SI CASE NESS Toyota Makes Its Move But Toyota was lucky as well. During the 1970
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SI CASE NESS Toyota Makes Its Move But Toyota was lucky as well. During the 1970s, Americans began to switch from enormous sedans to smaller cars, a market that American car companies had neglected. The few choices they did offer were of poor quality, and included the AMC Gremlin and Ford Pinto, among others. In contrast, Toyota, having long produced small, reliable, fuel-efficient cars for Japan, its home market, was ready to fill the gap. But why the shift to smaller, fuel-efficient cars? One answer is that the United States experienced a series of severe recessions, which could have induced consumers to seck cheaper alternatives to traditional big cars. As it turns out, however, other recessions have not led to major down- sizing in car purchases. Figure 12-19 shows the average number of miles per gallon for new passenger cars since lf you or someone you know bought a new car recently, 1975, which has generally trended upward, but increased at the odds are pretty good that it was manufactured a much faster rate in the mid to late 1970s and early 1980s, by one of two Japanese companies, Toyota or Honda. before stabilizing in the early 1990s-this despite the fact Together, these companies account for about a quarter that many consumers were buying more fuel efficient cars car sales. But this was not always the at that time. And, as you can see, there was only a slight average mileage after 2007, even t increase in prolonged than any slump since the 1930s. ase. In 1973, the two companies accounted for a mere of U.S. auto sales. Over the course of the 1970s andGreat Recession that began that arly 1980s, the Japanese share quadrupled. Why? year was deeper and more Toyota did a lot of things right: during the 1960s t had perfected the technique of so-called just-in-time bad things were happening: unem So what was different in the 1970s? At that time, two t was rising n or lean manufacturing, a production system sharply, but so was the price of gasoline. After unemployment soared, gas prices fluctuated but y compared to American production techniques. tually came down to levels well below those before the You may t at yielded lower costs, higher productivity, and higher gality de m recalour discussion of lean production in the recession. So people bought fewer cars, but not, by and Chapier 2 Business Case.) large, smaller cars The point is that Toyota got its big break not just by FIGURE 12-19 Average Miles per Cars, 1975-2016 producing good cars, but also by producing the particu- lar kind of good car that suited consumers during the economic troubles of the 1970s. Gallon for New verage miles per gallon QUESTIONS FOR THOUGHT 1. Why do you think gas prices rose in the recessions of the 1970s but fell after the Great Recession? 30 25 20 2. What does this say about the causes of the recessions in 3. In the 1970s, Toyota was able to increase its American sales despite interest rates on auto loans surging as high as 17.5%. In contrast, after 2007, auto loan rates fell to their lowest levels in history; car sales also declined. Explain why. (Hin: Examine the connection between inflation and interest rates on loans) 10 375 Protection AgencyExplanation / Answer
1.During the time of recession , due to scarcity of funds America lowered the petrol imports from the Gulf countries.
As a result the supply of gasoline comes down and thus due to shortage, the price curve rises. After the recession, America again started importing gasoline and thus the maket became normal.
2.The causes of the recession are:
3. As the interest rate on loans decreases as a step to fight against recession, there would be an easy availability of autoloans.There would be thus high demand of cars in the market.. As the supply is still at the existing position. there would be a mismatch between the supply and demand of the cars. Due to mismatch between the demand and supply, the price of the cars rises and leads to inflation
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