Industrywide, production levels fell by almost two million vehicles, almost 22 percent. Most of the decline was traced to larger and medium-sized cars that had poor fuel economy. Production of compact and subcompact cars rose, but not as much as that of larger cars fell. As the Nixon wage and price controls ended in August 1974, inflation figures boiled upward to above 12 percent. Chrysler, faced with an inventory of cars that would last for 120 days, closed five of its six U.S. assembly plants. Automobile-production figures did not improve in 1975, falling by another 24.5 percent to a mere 6.4 million vehicles. The slump in production caused massive layoffs among autoworkers, and the unemployment rate in the auto industry reached 15.8 percent.

Downsizing.

The two years of precipitous production declines, along with the shift in consumer tastes in car design, raised many problems for the domestic car industry. The...