Automotive industry began in the 1890s in the United States. As a result of the domestic market size and the use of mass-production, the industry grew so quick into the largest in the world. The United states is the second largest automobile manufacture in the world by volume with over eleven million manufactured in 2014 according to a survey conducted by Organisation Internationale des Constructeurs d 'Automobiles (OICA).
Though the industry began with hundreds of manufacturers, but by the end of 1920s it was dominated by three large companies namely General motors, Ford and Chrysler. By 1950 The U.S produced almost three quarters of all automobiles in the world.
From 1970s, high oil prices and increased competition from other foreign auto manufactures affected the companies in the U.S, later the United…show more content…
In this essay, the author
Explains that the united states is the second largest automobile manufacture in the world by volume with over eleven million manufactured in 2014.
Explains that the automobile industry began with hundreds of manufacturers, but by the end of 1920s it was dominated by three large companies namely general motors, ford and chrysler.
Explains that high oil prices and increased competition from foreign auto manufactures affected the companies in the u.s.
Explains that globalization and international trade have made the automobile industry in america more competitive. foreign automakers are coming into the u.s with more brands, while the united states is going abroad to compete with other companies in the industry.
Explains that toyota first came into america in 1957 when they opened a dealership in hollywood california, and that year about 287 customers bought the "toyopet crown" from the company.
Explains that the global competition made the u.s auto industry expand more to other foreign countries and thereby increasing their sales. gm has more than 212,000 workers in 396 facilities within six continents.
Explains that gm cars have adaptive cruise control, side blind zone warning, automatic park assist, and more applications to keep you connected while driving.
Explains that with buick and gmc intellilink, chevrolet mylink and cadillac cue, you may use the bluetooth or usb to connect your smartphone and other apps into your vehicle’s in-dash display.
Opines that general motors still has issues with employee satisfaction, which leads to constant strikes. employee management incentives have not been fair with the workers.
Explains that nitrogen oxides in vehicles emissions can react to form ground level ozone during spring and summer. the presence of this air pollutant causes and worsens respiratory illness.
Explains that vehicle emission can be trapped near the ground by temperature inversions during the winter, which could result in pollutants like nitrogen dioxide and carbon monoxide.
Explains that the federal government of the united states had established emission standards, which are the minimum legal requirement governing air pollutants released into the atmosphere.
Analyzes the dupont automotive/sae survey that was conducted by consumer insights, inc. in 2008. consumers want the industry to introduce more alternatively powered vehicles.
Opines that the automobile factories should reduce emissions from their factory and not just their vehicles to help keep the environment cleaner.
Foreign automakers are coming into the U.S with more brands, while the U.S automakers are going abroad to compete with other companies in the industry and improve its sales domestically and internationally.
One example is Toyota, the company first came into America in 1957 when they opened a dealership in Hollywood California, and that year about 287 customers bought the “Toyopet crown” from the company. Toyota now produce a million and a quarter vehicle in a year with ten plants in the U.S. The company also provide about 39.000 jobs and are engaged with other charity works that amounts to over $700 million to support safety, education and environment.
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
Environmental Challenges facing the US Automotive Industry
The American Automobile industry has been at the forefront of many great innovations over the years and provides a multitude of products that serve many different uses in today’s society. The Alliance of Automobile Manufacturers estimate that the industry is responsible for 7.25 million jobs in the USA.
SWOT analysis
In this essay, the author
Estimates that the american automobile industry is responsible for 7.25 million jobs in the usa.
Explains that foreign automakers have been ahead of their us counterparts in developing hybrid and electric technology and practically zero emission vehicles.
Opines that the us automotive industry must recognize trends and be at the forefront of innovation to become competitive globally.
Explains the strengths and weaknesses of the us automotive industry, focusing on its brand recognition and competitive advantage in the marketplace.
Argues that a ban on gasoline and diesel burning cars in the usa would be difficult to impose, even though the us environmental protection agency estimates that 150 million people live in areas that do not meet federal air quality standards.
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
In this essay, the author
Explains that the automobile industry is a pillar of global economy and contributes roughly 3 % of gdp in the us. the industry supports direct employment of 9 million people to build 60 million vehicles.
Explains that ford's profit margins were always at par or it was much better compared to general motors in the past.
Explains that toyota, volkswagen, general motors, ford, and honda are the top five biggest automobile manufacturers in the world.
