One thing I have long been confused and ill-informed about is the automotive industry; the last thing I remember having occurred years ago when GM and Chrysler filed for bankruptcy. Since then I never understood why new Chevy’s, Jeeps, and all continued rolling out of the TV promos and onto my neighbourhood streets. The article Boom here, bust there was able to shine some light on the situation for me. Apparently the American auto industry is booming. Say what? Though nowhere near what it once was, it still has managed to pull off a decent recovery. Europe’s automakers on the other hand have been struggling to make ends meet for the past 6 years. Looking at the European automotive market from Porter’s Five Forces model, it became apparent to me that the industry has some interesting rivalry caused by various characteristics. Slow market growth is probably the largest reason for manufacturer rivalry as demand for cars has declined significantly especially in Western Europe where the urban population often lives comfortably riding public transit. The Europeans are also suffering from an industry shakeout where automakers have been over-producing cars for years and this over-supply leads to price wars, competition, and failure. Another reason for European woes are government barriers in exiting the industry, such as France and Belgium’s laws making it extremely difficult and costly for Renault and Peugeot to lay off workers and shut down factories. In contrast, the United States looks strangely healthy; a younger population, cheaper production costs, and a leaner product output that actually suits demand can explain the recent boom. Now I’m left wondering, why is Detroit still broke?