Ford, the US' second-largest carmaker, is closing its plants and laying off its workers. It is also embracing shrink-to-survive strategy to regain its image in hope of rebounding billions of dollars of losses.

The automobile in the US is one of the key industries and cars account for more than 5% of the nation's GDP. The four-wheeler segment is dominated by Detroit-based big three players, General Motors (GM), Ford and Chrysler. During 1990s, they enjoyed boom time and introduced a wide range of vehicles and modernized "mass customization." However, America's economic slowdown in later years severely impacted the auto-majors and resulted in jobs loss, factories being closed against sinking benefits. The US carmakers are surrounded by steady decline in their market share, and enrooted downsizing their production capacity. The heydays of big three automakers of the US market are likely over. The foreign, especially Japanese manufacturers are ruling the roost and are enjoying the increasing popularity with the American car buyers. Against this backdrop, both GM and Ford have seen an erosion of their domestic market share in the recent past and are shrinking to survive and implemented downsizing as a conscious strategy.

According to the latest report on the US vehicle sales, GM and Ford witnessed that their sales had fallen more than the rest of the industry. Overall sales were up by a mere 0.1% on an adjusted basis; GM was off by 7.3% and Ford down by 2.7%. In fact, the declines have become regular phenomena among the US carmakers. GM commanded 50% market share in the 1960s. But now every year it is losing its market share. Ford is no exception. It has been losing about a point of share annually for the past decade. Its share of the US car market was 18% in the first seven months of 2006 against 26% in 1995. The losses were unintentional against new entrants from Japan and Korea.

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