Analyzes the kinked demand curve for ford escape vs competition (source – capital, economics of 21st century, 2015).
Explains that ford manufactures or distributes automobiles across six continents with about 187,000 employees and 62 plants worldwide. ford recorded highest net income & profit margins in 2011 the second most profitable year in the company's 109-year history.
Explains that the decline in profit margin in 2014 was due to their less revenue in the north american market where they make good margins with their larger vehicles.
Explains the barriers to entry in the automobile industry. the future requirement of electric cars and hybrid vehicles has opened this industry to some new entrants like tesla.
Explains that volkswagen would suffer from high marginal costs at a restricted quantity of units due to export/import fees and the cost involved in the transport of the cars.
Impacts of new companies entering the market are significantly decreasing the sales of domestic automotive sales. Chery and Geely are prime examples of automotive companies in China planning on importing cars to the U.S that will be priced under $10,000. Consumers will be thrilled, but it could be devastating to General Motors and Ford. New foreign automotive businesses entering the market in the near future will have a huge impact on domestic automotive businesses. Eaton produces OEM’s for Ford and GM trucks. The new business entering the automotive market is foreign cars. There will always be a demand for trucks. The demand for truck sales may decrease due to increase gasoline prices. Demand and Supply for domestic vehicles is going to decrease in the future. Increasing foreign car sales will impact domestic automakers by laying off more employees and shutting down more and more plants. Thousands of people have already lost jobs and thousands more will. Eaton has sold their mirror business and will continue to sell off more automotive businesses if sales do not increase sales by 14% every year. Eaton will have to purchase or win new business for foreign vehicles in the future. Eaton is currently doing 10% business with foreign vehicles and needs to increase foreign sales by 20% or more.
In this essay, the author
Explains that eaton corporation is divided into electrical, truck, automotive, and fluid power. impacts of market structure, technology, prices, competitors, cost structure and benefits will be discussed throughout the paper.
Explains eaton's automotive division provides 90% to domestic oem’s and 10% to the foreign market. toyota took over the domestic market share from gm and ford in august.
Explains the impact of new companies entering the market on domestic automotive sales. chery and geely are prime examples of automotive companies in china planning on importing cars to the u.s.
Explains that eaton's top priority is to create vehicles that people want to drive, a vehicle with the best possible performance, efficiency, and control.
Explains the law of diminishing marginal productivity. eaton has key metrics that are measured monthly. on time delivery, scrap and productivity are some of the metrics.
Opines that eaton offers competitive wages and benefits, including a pension plan, matched 401k, tuition reimbursement, competitive medical and dental insurance, and paid vacation.
Explains that the products produced in the automotive division at eaton corporation are elastic. a shift in demand has been seen due to an increase of demand for foreign cars.
Explains that government regulations have an impact on how businesses can run. regulations have been put in place for equal opportunity rights, labor laws, and safety.
Explains that borg warner, dana and delphi are the most competitive companies within the automotive division. eaton believes in competitive gain through advanced performance.
Explains that eaton's automotive and truck division has seen a decline in sales for the year of 2006 and 2007 due to high gasoline prices, and toyota taking over the market share.
In 2015 17.4 million vehicles were sold in the U.S. and 9.8 million of those were cars and trucks manufactured by General Motors (Automotive Industry Spotlight, 2016).
In this essay, the author
Opines that general motors needs to rebuild its product development pace and employment issues to find a way back to the top.
Recommends gm for product development in order to create a type of gas-electric vehicle that will allow them to be more competitive. the future of the automotive industry is small, fuel producing with very little waste cars.
Explains that general motors is competitive in terms of innovation. it must keep up with automobile trends, new technology, and government and safety demands.
Explains that general motors entered bankruptcy protection on june 1st 2009 and has been fighting there ever since. they sold a portion of their stock holdings and bought them back by the end of 2012.
Explains that general motors is the largest manufacturer of cars and trucks in america and one of the biggest in the world.
Explains that general motors was running out of cash, with reserves of $16.2 million at the end of the third quarter in 2008 and cash outflows of $6.9 million during that same quarter.
