ABSTRACT

This chapter analyses some of the most important trends affecting the US auto industry and reviews the current literature on the effects of the Voluntary Restraint Agreements (VRAs) on product quality, prices, output and employment in the domestic auto industry. It explores the structure of the domestic industry. Recent changes in patterns of demand and the competitiveness of the domestic producers, vis-a-vis their principal competitors in Japan. The chapter also analyses the markets for both cars and trucks because small trucks are close substitutes for cars, use many common parts and are produced by the same industry. It explains the literature on the particular effects of the VRAs on the US auto industry, as a preface for a new analysis of this issue. Employment in domestic vehicle production depends on overall levels of auto demand, the shares of domestic producers in US and world markets, and trends in the structure of the production process.