The Automotive industry has seen many peaks and valleys over the course of its nearly 150-year history. The economy, supply chains, governmental policy, and global crises have each reared their heads at one time or another, bringing car manufacturers joy or sorrow in irregular intervals. It is rare, however, to see all of these factors intersect in one single time period. Unfortunately for American automakers, this is exactly what happened in the 1970s, changing the landscape of the car business forever. 

The story actually begins in the late 1960s, as the first concrete automobile safety regulations were beginning to take shape. The widely circulated book written by American political activist Ralph Nader, Unsafe At Any Speed, decried the current lack of safety features in most American cars. As a reaction to the outcry caused by this book, President Lyndon B. Johnson set the beginnings of the National Highway Traffic Safety Administration in motion. Subsequent policies produced federal regulations that forced manufacturers to include air bags, hazard lights, and seat belts, which resulted in incremental losses for the companies that were forced to spend more on safety. The airbag in particular saw increased development in the form of inventor Allen Breed’s crash sensor, which automatically deployed airbags in the event of a collision. Safeguards like these were only a shadow of the regulations to come in the following decade.

The first of these regulations came on December 31st, 1970 in the form of the Clean Air Act. A version of the CAA had been around since 1963, but President Nixon passed an amendment that expanded the boundaries of the law and allowed him to create the Environmental Protection Agency, or the EPA. EPA policy dealt a huge blow to auto companies across the nation; cars were forced to use catalytic converters that curbed pollutants at the expense of engine efficiency.

On a macro level, the benefits of this policy were obvious. Air pollution significantly decreased in cities around the country. However, the EPA’s new law caused a lot of fractures on the micro level that quickly shattered the illusion of calm that surrounded General Motors, the country’s largest automobile manufacturer. GM factories had become famous for their strikes over the prior decades. Worker’s rights were unbelievably nonexistent as of the 1950s, and their banding together in demand of better treatment had eventually won them better benefits and healthcare. However, when GM began to see a significant increase in material costs due to environmental regulation, they were less inclined than ever to give workers what they wanted. The result was a 57-day strike in 1970 that lost the company around 350,000 workers and 1 billion dollars in profit–the biggest loss the company had ever taken over the entire course of their history. 

Things were bleak enough without the issue of profit, and they would continue to worsen with the advent of new automotive insurance policies. New regulations and tariffs decreased insurers’ ability to get their clients enough compensation for their accidents, and policy rates soared as more and more drivers declined to open polices. In 1971 and ‘72, some states passed new no-fault regulations that guaranteed both parties involved in automotive accidents vehicular compensation regardless of who was at fault. However, injuries caused in these collisions were only reimbursable if they were serious enough to result in medical bills in excess of $5,000, causing many injured to go untreated or pay huge sums out of their core savings. 

After the dust somewhat settled on the insurance front, auto companies didn’t have much time to catch their breath before the next crisis. In 1973, the price of oil skyrocketed as the Arab-dominated Organization of Petroleum Exporting Countries put an embargo on world oil exports. The nations in this organization were at war with Egypt and Libya, and withheld oil to attack their enemies on the political front. As a result, the prices of oil and gasoline increased in the United States by over 70%, and car companies continued to suffer since less people were buying than ever. Even after the end of the war in 1974, OPEC kept prices relatively high, tanking auto sales since cars were becoming more expensive in order to keep up with government regulations and turn a profit. 

Each of these ongoing problems culminated in the greatest crisis faced by American car producers. A cavalcade of taxes and price hikes meant that American vehicles were no longer the most economically viable option for the average consumer. Import cars, especially from Japan, had begun to capitalize on the European trend of the compact car in the late 1960s. When this trend finally reached the U.S., American companies produced their own answers to this trend. The AMC Gremlin, Chevy Vega, and Ford Pinto were mildly successful, but could not compete with their Asian counterparts and began to fall by the wayside. Additionally, import cars triumphed over American products in regard to safety. Even though the aforementioned American regulations had forced manufacturers to add multiple safety measures, lack of quality checks from underpaid workers resulted in cars that had multiple dysfunctional or fully inoperable pieces in the cabin, under the hood, and within the drivetrain. Once Japan had their foot in the door, they quickly overtook the U.S. as the world’s leader in car manufacturing and were themselves overtaken by China in the following years.

These problems by no means spelled the end for automotive production in the United States. Manufacturers hit their stride once again in the 1980s as company hierarchies changed and new theories of business allowed the U.S. to take a bolder step into the new, more regulated era of motor vehicles. The 1970s also saw some truly fantastic American cars amid the drama, such as the second-gen Pontiac Trans-Am. However, to neglect these problems is to become ignorant to their warning signs, making it much more likely to repeat the mistakes that were made five decades ago. We are proud of where the American automobile industry stands today, and we know that this standing would not be as significant if it had not been won at a great cost.

References:

Car History Timeline: From 3-Wheeled Buggies to Self-Driving Vehicles - HISTORY

Automobile History - HISTORY

1970s Cars: History, Pictures & Facts (retrowaste.com)

Automobile - V-8s and chrome in America | Britannica

History of the automobile - Wikipedia

‘A Gallant Fight’: The UAW and the 1970 General Motors Strike | International Review of Social History | Cambridge Core

1960s and 70s: booming markets and ballooning losses in motor | Swiss Re