How the 1973 Oil Embargo Changed the Auto Industry

Last week was the 40th anniversary of the first Arab oil embargo which drastically changed the automotive industry. The oil embargo affected the car scene in multiple ways:

  • Auto Industry Increasing

    Image Courtesy of FDP

    The rise of foreign automakers: Before the 1973 oil embargo, only 13% of cars in the United States were imported. Shortly after, foreign automakers’ presence with their cars and off-road-inspired vehicles in the States dramatically rose and has been on the incline ever since.

  • Tarnished reputations: Gas prices became more of a concern and as a result there was more of a demand to manufacture and sell smaller cars. Some brands including Lincoln and Cadillac, who were known for their larger-style vehicles, took a huge hit to their reputation.
  • CAFE standards: The federal government began to push that automakers meet corporate average fuel economy (CAFE) standards. Some automakers were forced to put heavy incentives on small cars to meet the mandate in order to be in compliance.
  • New speed limits: The average speed limit around the country was reduced, and many areas that were once 70mph were reduced to 55mph and 60mph zones reduced to 45.
  • The rise of trucks and SUVs: As auto makers made smaller cars to meet CAFE standards, more trucks and SUV’s were introduced to help meet the demand for consumers who needed additional cargo space. This of course helped give birth to the 4×4 accessories industry and crated more of a demand for 4×4 mechanics and truck parts.
  • Death of muscle cars: Sadly, as automakers struggled to meet fuel economy standards, horsepower and performance took a back seat.
  • The rise for alternative fuels: The quest for better fuel economy became more important which helped fuel (no pun intended) the use for diesel and ethanol.
  • Innovation: The original run of downsizing cars created a mass of lousy, ugly cars. Fortunately over the next couple decades the push to trim weight and increase fuel economy brought new technology and new innovative designs that would later stimulate the car economy and create new attractive automotive designs.

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