Auto Industry

1954 Words8 Pages
Introduction

The evolution of the automotive industry has been influenced by various innovations in fuels, vehicle components, societal infrastructure, and manufacturing practices, as well as changes in markets, suppliers and business structures. Currently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors GM, Honda, Toyota, and Nissan The best known early automotive manufacturing pioneer was Henry Ford, who built his first car in 1896 and founded the Ford Motor company in 1903. Ford became famous for pricing Model T's competitively and perfecting the automotive industry assembly line production which revolutionized the automotive manufacturing industry and mainstreamed ownership in the United States. During this period 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.

Going forward the global car market is full of potential. That growth is not expected to be in the US, rather in countries such as: China, India, The Pacific Rim, South Africa, and South America. Other future endeavors include low emission cars, which are expected to provide expansions in sales. Some major automakers are investing in fuel cells, devices that convert liquid hydrogen into electricity, hoping to make future vehicles more environmentally friendly. As we move forward the automobile industry will see more changes in the next 10 years than it has in the last 100.

Now we will take a look at the automotive industry through Michael Porters Five Forces Analysis model. There five different areas that influence an industry: (1) threat of substitutes; (2) barriers to entry, (3) supplier power, (4) buyer power; and (5) degree of rivalry. As we look at each of these areas we will learn what influences and drive the automotive industry in today's society.

Threat of Substitute Products

There are not many substitute products for automobiles. The most common substitutes are planes, trains, buses, walking, or riding bike. All of these different forms of transportation depend on the geographic location, availability and what the cost is resulting back to the consumer. In some cities such as New York or Chicago, a car is not as necessary. In cities such as those, the subway, bus, riding a bike or walking is the most effective means of transportation.
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