A much battered automobile industry enjoyed a significant rebound in 2010 through the fall of 2011—a sharp and welcome contrast to its state during 2008 and 2009.  In the U.S. and around the world, the recession that started near the end of 2007 had a profound impact on the automobile industry.  America’s car and light truck market dropped dramatically in 2008, to approximately 13.2 million units sold for the year, down by about 2.9 million from the number of units sold in 2007.  In 2009, the market was much worse, with sales for the year totaling 10.4 million units.  About 690,000 of those sales were made with the stimulus of a “cash for clunkers” program paid for with federal dollars.  This was easily the worst year in decades for the car business, with two giant manufacturers filing for bankruptcy, GM and Chrysler, while a large number of dealerships, suppliers, parts manufacturers and other auto-related businesses also failed.  By 2011, Chrysler was 50% owned by Italian car maker Fiat, thanks to agreements and financing that had enabled Chrysler to exit bankruptcy.  GM was 61% owned by the U.S. federal government.

Estimates of the worldwide automobile market vary substantially from one source to another.  Scotiabank Group estimated that 60.13 million new cars and light trucks would be sold globally during 2011, up from 53.96 million in 2010 and only 50.50 million during 2009.  As of mid-2011, Scotiabank’s analysts found that sales were growing at particularly rapid rates in emerging nations such as India (with 2 million units sold forecast for 2011, doubling since 2006), Brazil, Chile and Russia.  Brazil, enjoying exceptional economic growth, may become the world’s third-largest car market by 2016 or so, surpassing Germany, and topped only by China and the U.S.

U.S. car and light truck sales will total from 12.2 to 13.0 million units for 2011 provided the economy does not slow significantly during the final quarter of the year.  This would represent good growth from 11.55 million units during 2010.

The biggest upward trend in auto sales has been in China, where government stimulus helped dealers to sell about 13.6 million units in 2009 and an estimated 14 million in 2010.  While estimates of its annual unit sales vary widely, China has clearly become the world’s largest car market.  The China Association of Automobile Manufacturers states that its members manufactured 18 million units during 2010, some of which were for export.  Many observers expect China’s market to grow to 20 to 25 million units yearly over the mid term.  However, China’s government has a great deal of control over the market, as it may increase sales by encouraging new auto loans, or decrease sales by adding new registration fees or restricting traffic in major cities in order to reduce congestion and pollution.

One of the biggest winners in today’s highly competitive automobile market has been Korea, where Hyundai, along with its brand Kia, have enjoyed soaring global sales.  Consumers are attracted to their reasonable prices, excellent warranties and world class manufacturing quality.  Korean car makers are competing aggressively against the world’s largest firms.  Hyundai’s sales soared to 5.74 million units worldwide during 2010, placing it 4^th below Toyota, GM and Volkswagen.

There are approximately 250 million vehicles in operation in the United States.  Around the world, there were about 1 billion cars and light trucks on the road in 2010.

The years of 2004 through 2006 will long be remembered as a pivotal period in the automobile industry.  It was a time during which high gasoline prices finally created significant demand among U.S. consumers for fuel-efficient vehicles.  Gasoline prices that rose to approximately $2.00 per gallon started taking a huge bite out of family budgets in 2004, and many middle-class consumers who owned fuel guzzling SUVs and pickup trucks began to wish they had vehicles that were much less expensive to operate.  By 2005-06, with gasoline prices in the $3.00 range, the party was over for large SUVs and family trucks.

All major car makers are aggressively pushing their smaller, high efficiency vehicles.  GM is betting heavily on its Chevrolet Cruze, a small sedan capable of 36 mpg on the highway and stuffed with convenience features that consumers will appreciate.  Ford’s revamped Fusion earned rave reviews, and it comes in either a hybrid model or a standard engine version that gets 31 mpg on the highway.  Chrysler will be relying heavily on its relationship with Fiat for new, fuel efficient models.  Honda, Volkswagen, Toyota, Hyundai, Nissan and Peugeot all have invested in new, advanced small cars.  Luxury brands like BMW, Mercedes and Audi each have relatively small cars on the market and will soon offer a wide range of very fuel efficient designs.

One result of high gasoline costs and frugal consumers has been strong demand for Toyota’s Prius gasoline-electric hybrid car.  The company has made investments that enable it to manufacture hybrid versions of many of its popular models, including the Camry and several versions of the Lexus.  Hybrids are now available from a wide variety of makers, and technology has steadily improved.