,2011, para 4). Yet, so much success was not enough, so General Motors decided to expand overseas. In the late 1920s and early 1930s General motors expanded its company by adding Vauxhall of England, Adam Opel of Germany and Holden of Australia. These new additions to the company were essential to attack the market in other countries. Despite being under another badge these companies had the same heart and soul as the GM and Chevrolet. These qualities made the production cars to have great features that could not being out matched. Decades later GM was going to through an economic crisis meaning it had to cut back on certain areas. It concluded that GM had to cut back on staff and maybe on holding back from producing overseas. Such economical setback made GM resort to going bankrupt and killing of Pontiac and Saturn then later selling SAAB (Gunnell, J. 2011, para 16
In this essay, the author
Explains that chevrolet has been around for decades and has grown and developed since its early days. it's had its downsides but that never pushed the idea to quit.
Narrates how louis chevrolet and william c. durant co-founded chevrolet motoring company in 1911, a deal that would provide millions of jobs and become one of the most well-known motoring companies.
Explains that louis and william worked together for day and weeks designing the new car that would help the growth and development of the newly founded company.
Explains that general motors bought chevrolet in 1917 to extend its market and help louis with mass production. in 1920, chevrolet had surpassed its main competitor, ford.
Compares chevrolet's rivalry with mcdonalds, at&t, and verizon in the late 1960s and early 1970s. chevrolet and ford had a huge clash in marketing their products through public television.
Explains that general motors expanded its company by adding vauxhall of england, adam opel of germany and holden of australia.
Explains that despite the economic downfall, chevrolet has been slowly returning to a stable economic status. since 2008, general motors was near bankruptcy, but it slowly began to recover.
Explains that general motors' net worth is $40 billion dollars, with a staggering revenue of $150.48 billion in 2011. the company is providing many jobs to the different 6 countries in which its established.
Explains that gm has woken up to attack the eco-friendly market by producing electric concept cars in the early 1990s.
Opines that chevrolet and gm will continue making advances to protect the environment, such as better and more ecofriendly all-electric cars, and use more power efficient and less emission engines in the future.
Explains that chevrolet has one of the biggest and most successful pickup lines in the us. the chevrolet silverado and gmc sierra are based on the same chassis.
STUART. "GM Could Soon Sell More Cars in China Than in the US." MetalMiner â Sourcing & Trading Intelligence for Global Metals Markets. 28 Apr. 2010. Web. 04 June 2010. .
In this essay, the author
Explains that general motors has an uphill and downhill history of sales in america, but has been doing well in other countries.
Explains that general motors incorporates word of mouth, test driving, and television ads to sell automobiles. they also use target market selection, which is a useful strategy in the automobile industry.
Explains that general motors is marketing to a more efficient automobile in china, where most people who can afford cars have professional drivers who take them places.
Analyzes how general motors plans to sell automobiles they make in china back in the united states, which would create a whole new market strategy since americans don't base their buying on trade shows.
Explains that knowing how to segment your market is the key to any kind of sales internationally and domestically.
Explains gm plans china-built vehicles for us market. nz herald: new zealand's latest news, business, sport, weather, travel, technology, entertainment, politics, finance, health, environment and science.
Opines that gm adopts green marketing strategy: automotive news & analysis.
Explains krolicki, kevin. "gm dusts off a familiar brand strategy for china boom." business & financial news.
Opines that gm could soon sell more cars in china than in the us. metalminer, sourcing & trading intelligence for global metals markets.
Opines that gm could soon sell more cars in china than in the us. metalminer, sourcing & trading intelligence for global metals markets.
General Motors, an American-based automotive manufacturer with a large global presence, has long held a large share of the worldwide automotive market. Despite its market position and reputation for quality, the company has recently begun to struggle with new competitors in the Asian Pacific region, which has pushed their needs to develop new manufacturing technologies, as well as to better control costs and quality in its American manufacturing facilities.
In this essay, the author
Explains that general motors' asian business alliances have often yielded greater benefits to their partners than to gm. however, it has failed to improve its internal product development program, demand a proper return on its investments, loyalty from its partners, and the proper level of control over proprietary technologies.
Explains charles hill's textbook, "international business: competing in the global marketplace", identifies three key characteristics for a company to look for in selecting business partners.
Opines that general motors' missteps with its early attempts with asian business alliances should be viewed as valuable learning experiences for the company as it accustoms itself to the business environment of the region.
Explains that general motors, an american-based automotive manufacturer with a large global presence, has struggled with new competitors in the asian pacific region, which has pushed their needs to develop new manufacturing technologies.
