. Notably, the popularity of small hatchbacks has increased. Only the Peugeot 104, Renault 5, and Fiat 127 were produced in Western Europe during the time of the oil crisis and represented this car form. There were many of these automobile models available by the end of the decade, including the Ford Fiesta, the Opel Kadett, which was marketed as the Vauxhall Astra in the United Kingdom, the Chrysler Sunbeam, and the Citroen Visa.The Chrysler/Simca Horizon, Fiat Ritmo, Ford Escort MK3, Renault 14, Volvo 340/360, Opel Kadett, and Volkswagen Golf are only a few of the new medium-sized hatchbacks that were introduced in Western Europe between 1973 and 1980. These vehicles set a new benchmark for fuel efficiency. But in addition to being more fuel-efficient than the sedans they replaced, hatchbacks also drew purchasers who would have otherwise chosen vehicles from a lower price range. (Worldnews, 1973; Grumböck, 2008; carsplusplus.com; wapedia.mobi)
From September 1973, a sales crisis specifically in Germany began. The start was a 6% decline in domestic demand. In addition to higher insurance and car prices, it was caused by rising gasoline prices. The same year’s oil crisis began to cause significant issues in the autumn by lowering domestic auto demand by 24% from the previous year and, for the first time, having an impact on exports. The export sales decreased 16% over the previous year. There were layoffs, the introduction of short-term employment, and an increase in the quantity of unsold new cars in car parks for the automakers. These consequences were typical of the entire automobile sector, which is a vital part of the German economy. The industry employed one in seven workers, or every seventh had a job that was directly related to it.Only those producers still had a chance to compete on the market who were able to quickly respond and adapt to changes in consumer tastes. The trend towards fuel-efficient cars was evident in the German market, as it was in all of Western Europe. (1995, pp. 44–51 in Boehmer-Christiansen & Weidner).
Volkswagen, for instance, produced 29,100 vehicles in November 1973. 16.000 of these vehicles were of the “Käfer” type, namely the “VW1200” variant, which was particularly economical and affordable with a cost of 5.650 DM each vehicle. As evidenced by the 50.000 unfulfilled orders in November 1973, the “VW Passat” economic middle-class car was also a huge success.Additionally, Opel and Daimler-Benz noticed a tendency among its clientele towards fuel-efficient vehicles that use regular petrol. With 1,2 litre petrol engines, Opel built a more fuel-efficient version of its Ascona and Manta vehicles. A 1-liter petrol engine was even produced for the Kadett model. The demand for Daimler-Benz’s 4-cylinder and diesel engines has grown. Ford also intended to release more fuel-efficient vehicles as a result of the trend. Compact vehicle manufacturers in other countries benefited from the change. Renault raised its market share for the R4, R5, and R6 compact automobiles. The crisis was advantageous for manufacturers like Chrysler with its Simca 1000 and Fiat with its models 126 and 127. These vehicles contributed as much as 60% of Fiat’s income. The car has lost its significance as a status symbol in many families as a result of the sharply increased costs for maintaining inefficient vehicles. Many families put off buying new cars, which was one of the factors contributing to the demand shock. (chroniknet.de)
In order to continue selling automobiles throughout the crisis, the automotive industry attempted using special advertising efforts. These campaigns primarily sought to appeal to customers’ preferences for fuel efficiency. Audi, as an illustration, promoted the fact that its engines use every drop of fuel through a unique burning technique. Additionally, there were discounted prices for some automobiles, such as the Mercedes 280, which was available for 12.000 DM as opposed to 16.000 DM. (chroniknet.de)