Key Features Of The Global Automobile Industry

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"Outline what you consider to be the key features of the global Automobile industry, and discuss how the industry has changed in recent years."
The global auto industry is expected to produce 85 million sales in 2014, up from an estimated 82 million in 2013. The automobile industry is a hugely profitable industry as we all know but Auto sales since 2008 have been below the long-term trend of the previous decade. Even in 2013, sales were below 16 million, which was the normal pace for the previous 10 years. [“ Global Car Sales Seen Rising to 85 Million in 2014” by MIKE RAMSEY and NEAL BOUDETTE – Wall Street Journal Online written Dec. 16, 2013. Last Accessed 7/04/14]. According to IHS Automotive, 82.84 million vehicles were sold last year. This represents a 4.2% increase over 2012. [Adnan Riaz, Mar. 24, 2014, 2014 Looks To Be A Good Year For The Auto Industry, Available from http://seekingalpha.com, Last Accessed 7/04/14]
By studying the global automobile industry, I have discovered that the industry resembles an oligopolistic market. The industry has lots and lots of costs such as Labour, materials and advertising. [http://www.investopedia.com/features/industryhandbook/automobile.asp last accessed 7/04/14] An oligopolistic market is dominated by few large suppliers. The leading firms account for a large percentage of market share. An Oligopolistic market structure has many characteristics. [Oligopoly Characteristics, http://www.buzzle.com/articles/oligopoly-characteristics.html last accesses 8/04/2014]
i) Industry Dominance by Few Large Firms
This is the most crucial characteristic of oligopoly. The automobile industry includes a few large firms which are dominant, and each one of these firms is approximately larger than the mar...

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...ine and secondly in the production of tires. The price of gasoline has increased dramatically in the US during the last few years. Oil is the major ingredient in tire production. An Increase in oil prices means an increase in the cost to make the tires, an increase in the cost to heat or cool the factory where tires are made and lastly an increase in the cost to ship the tires around the world. The tire makers are increasing the price of the tires as a result of the increase in the price of the oil. Both gasoline and tire production affects the auto industry as the increase in the price in gasoline and tire production affects their profit margin. [“The economic impact of rising oil prices in automotive industry” By binayak, april. 2008- Study Mode – Can be seen at http://www.studymode.com/essays/The-Economic-Impact-Of-Rising-Oil-140915.html . Last Accessed 08/04/14]

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