Explains that toyota was the world's third largest automotive manufacturer, behind only ford and general motors. keiretsu were vast and closely-allied corporate partnerships, bound by complex and long-lasting arrangements.
Explains that gm faced numerous problems with its asian alliances, including managerial control, return on investments, and control of general motors technology.
Analyzes how gm's asian alliances did not find partners who didn't meet these criteria. many partners benefited significantly from doing business with general motors, while others had business relationships with other automotive manufacturers.
Explains that general motors' relative newcomer status hurts their ability to acquire the most knowledge possible about potential partners, but the long-term costs of failed relationships are much higher.
Argues that general motors needs to be more selective in establishing partnerships that require large investments, and expect a higher level of managerial and executive control.
Explains that toyota's empire was based upon a high-degree of geographical and power centralization, best represented by the massive toyota city complex and its keiretsu style of organization.
Recommends a flexible approach to address the problems faced by general motors, such as crossing cultural divides and building close, deep-rooted alliances.
Question 1: Barriers to entry
Entry into the car manufacturing industry involves overcoming steep barriers; car manufacturing is a highly capital-intensive market, thus forcing new entrants to acquire large sums of capital simply to enter. This capital goes into purchasing a manufacturing plant, sophisticated equipment, raw materials and supplies, and the development of extensive supply chains. (MarketLine, 2015) Additionally, car manufacturing firms must invest in research and development. In economic terms, this last item is deemed a sunk cost because the firm must undergo the research and development/engineering expense prior to even selling a single vehicle.
In this essay, the author
Analyzes the barriers to entry into the car manufacturing industry, stating that newcomers require significant capital, comply to government regulations, and comply with environmental and safety standards.
Explains that buyers in the car manufacturing industry are inherently price sensitive, but their susceptibility or elasticity depends on time frame. they have substantial leverage over automotive manufacturers and exert downward pressure on prices.
Explains that suppliers in the car manufacturing industry have limited power in pressuring firms due to foreign entities entering the market through forces of globalization. lack of differentiation leads to subsequent threats of substitution by automotive manufacturers.
Explains that the canadian car manufacturing industry consists of honda canada inc., fiat chrysler automobiles, toyota motor corporation, ford motor company of canada limited, and general motors.
Opines that the proposed trans-pacific partnership trade agreement between twelve pacific-rim nations could have deep ramifications within the canadian car manufacturing industry.
Opines that the future prospects of the canadian car manufacturing sector depend on the various trade-agreements – tpp and ceta - currently being debated.
The United States employs over one million workers and 3 percent of the U.S. economy is represented by the output of auto manufacturers in the U.S. (Klier, 2005). An average of over eight million passenger vehicles is produced in the United States annually. In a report published by Young (2014), auto sales in the U.S. have increased by 9.1% since July 2013. The automobile industry is a competitive industry, with global manufacturers such as British Motor Works (BMW) and Mercedes among other manufacturers importing vehicles into the U.S.; consumers have a wide range of vehicle makes and models to choose from.
In this essay, the author
Explains that the decline in sales of vehicles in india and russia impacts ford's international growth and competitiveness.
Opines that ford could capitalize on the demand for more fuel efficient cars and appeal to a younger generation by marketing the f series of trucks in other regions.
Argues that ford should invest in vehicle-to-vehicle communications (v2v) because other car makers are experiencing loss of trust from consumers.
Cites young, a. (2014, july 29). us new auto sales forecast: record high auto lending pushing us car sales to highs unseen since 2006.
Explains that the united states employs over one million workers and 3 percent of the u.s. economy is represented by the output of auto manufacturers.
Explains ford's mission statement, which includes a concern for sustainability, including climate change, water and supply chain issues, and materiality analysis.
Describes the strengths of the ford motor company, such as financial resources, market leadership, and innovation.
Explains that ford's weaknesses include a decline in combined corporate average fuel economy in 2013, due to more consumers purchasing trucks over passenger vehicles, and perceived product quality and service.
Explains that automobile manufacturers are finding it harder to increase prices because of competitive factors such as quality, price, style, available options, fuel economy, safety, reliability, and functionality. trade policy risks and currency fluctuations in south america are expected to negatively affect ford’s south american operations.
Opines that ford should aggressively go after market share in emerging markets. by marketing their f-line series trucks in china, ford has an opportunity to increase sales.
