automotive industry, all those companies and activities involved in the manufacture of motor vehicles, including most components, such as engines and bodies, but excluding tires, batteries, and fuel. The industry’s principal products are passenger automobiles and light trucks, including pickups, vans, and sport utility vehicles. Commercial vehicles (i.e., delivery trucks and large transport trucks, often called semis), though important to the industry, are secondary. The design of modern automotive vehicles is discussed in the articles automobile, truck, bus, and motorcycle; automotive engines are described in gasoline engine and diesel engine. The development of the automobile is covered in transportation, history of: The rise of the automobile.
(Read Lee Iacocca’s Britannica entry on Chrysler.)
The history of the automobile industry, though brief compared with that of many other industries, has exceptional interest because of its effects on history from the 20th century. Although the automobile originated in Europe in the late 19th century, the United States completely dominated the world industry for the first half of the 20th century through the invention of mass production techniques. In the second half of the century the situation altered sharply as western European countries and Japan became major producers and exporters.
(Read Henry Ford’s 1926 Britannica essay on mass production.)
History
Although steam-powered road vehicles were produced earlier, the origins of the automotive industry are rooted in the development of the gasoline engine in the 1860s and ’70s, principally in France and Germany. By the beginning of the 20th century, German and French manufacturers had been joined by British, Italian, and American makers.
Developments before World War I
Most early automobile companies were small shops, hundreds of which each produced a few handmade cars, and nearly all of which abandoned the business soon after going into it. The handful that survived into the era of large-scale production had certain characteristics in common. First, they fell into one of three well-defined categories: they were makers of bicycles, such as Opel in Germany and Morris in Great Britain; builders of horse-drawn vehicles, such as Durant and Studebaker in the United States; or, most frequently, machinery manufacturers. The kinds of machinery included stationary gas engines (Daimler of Germany, Lanchester of Britain, Olds of the United States), marine engines (Vauxhall of Britain), machine tools (Leland of the United States), sheep-shearing machinery (Wolseley of Britain), washing machines (Peerless of the United States), sewing machines (White of the United States), and woodworking and milling machinery (Panhard and Levassor of France). One American company, Pierce, made birdcages, and another, Buick, made plumbing fixtures, including the first enameled cast-iron bathtub. Two notable exceptions to the general pattern were Rolls-Royce in Britain and Ford in the United States, both of which were founded as carmakers by partners who combined engineering talent and business skill.
In the United States almost all of the producers were assemblers who put together components and parts that were manufactured by separate firms. The assembly technique also lent itself to an advantageous method of financing. It was possible to begin building motor vehicles with a minimal investment of capital by buying parts on credit and selling the finished cars for cash; the cash sale from manufacturer to dealer has been integral in the marketing of motor vehicles in the United States ever since. European automotive firms of this period tended to be more self-sufficient.
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