American automobile industry in the 1970s

Definition Four-wheeled passenger vehicles and the industry that manufactures them

Economic problems, the rise of subcompact cars, and government regulations transformed the way in which Americans viewed their automobiles. The muscle car era came to a halt as cars became subject to new emission and safety rules that curtailed horsepower and consumer demand rose for cars that were more fuel efficient.

At the beginning of the 1970’s, the U.S. automobile industry, centered in Detroit, was doing very well from a profitable 1960’s decade, but trouble was brewing on the horizon. The car output for 1970 was the lowest since 1961. The beginning of the decade saw a United Auto Workers (UAW) strike against General Motors (GM) that halted the automaker’s U.S. operations for more than two months and halted its Canadian operations for three months. GM suffered $4.5 billion in lost sales. The year 1970 was a down one for the automobile industry in general, but it proved to be the high point for muscle cars, two-door sports coupes with powerful engines.

Early 1970’s Muscle Cars

Some of the hottest muscle cars of the 1970’s included Ford’s Torino Cobra, Mustang Mach I, Boss 302, Boss 351, and Boss 429. Chevrolet had the Corvette and Camaro, which launched the company into the number one sales position in the country. Pontiac had the Firebird and the GTO Judge, and Plymouth had the Road Runner, which was named after the popular Warner Bros. cartoon character. The Road Runner was a low-priced, medium-sized, high performance muscle car that garnered instant popularity. Owners of Road Runners claimed that the styling and performance were exceptional. The horn even echoed a familiar “beep beep” sound of the character.

The automobile that symbolized the muscle car era of the early 1970’s was the Ford Mustang. In addition to the Mach I, Ford produced the fastback coupe, but it was the Boss 302 that gained the attention of many. Ford made six thousand Boss 302’s in 1970, up from fewer than two thousand produced in 1969. Ford also produced the Boss 429 with a “Cobra Jet” engine.

Indeed, the American muscle car era was alive and well in the early 1970’s until the oil crisis hit with the 1973 oil embargo by the Organization of Petroleum Exporting Countries (OPEC). It was then that cars such as the Maverick started to eat into Mustang sales. By 1979, Ford built the third-generation Mustang. The 1979 model was chosen as the official pace car for the Indianapolis 500. This Mustang established itself as one of the most potent drag strip performers of the coming decade.

Emission Controls and the OPEC Embargo

The Clean Air Act of 1970 provided provided tight vehicle emission controls that took away the horsepower in cars. Insurance premiums skyrocketed as well. Performance vehicles such as the muscle cars were the victims. In 1971, sales of domestic automobiles jumped to 8.7 million, an increase from the 6.5 million for 1970. President Richard Nixon initiated a temporary increase in import duties and repealed the excise tax. This action gave incentives to shoppers to buy domestic cars, and they responded. Domestic automobile sales continued to increase in 1972.

October 6, 1973, was a very important date in the history of the U.S automobile industry. It was the day that Egyptian and Syrian forces attacked Israel in the hope of wiping out that nation. It was the fourth war in a series of military conflicts between Arabs and Israelis. Israel managed to repel Arab advances, and two weeks after the conflict started there was a cease-fire. The Arab states decided, under the guidance of OPEC, to halt oil exports to the United States and other pro-Israel nations. U.S. oil companies raised gas prices at the pump, which hit consumers hard. Pumps often ran dry as motorists waited in long gas lines for hours. In some states, speed limits were lowered, and there was talk in Washington, D.C., of rationing gasoline. Nevertheless, many Americans still favored large vehicles with V-8 engines. The government was concerned about safety, however, and ordered that all 1973 American cars have five-mile-per-hour “crash” bumpers.

The U.S. automobile market was strong before the oil embargo forced dramatic changes in automobile manufacturing. Sales were at an all-time high. In 1973, car sales totaled 9.7 million units, a record. After that year, sales began to slide. Automobiles were more subject to the rules and regulations of government agencies than ever before. Government industry meetings and trade journals warned that the United States was at the mercy of OPEC. By 1973, imported oil in the United States accounted for about 40 percent of oil consumption.

Lagging Sales, Rising Gas Prices, Regulation

By 1974, the automobile industry witnessed a significant drop in total vehicle sales to 7.5 million. Imports as well as domestic vehicles were affected. The main reason was rising gas prices directly related to the OPEC embargo. Despite the fact that OPEC lifted the embargo in March, 1974, states such as California went on an odd day/even day gas rationing schedule. President Nixon urged the nation to cut back on pleasure driving. A gallon of gasoline went up thirty-eight cents to fifty-four cents a gallon. The government also passed legislation installing a National Maximum Speed Limit of fifty-five miles per hour on the highways.

Car sales continued to drop in 1975. One of the most significant pieces of legislation passed that year was the Energy Policy and Conservation Act, which called for a Corporate Average Fuel Economy (CAFE) setting of fuel economy figures at 18.0 miles per gallon by the 1978 model year and 27.5 miles per gallon by 1985. Emission control regulations were also passed. GM installed catalytic converters on all of its vehicles in an effort to reduce emissions. The Chrysler Corporation installed them on 75 percent of its vehicles, and Ford on 70 percent of its vehicles.