One of the most important trends is the introduction of plug-in hybrids (PHEVs) and electric vehicles such as GM’s Volt, which debuted in very low production volume as a 2011 model.  This car includes a gasoline-powered engine capable of charging its batteries for those occasions when it is not convenient to plug in and also provides a boost to acceleration when needed.  Tremendous improvements in battery technology will soon come to market, further enhancing this trend.  Nissan offers strong competition in the electric vehicle sector, with the launch of its 2011 all-electric model called Leaf, initially in very low volume.  However, the very high prices and limited range of batteries will cause many consumers to stay away from electric cars.  This market is likely to begin rapid growth when advanced batteries become available at lower cost, which may take until 2020 or so.  Many of the world’s top research organizations are working steadily on this challenge.

Both consumers and emissions regulators are taking a renewed interest in advanced automobile technologies.  Clean diesel engines, like those offered in new cars from BMW, Volkswagen and Mercedes-Benz, offer exceptional performance and fuel economy while providing quiet, vibration-free running similar to that found in gasoline-powered cars.  Clean diesel offers a particularly attractive alternative to hybrid technology for those who seek fuel efficiency, and it is already widely used in passenger vehicles in Europe.  Meanwhile, the use of ethanol as a gasoline additive in America has grown rapidly, regardless of whether it makes any environmental or economic sense, thanks to requirements enacted by Congress, backed up by massive government subsidies.

Consumers are keenly interested in quality and serviceability in the cars that they acquire.  A stumble in this regard can have devastating consequences for a car maker, as seen in Toyota’s recent quality problems that led to slow sales, massive recalls and a humble apology from the firm’s leader.

The rising affluence of consumers in China is creating both huge opportunities and huge problems.  China has become the world’s largest user of energy overall and one of the world’s largest importers of petroleum products, largely to fuel its burgeoning fleet of cars and trucks.  Streets and highways are clogged with cars, to the extent that traffic and smog are nightmarish.  Automakers from abroad have raced to establish plants and partnerships in China, with the aim of producing cars both for domestic use and for export.  In fact, low labor costs and increasing product quality in China threaten auto plants located in high cost nations such as the U.S.  Today, strong markets have emerged there for everything from inexpensive sedans and vans to Cadillacs and German luxury cars.

India has also seen significant growth in its automotive sector.  During 2009, local industrial giant Tata launched a no-frills car called Nano at a price equal to less than $2,500 U.S dollars.  While initial customer deposits for future delivery of this innovative car made the Nano appear to be a great success, sales have not been up to expectations.  Nonetheless, a major effect of the Nano has been a rush by many of the world’s largest car firms to design very inexpensive family sedans for India and similar emerging markets.

Not to be overlooked are the vast changes taking place in automobile manufacturing plants.  Flexible factories have reduced man-hours and cut costs per car, while offering a much wider range of choices for customization to consumers.  Today, more than ever, car manufacturers and their suppliers are cooperating in the design and manufacture of new cars in ways that are revolutionizing the entire process.

Inexpensive cars manufactured in China will soon be on the market in many nations.  The question is not whether China will export cars and trucks, but whether consumers in markets such as America will be convinced that they offer safety and reliability.  Meanwhile, U.S. automakers have made intense demands on their component suppliers for lower prices—these suppliers are, in turn, looking to low-cost production in China and other emerging nations.

European manufacturers are facing challenges of their own.  High costs, tough labor laws and daunting government regulations are constant challenges to manufacturers in there.  Nonetheless, firms like Volkswagen and Daimler/Mercedes Benz have found great success in the global market, often locating plants in nations where their products sell well.  Volkswagen has its eye on becoming the world’s largest car firm.

The Progressive Insurance Automotive X PRIZE offered $10 million in prizes to the competitors able to create viable passenger vehicles capable of operating at the equivalent of 100 miles per gallon.  The competition is in conjunction with the X PRIZE Foundation.  Of the 111 teams entered, seven remained in final competition.  The winners, announced in September 2010, were Edison2, a Virginia-based team of racing engineers who designed and built a four-seat car that gets 102 mpg; Li-ion Motors, a North Carolina firm that produced a two-seat vehicle; and X-Tracer, a Swiss company that produced a motorcycle-type vehicle called the E-Tracer.  Edison2 won $5 million, while Li-ion and X-Tracer won $2.5 million each.