Explains that ford cannot control the external, political influences or currency fluctuations in south america. the organization must seek to build branding in india and china.
Cites goch, l., goyal, m. and klier, t.
Cites pereira, ro, y.k., and liker, j. k. (2014). product development and failures from best practices in u.s.
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.
In this essay, the author
Explains that the automobile industry began with henry ford's production of the model t in the early 1900s. with the assembly line, cars became cheaper and quicker to produce.
Explains that the industry is a global producer of automobiles, which is evident in the recent acquisition of chrysler by daimler-benz.
Predicts that the global car market will grow to 64 million vehicles by the year 2002. the automobile industry will see more changes than it has in the last 100 years.
Explains that the oversized vehicle was the body-style of choice among american consumers. japan's efficiency at producing this type of car allowed them to take 30% of the u.s. automobile market away from american manufacturers.
Explains that the luxury vehicle segment has grown more competitive, yet maintains large profit margin potential. american buyers have been showing increased interest in european and japanese manufacturers.
Explains that the sport utility vehicle segment has emerged as one of today's hottest markets through its increased sales. north-american consumers in higher income brackets are choosing suv’s in their garages.
Explains that minivans market share was 8% in 1998, which was down 12% from 1991, due to a shift in consumer demand away from these vehicles.
Explains that pick-up trucks, uniquely american vehicles that span all of the consumer target markets, show good potential for domestic manufacturers.
Explains that the largest and most important product segment in the automotive industry is mid-size cars. popularity for midsize vehicles is due to consumers’ preference for luxury cars they cannot afford and compacts that they do not like.
Explains that all these vehicle segments combine to form an industry in which consumers have continuously changing tastes. manufacturers who can compete worldwide, profit and growth potential will be ever present.
Explains the history of ford, which began with the first car sold in 1903 and the millionth car produced in 1917. ford's finance subsidiary, ford motor credit, was formed in 1959.
Explains that ford's three major subsidiaries are hertz, ford credit, and visteon.
Explains that ford's prime focus in the 21st century will be on the consumer. ford has made a deal with microsoft to take advantage of the msn carpoint service.
Explains that general ford has shown a steady pattern of sales growth from 1994 to 1997, growing at 5-7% each year. however, in 1998 sales were down 6%.
Analyzes how ford's borrowing can be explained by its leverage ratios, and their debt-to-equity ratio, which is up from past years.
Explains that ford's current ratio of.41 indicates that they have many current liabilities. this number is lower than the industry average, and their quick ratio has trended upward over the last 4 years.
Evaluates ford's efficiency by examining its asset turnover ratio and days inventory held ratio, which show how effectively it is using its assets.
Analyzes how ford's profitability is measured by the net profit margin, rate of return on assets (roa), payout ratio, and rate-of-return on common shareholder’s equity.
Explains that ford's 1998 price/earnings ratio of 12.64, meaning investors are willing to pay $12.64 per dollar of earnings, has more than doubled from 1997, a positive signal from investors to ford management.
Explains that the united auto workers (uaw) union represents the ford motor company's workforce. the company has $22 billion in cash to limit the threatening power of its unionized employees.
Explains that interest rate fluctuations affect individuals' willingness to spend large amounts of disposable income and are a concern to ford. ford will spend $74 million to comply with pollution and hazardous waste control standards.
Analyzes how ford has come to possess many strengths, such as their brand name, economies of scale, and diversified subsidiaries. ford's product lines reach all target markets.
Explains that ford's large size could be a source of weakness to them because of bureaucracy, red tape, and timely reactions to changes in the industry.
Opines that the opportunities for ford lie in their ability to lead the automotive industry in a global expansion. internet and e-commerce are examples of technological opportunities available to ford.
Explains the threats facing ford include an increasing number of well-informed consumers attributable to the availability of information on the web. honda, gm, and chrysler are ford's main competitors.
Explains that ford has been a leader in the automobile industry for the past 5 years. their 17.11% long-term annual growth rate shows they don't face going concern problems and expect to be profitable for many years to come.
Compares ford's current stock price with its 52-week low of $40.25, and its high of $67.875. with 1,222 million shares outstanding, ford has a market capitalization of $54,531 million.
Analyzes how a regression analysis of ford yields an accurate beta of 1.0151, compared with well-known financial news providers' estimates.
Cites the following sources: http://www.askjeeves.com, cnbc, and msn.