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In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs

How Oil Prices Threaten Automakers' Profits and Jobs

Since the late 1990s, Detroit's three big U.S. automakers -- General Motors Corp., Ford Motor Company, and DaimlerChrysler -- have relied heavily on large, truck-based sport utility vehicles to drive company profits. But with gasoline prices now at near-record highs, consumer demand for mid- and full-size SUVs is sinking fast. What if higher gas prices are here to stay and the trend away from gas-guzzling vehicles continues? This July 2005 report, a joint effort from NRDC and the Transportation Research Institute's Office for the Study of Automotive Transportation (OSAT) at the University of Michigan, says that sales, profits, and American jobs are at risk if Detroit automakers continue with their current business strategy in the face of higher oil prices. The report recommends actions that automakers, government, and investors can take to mitigate the risks.

OVERVIEW & QUICK REFERENCE
Press Release

FULL REPORT IN PDF
Adobe Acrobat file (size: 599 k)
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TABLE OF CONTENTS
(Links indicate sections available as individual webpages)
Executive Summary
High Oil Prices are a Key Driver in the U.S. Vehicles Market
Methods and Assumptions of the Model
Profits and Jobs at Detroit's Big Three are Most Vulnerable to High Oil Prices
Automakers, Investors, and Lawmakers Should Act Now
Appendix A: An In-Depth Look at What is Driving Oil Prices
Appendix B: Estimating Oil and Gasoline Prices in the Event of Supply Disruption
Appendix C: Discrete Consumer Choice (Nested Multinomial Logit Regression)
Appendix D: Detailed Planning Edge Sales, Revenue, and Variable Profit Forecasts by Manufacturer by Segment, 2009
Appendix E: Detailed Planning Edge Production Forecast for U.S. and Three Auto-Dependent States, 2009

In the Tank: How Oil Prices Threaten Automakers' Profits and Jobs: How Oil Prices Threaten Automakers' Profits and Jobs. By By Dr. Walter S. McManus, Alan Baum, Roland Hwang and Dr. Daniel D. Luria. July 2005. $0.00. Order print copies.

last revised 7/25/2005