By 1976, a rebound in car sales occurred as the national economy made a recovery, and large cars regained some of their lost popularity. The 1977 Lincoln Continental Mark V was a giant on wheels and a gas guzzler, but thousands of Continental buyers did not seem to mind. It seemed that many had forgotten the lessons presented by the rising gas prices and the oil embargo a few years earlier. Car sales rebounded nicely from 1977 to 1980. The automobile industry was adapting to all the new rules and regulations that had been implemented in the first half of the decade. In 1979, however, OPEC increased the price of a barrel of oil by almost 25 percent, precipitating another oil crisis in the country. Also in that year, Congress approved a $1.5 billion loan to save Chrysler from bankruptcy. Lee Iacocca, former Ford boss turned head of Chrysler, was largely responsible for setting up the plan to secure the loan.

The government set fuel economy standards that were in conflict with existing air pollution and safety standards. Automobiles had to be smaller in order to comply with economy requirements, but designing smaller cars conflicted with safety standards because safety equipment added weight to the car. Extra weight cut fuel economy, which was incompatible with an oil crisis. Thus, the OPEC embargo created a dilemma. The automobile industry was being pressured to make cars that lived up to national vehicle emission and safety standards. This situation inspired a new wave called subcompacts, cars that were smaller and cheaper, with better fuel economy than the large and mid-sized cars produced in the 1960’s and early 1970’s. Chevrolet and Ford had first delved into the subcompact market in 1971, and Chrysler was the only giant automaker that refused to do so.

The Foreign Invasion

The Japanese automobile industry was ready for the challenge of meeting fuel efficiency demands and was producing smaller cars for the U.S. market. Japanese manufacturers had been working hard at making their cars attractive to American consumers. Japanese cars first hit the United States in the late 1950’s, but they found no real market and service was hard to find, so they quickly withdrew. They came back strong in the 1970’s with the small cars that Americans wanted.

Japanese companies such as Toyota and Nissan generated huge sales in the U.S. automobile market. In 1978, Japan accounted for more than half the cars imported to the United States, and sales passed 1.5 million units. Japanese automakers offered cars with high mileage per gallon that were high quality as well, whereas U.S. manufacturers concentrated on the quantity of cars. By the end of the 1970’s, Japanese companies were selling 2.5 million cars a year in the United States, almost one in every four cars sold.

Detroit had no answers, and both the federal government and the media were criticizing its cars. The Chevrolet Vega had a leaky cylinder-head gasket and bodywork that was quickly plagued with rust. The Ford Pinto burst into flames when rear-ended in an accident because its gas tank was low, exposed, and close to the bumper. Chrysler, American Motors, GM, and Ford were all in financial trouble and losing ground to the imports. Ford even considered pulling out of North America at one point.

Impact

The 1970’s were an uncertain time for the American economy, with oil crises and gas shortages at the pumps. The recession in the automobile industry was a big reason for the country’s economic slump. The price of gasoline rose dramatically, and Americans no longer wanted cars that were gas guzzlers. American cars were becoming too expensive to buy, own, and operate. U.S. automobile manufacturers were downsizing their cars and not making them attractive to potential buyers. They had been too busy trying to meet federal requirements in air pollution and safety to address fuel economy.

Though Americans were still interested in medium- and large-sized vehicles, subcompacts were the new wave of the decade, and foreign companies excelled at making them. Foreign automakers such as the Japanese made a serious dent in the U.S. automobile industry, which grew increasingly worried as millions of imports infiltrated the domestic automobile market. By the end of the decade, the love affair that Americans had with their domestic cars during the previous decade was all but over.

Bibliography

“Automotive History: A Chronological History.” Antique Automobile Club of America. http://www.aaca.org/history. Discusses the Clean Air Act of 1970 and the realignment of the global automobile industry with the foreign invasion of the U.S. automobile market.

Cheetham, Craig, ed. Hot Cars of the 1970’s: The Best Cars from Around the World. San Diego, Calif.: Thunder Bay Press, 2004. Profiles 1970’s vehicles from around the world, including the significant “muscle cars” and post-“muscle cars” of the era.

Consumer Guide, editors of. One Hundred Years of the American Auto. Lincolnwood, Ill.: Publications International, 2003. A very good guide to the styling, design, power, and other attributes of American cars during the twentieth century. Significant automakers, both companies and people, are discussed within the context of their achievements.

Flammang, James M. Cars of the Sensational Seventies: A Decade of Changing Tastes and New Directions. Lincolnwood, Ill.: Publications International, 2000. Provides a year-by-year analysis of the major changes in the automobile industry within the decade. Addresses the role of international events such as the Arab-Israeli War of 1973.

Montgomery, Andrew. The Illustrated Directory of American Cars. St. Paul, Minn.: Salamander Books, 2003. A pictorial history of American cars with well-written summaries accompanying each car and decade.

Wright, Richard A. “A Brief History of the First One Hundred Years of the Automobile Industry in the United States.” The Auto Channel. http://www.theautochannel.com/mania/industry.orig/ history. Includes a good synopsis on the dire times faced by the domestic automobile industry during the decade and some of the people who worked hard to correct the problems.