Automotive industry crisis of 2008–2009

The automotive industry crisis of 2008–2009 is a global financial crisis in the auto industry that began during the later half of 2008. The crisis is primarily felt in the United States' automobile manufacturing industry and, by extension, Canada, due to the Automotive Products Trade Agreement, but other automobile manufacturers, particularly those in Europe and Japan, are also suffering from the crisis.

The automotive sector was first weakened by the substantially more expensive automobile fuels linked to the 2003-2008 oil crisis which, in particular, caused customers to turn away from large sport utility vehicles (SUVs) and pickup trucks, the main market of the American "Big Three" (General Motors, Ford, and Chrysler). The US automakers also suffered from considerably higher wages than their non-unionized counterparts, including salaries, benefits, healthcare, and pensions. In return for labor peace, management granted concessions to its unions that resulted in uncompetitive cost structures and significant legacy costs.

In 2008, the situation became critical because the global financial crisis and the related credit crunch placed pressure on the prices of raw materials. In certain countries, particularly the United States, the Big Three have been under heavy criticism since their vehicle offerings were largely fuel inefficient SUVs and light trucks, despite the increase in the price of oil. Accordingly, they suffered both from consumer perception of relatively higher quality models available from abroad — particularly from Japan and to some extent from Europe —and from transplants, foreign cars manufactured or assembled in the United States.The Big Three had neglected development of passenger cars and instead focused on light trucks due to better profit margins, in order to offset the considerably higher labour costs, falling considerably behind in these market segments to Japanese and European automakers.

As of the beginning of 2009, the vehicle companies of the world are being hit hard by the economic slowdown across national boundaries. Car companies from Asia, Europe, North America, and elsewhere have been forced to implement creative marketing strategies to entice reluctant consumers to purchase vehicles, when many firms are experiencing double digit percentage sales declines. Major manufacturers, including the Big Three and Toyota, are offering substantial discounts. Hyundai is even offering to allow customers to return their new cars if they lose their jobs.