In the automobile's first few decades in North America,
rapid technological change lead to the concentration of most car manufacturing
at Ford, Chrysler and General Motors.
With their labour unions they formed a duopoly,
able to buy out or compete unfairly with smaller competitors.
By the 1970's, these companies had become sufficiently large relative to government that their influence had created a permissive regulatory environment. The big three could pollute excessively, and could produce overpriced, unsafe vehicles.
Auto makers could confuse consumers by introducing new models every year and maintaining dealer networks whose role was to manage customers' access to information.
Japanese manufacturers had to compete on price, fuel economy and quality because they didn't have a cozy relationship with North American governments. In winning a large and growing share of the global car market, Asian carmakers reimposed market discipline on the big three.
The car market is more competitive than it used to be. Vehicles are safer, cheaper and of higher quality than they were thirty years ago because there are a larger number of truly distinct car companies.
Today, the Internet facilitates information gathering and
comparison of different car models. There are numerous websites on which
consumers can discuss buying choices and share information.
Information technology, including computer-aided design and automated parts ordering systems, allows car companies to arrange production more efficiently, which often means relying on third parties for parts and sub-assemblies. Much of the act of making a car is now contracted out.
Sometime in the next few years,
a large automaker is going to allow consumers to
order vehicles online without ever visiting a dealership.
This hasn't happened yet because automakers don't want to anger their dealers,
but as soon as one falls, the rest must follow.
Once cars can be ordered online, it will be easy for automakers to offer consumers the ability to customize their vehicles in much greater detail. Manufacturers will be able to produce more specialized vehicles as smart production techniques make possible short production runs and per-vehicle choices at no extra cost.
It is currently necessary to ship a few demonstration units of each model to each dealer in one's dealer network. With per-model design costs, which are still high, this keeps automakers from introducing a wide range of models.
Styling has become blah over the last twenty years, with all cars converging on a rounded featureless bubble design. Designs will become more radical when a car model can appeal to a few thousand people worldwide and still be a commercial success.
For at least the next twenty years there will still be car models, as opposed to full-blown creations of the individual consumer's imagination, because of the regulatory framework surrounding the auto industry. A new model has to pass safety and fuel efficiency tests. This barrier will fall only gradually.