During the early part of the twentieth century, the automobile industry grew rapidly. The demand for cars in the United States and Europe increased greatly following World War II. In addition, the rise in per capita income made vehicles more attractive to middle-class families.
The automotive industry became increasingly concentrated in the hands of a few large companies. These companies began to lobby against safety regulations. During the mid-twentieth century, automakers were required to conform to stricter standards.
The European Union and California imposed stricter limits on hydrocarbons, nitric oxides, and carbon monoxide in their emissions. These measures were designed to improve the quality of automobiles and reduce pollution.
During the 1970s, the price of gasoline rose because of oil shortages. This caused the automobile industry to lose ground to Japanese automakers. During the early 1990s, Japanese automobiles gained international reputation for better quality.
The automotive industry also faced increasing competition from the public transportation sector. In the United States, the Model T, manufactured by Ford Motor Company, replaced animal-drawn carriages. The Model T was also a mass-produced car that was relatively affordable.
Another significant change occurred when Toyota, which was originally a non-automotive company, took Toyoda Loom Works into automobile manufacturing. The decision by Kiichiro Toyoda helped form Toyota Motor Corporation.
A further important development was the invention of the internal combustion engine. Carl Benz patented the Benz Patent-Motorwagen in 1886. The first automobile with an internal combustion engine was produced in Mannheim, Germany, in 1885.