The assembly line and mass production techniques improved by Henry Ford increased productivity in the automobile industry. The assembly line allowed an automobile to be produced by using many workers to perform one task as the car was carried along the line, skilled craftmen were no longer needed. As productivity increased, cost decreased between 1908 and 1909 Ford was able to reduce the cost of the Model 'T' from $950.00 to $300.00. This led to greater consumer demand, which led to the growth of the industry. Prior to these new refined production methods automobiles were the luxury for the rich and famous, Ford realized the potential that mass production could have upon a mass consumer market.
The growth of automobile industry in the US can be linked to a few key changes that took place in America after WWI:
1) Consumer spending -- Soldiers coming home from WWI and families that drastically reduced spending during the war had more disposable income (spare cash) to spend on consumer goods.
2) Government and Big Business -- During the 1920s the Federal government made an effort to help businesses growth through tax breaks and easy credit. Also, the government repealed taxes on wealthy individuals. This gave wealthy individuals more money to spend (see #1) and more money to invest in business.
*Also, mass production (business) made cars affordable for consumers (more income).
*Government builds more infrastructure, like high ways after the war. There are places to drive cars.
3) Modernity -- Socially, the 1920s were a time when many Americans felt that technology made them modern. And technology became desirable, cool, hip, whatever you want to call it. No more horse and carts for the young people of the 1920s! Cars gave them freedom to travel and to get away from extended families.
These three areas effect each other and the automobile industry grows because:
1) People can afford cars (disposable income).
2) Business can afford to sell cars cheaper (easy credit/taxes reduced/mass production).
3) Government built roads (infrastructure).
4) People thought cars were cool and enjoyed the freedom to go faster and farther so they wanted to spend their extra cash on cars.