The U.S. auto boom that fueled record sales and profits is winding down. General Motors CEO Mary Barra claims that the auto industry is changing more today than it has in the past 50 years. It’s true that the U.S. auto sector had a close call during the 2008 financial crisis, when both GM and Chrysler needed federal bailouts to survive bankruptcy. But that was a pretty straightforward crisis, caused by excess labor costs and a plunge in auto sales due to a wrecked economy.
The challenge today is posed by electric and self-driving cars, and it is far more fundamental.Automakers are investing billions to develop these new vehicles. At the same time, they’re facing a tremendous competitive threat from upstarts like Tesla and Uber, as well as from tech giants with deep pockets such as Google and Apple. Late last month, Ford disclosed that it may have to slash $3 billion in costs in order to free up money to invest in new technology. There were reports this week that in order to do so, the automaker may trim its global work force by about 10%, or as many as 20,000 jobs. Read more