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Impact of the american automobiles industry
Impact of the american automobiles industry
Us automotive industry analysis
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1. Introduction 1.1 Global Automobile Industry The automobile industry is a pillar of global economy. Globally automotive contributes roughly 3 % of all GDP output. It historically has contributed 3.0 – 3.5 % to the overall GDP in the US. The share is even higher in the emerging markets, with the rates in china and India at 7 % and rising. China produces the highest number of automobiles followed by US and Japan (oica.net, 2015). The industry supports direct employment of 9 million people to build 60 million vehicles and parts that go into them (oica.net, 2015). Many other industries such as steel, iron, glass, aluminium, textiles etc. are associated with the automotive industry and resulting in more than 50 million jobs owed to the auto …show more content…
With about 187,000 employees and 62 plants worldwide, the company’s automotive brands include Ford and Lincoln (Ford Annual Report, 2014). In 2014, Ford automotive made revenue of USD 135.8 billion with a pre-tax profit of USD 4.5 billion (Ford Annual Report, 2014). Ford recorded highest Net Income & profit margins in 2011 the second most profitable year in the company's 109-year history as shown in Table 1 .But much of the profit was attributed to a non-cash gain, as it put a large tax credit from past losses on its balance sheet that will shield it from taxes in the future. Table 1 – Net Income (Source – Ford Annual Report, 2014) The Profit Margins of Ford was always at par or it has been much better compared to General Motors in the past as shown in Table 2 except in 2014. Table 2 – Profit Margin of Ford Vs Competition (Source – Nasdaq.com, 2015) http://www.nasdaq.com/symbol/f/financials?query=ratios The decline in Profit margin in 2014 was because of their less revenue in the North American market where they make good margins with their larger vehicles as shown in Figure …show more content…
The Capital investment, skilled and licensed labour force, technological advancements, working with good quality suppliers is considered big barriers of entry into this industry. The future requirement of electric cars and hybrid vehicles has opened this industry to some new entrants like Tesla. To explain the barriers of entry, let us take the example of America's best-selling SUV in 2014 which was the Honda CR-V, for the third consecutive year followed by Ford Escape. These two companies with their immense economies of scale are posing a high barrier to entry for their share of the market. Honda CRV is able to offer the better fuel economy and safety rating without incurring a loss and maintaining the majority of the market share. This makes it difficult for firms like Volkswagen who are leaders in Europe to enter this market. Due to the high market share and high barrier of entry, Honda and Ford have an oligopolistic relationship within the SUV market. These two companies tend to have similar prices against any other
Until recently, the Ford Motor Company has been one of the most dynastic of American enterprises, a factor which has both benefited the company and has brought it to the brink of disaster. Today Ford is the second largest manufacturer of automobiles and trucks in the world, and it’s operations are well diversified, both operationally and geographically. The company operates the worlds second largest finance company in the world, and is a major producer of tractors, glass and steel. It is most prominent in the US, but also has plants in Canada, Britain and Germany, and facilities in over 100 countries.
As of 2010, Ford is the second-largest U.S.-based automaker and the fifth largest in the world based on vehicle sales in that year. Ford has seen success in the international market, and is ranked in the top ten fortune 500 companies. Ford was the tenth-ranked overall American-based company in the 2013 Fortune 500 list, based on their global revenues in 2012 of $134.3 billion. (CNN, 2014)
Hybrid vehicles are gas-electric vehicles. They provide gas mileage that is more efficient than that of conventional gas only powered vehicles. For the Ford Motor Company, an increase in its demand of hybrid vehicles seems to be a double-edged sword. It is profitable that there was an increase in demand; however, they have not been able to keep up with the demand. Ford introduced the first hybrid SUV, the Ford Escape, to auto showrooms in 2004. This was one of the few hybrid vehicles available to consumers. Upon introducing the Ford Escape and increased fuel prices, Ford experienced an unexpected increase in demand for its Escape, which rendered the company unable to keep up with the demand. Dealerships began selling out of this popular hybrid model as soon as it hit the showroom (Freeman, 2006). With gas prices constantly on the rise, consumer interest continued to rise. The demand for the hybrid vehicle became higher than the supply. With Ford Motors inability to keep up with demand, its sales for the vehicle fell from 2,526 in June of 2007 to 1,578 in July of 2007 (Freeman, 2006).
The automobile industry began with Henry Ford’s production of the Model T in the early 1900’s. With the creation of the assembly line, cars became cheaper and quicker to produce, thus making them affordable for many people. There were originally 500 auto manufacturers. By 1908, there were only 200; and in 1917 only 23 remained. This vast reduction was due to large amounts of consolidation within the industry.
