The global financial crisis jolted the entire economy of the world and like other sectors the automobile industry was badly affected by this. The crisis in the automobile industry actually started jolted other sectors as well and this economic downturn tarnished the economic growth of many developing nations. That is the reason why it is considered as the part of global financial downturn. Research actually depicts that these crisis badly affected the European and the Asian manufactures of automobiles. But slowly and gradually it affected the automobile industry of America. The demands of the cars were severely affected by the economic downturn and this affected different organizations in both the short and the long run (OECD Organisation for Economic Co-operation and Development 2009). The prices of the automobiles were increased because of the rising prices of raw materials and fuels and the purchasing power of people were declining that is the reason why people were not buying luxurious items and ultimately the sales of automobiles were declining.
There are three core players of the automotive market and the profit margins of these big three are affected by the financial disruption in the economy. The sales of these organizations slowly and gradually begin to slide. The credit crunch in the economy slowly and gradually crept into the market and it directly affected the prices and placed enormous pressure on the prices of raw materials. The credit crunch directly affected the sectors like automobiles, housing, manufacturing, etc (McEachern 2008). The car industry experienced a double digit decline in the sales revenue and these car companies actually belong to places like North America, Europe and Asia. They changed their conventional high pricing strategy in this scenario and many organizations of this sector opted for discounts in their regular line-ups.
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