Today the automobile industry is stronger than ever, selling millions of cars to eager consumers. Every year new models are released with newer features and technology to lure the purchaser. Every manufacturer today should thank Ford for what it has done in the past, whether it was the assembly line, interchangeable parts, strong quality of the Model T, it's undeniable what Ford has done for the industry, economy and transportation.
Ford’s major products are passenger cars and light commercial vehicles (trucks and vans). Ford’s current assets include 90 factories, two automotive brands, Ford and Lincoln, and the Ford Motor Credit Company. Ford’s largest market is the United States, where it generated $82.67 billion in revenues in 2014.
The One Plan and One Goal components also indicate that the mission statement focuses and unifies Ford’s global organizational efforts to improve business performance and achieve the global leadership point in the company’s vision statement” (Ford). Ford’s vision statement is “people working together as a lean, global enterprise for automotive leadership.” (Ford). The company also explains that organizational performance is measured by the satisfaction of their customers, employees, investors, dealers, suppliers, and communities. Ford’s vision statement states that the company places a great deal of emphases on global leadership, stakeholder relations, and lean business in their quest to become the world’s leading automotive brand in products and services. Ford Motor Company prides itself as a company that is passionately committed to providing personal mobility for people around the
American automobile industry has striven through the years with excellence and great dominance both in America and in the global market. The history of it global dominance could be attributed to many factors which include global acceptance of American cars and brand superiority. However, American automobile industry has not strived without major challenges that include: political, global competition, technological, economical, and environmental challenges.
This has resulted in exposing many automobile users to unpredictable prices of fuel. These issues were, however, the reason for the inception of Tesla Motors so as to bring into existence another set of automotive which serves the similar purpose but uses another form of energy that is electricity to drive them instead of the disadvantageous gasoline-powered engine. This invention was influenced by a number of factors in terms of its planning and performance (Hunger, 2010). Factors affecting Tesla’s planning and performance. The success of any organization, just like the Tesla Motor, largely depends on the planning of the activities by the management team in the company.
BMW having high market share in European and U.S luxury car markets, started facing issues with launch product qualities and also facing a fierce competition from Japanese producers. Currently the market share was still stable but the rigorous growth of Japanese producers would affect BMW in future. These Japanese competitors had set higher standards of conformance.
On the contrary, the global competition made the U.S auto industry to expand more to other foreign countries too and thereby increasing their sales. Example is GM motors, the highest car sale automobile company in 2014, it has more than 212,000 workers in 396 facilities within six continents. The company is more innovative with more partners around the world to outperform other competitors in the
the only person other than Ford to successfully break in to the automotive industry. (Henry Ford Biography, 2015) The second car produced by Ford was the Model N, a $600 dollar four-cylinder automobile which became the bestselling car in the country. (Henry Ford Biography-Childhood, Life, Achievements & Timeline, 2015) Much of the Ford’s success was due to the assistants that Ford had. James S. Couzens, C.H.Willis, and John and Horace Dodge, the Dodge brothers who would eventually start Dodge motors learned a lot from Ford at this time. (Henry Ford Biography, 2015) In 1907 profits were over $1,100,000 dollars and the company had a worth of $1,038,822. This was substantial amount of money at this time. After the success of the first two models Ford had a vision for a better, cheaper, motorcar called the Model T which got its name due to the fact the o-s where not approved or liked by Ford. So, in 1908, the Model T was introduced to the public. (Exhibits, 2014) The Model T was easy to
Today Ford continues to produce passenger cars and commercial trucks. The company continues to sell cars through the Ford and Lincoln brand, but has recently discontinued the Mercury brand (The Editors of Encyclopædia Britannica). Ford operates in North and South America, Europe, China, Korea and Africa. Ford continues to be one of the largest American car manufacturers alongside its longtime domestic competitors Chrysler and General Motors (“Ford Motor Company
Although “The Big Three” dominate the market, there are other players in this industry, though most operate as foreign branches. A good example of these is The Three Asian companies: Toyota Motor Corp, Honda Motor Co. and Nissan Motor Co. According to Checkonomics (2006) their combined market share in the U.S. had gone up to 40.61% by 2005. As shown in a report by Graduate School of Business, Stanford University (2000), these six shared the market with Volkswagen, although local consumers also imported vehicles from other countries.
The company's main location is in Dearborn, Michigan, United States. The ford moto company located in around 90 worldwide, and the company also located in sultanate of Oman in Muscat, Barka and Nizwa. In 2016 the number of employees in Ford moto company are 201,000 thousand employee. The ford moto company reported that in 2011 that they make second most gain profit since 1993. The company's profit in 2011 was $20.2 billion. The company produce