EXECUTIVE SUMMARY
This report critically analyzes the present situation of Pakistan’s Automobile Industry mainly focusing on the cars and motorcycles sector. The report provides brief information about the history and the evolution of the auto sector in the country.
The report also presents 5 years of data on the production and sales of the auto industry and discusses the various active tax and duty policies. The report also discusses the installed capacity and the capacity utilization of the overall industry. The report includes information about the installed capacity of the various major players of the industry.
I have also conducted a demand/supply analysis to analyze whether or not the local manufacturers are meeting the surging demand for vehicles efficiently. We have also taken reference from a research study conducted by the EDB and have tried to show a direct relationship that exist between per capita income and demand for vehicles. The report also talks about the manufacturing process of cars and lists the generic raw materials that are required for production.
The report also discusses the product mix of the cars and motorcycles sector and presents brief information about the various models and designs available in the market. We also presented market share breakdown highlighting the major share holders of the industry.
The report also analyzes the auto sector on the basis of Porter’s 5 forces framework and finally highlights some of the major problems the industry is currently facing.
I have tried our best to ensure that all the figures included in this report are relevant and authentic.
INTRODUCTION
Automobile industry comprises of the companies which are, in one way or the other, involves in the designing,...
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...en operating for more than 30 years and has managed to achieve high levels of localization i.e. 75% for cars and 95% for motorcycles yet the local manufacturers have not been able to manufacture complete engines and other major auto parts within the country and rely on imports. The government also needs to devise a consistent policy for the auto sector. The government should not abruptly end the protection given to the auto sector. One good decision taken by the government this year was the ban on the imports of cars that are used for more than 3 years. The government should also consider revising the import duty structure as the government currently slashed down duty on CBU’s from 65% to 40%. With the import duties being so low, it will encourage importers to import vehicles from other countries and their actions will cause significant damage to the local industry.
This paper will focus on the future of the U.S. Automobile industry as the United States recovers from the worst recession we have experienced in the past 75 years. I will provide information on the following topics pertaining to the U.S. automobile industry:
The automotive industry is without a doubt an industry that has massive implications relating to the United States economy as well as affecting every American household. Shifts in the supply and demand of automobiles influence the current and future household purchases. Households must determine what amount of their hard-earned income to allocate to certain necessities. Because most households have a budget, the amount spent on transportation it limited. While most industries have an effect on the economy, the automotive industry has far-reaching implications for most Americans. Not only are the workers affected but the many spin-off jobs created as well as the consumers that must purchase the automobiles manufactured.
The automobile industry is one that has constant vicissitudes. Burns Auto Corporation is not exempt from these unexpected changes or shifts in that industry. Many factors drive the automobile market fuel prices, the economy, and family sizes are just a few. This paper will take an in depth look at the current situation at Burns Auto; including the situation, problem definition, end state goals.
In many ways, the automotive industry has huge impacts on Canada. The impact it has creates jobs, and services. It also boosts economy and contributes to its success. Over the last two decades, the automotive industry has been a leading contributor to Canada’s economy and is a primary factor as to whether or not the economy will be successful. There are many contributing branches of the sector that allow it to be successful. This is shown through the production and manufacturing of vehicles, as well as the sale of the vehicles. The automotive industry has had a significant impact on Canada’s economy over the last 10 years. If the production and sale of domestic vehicles were to decline, Canada’s economy to be severely crippled and fall back into a recession.
The automobile sector has been a robust sector that has experienced tremendous growth in the past seven to eight years. Apart from two years in particular -2008-09 & 2012-13, there is general trend of ten percent plus growth in various segments like passenger car, commercial vehicles, two and three wheelers. The following chart shows the growth rate of various years in each sectors.
The world of technology is ever changing and advancing. With the automotive industry in play technology is constantly surpassing what is available today with what can be done for tomorrow. Technology and the automotive industry go hand in hand with constant improvement to components of cars. Due to technology advancement there is competition within the car industry, especially between American car companies and European car companies. European car companies provide their buyers with innovative variety and revolutionary luxuries. European car technology is superior to American car technology due to their safety, entertainment, and luxury features.
...nsumer interest and sales began to increase. However, without attaining economies of scale, the cheaper pricing of cars without making much of a profit is not sustainable and an alternative method of producing products at a cheaper price long term was to be sought. Consumer demand of imported vehicles, had sparked an increase in imports into the country causing local manufacturing to cease production and move overseas in order to reduce costs per unit to maintain profit margins. It is clear that this move is to achieve economies of scale as well as maintaining competitiveness in the evolving industry. Therefore the analysis concludes that the manufacturing of automotive vehicles is declining and will soon cease to exist in Australia. Profitability is declining, until a cheaper alternative of cost per unit is achieved, hence economies of scale will also be achieved.
At the end it will also provide some recommendations for the government to salvage this business. One of the principal reasons for which Australian car manufacturing industries are struggling to compete globally is the high labour costs in Australia compare to other car manufacturing country. The most promising countries in the car manufacturing sector are China, India and Korea have a very low labour cost (one fourth of the labour cost in Australia), which is reflected on the car price. Since people are getting same model of the car with comparatively cheap price,
In a capitalistic country with a free market, foreign competition is expected. This is no exception for the automobile industry where America competes with its various rivals. Competition from elsewhere encompasses that from Italy, Germany, and of course, the renowned Japan. The Japanese vehicle industry is especially competitive; according to the Automotive News Data Center, five out of the ten best selling vehicles of the year are Japanese vehicles. This data applies to the U.S. market over the first 9 months of the year. Expectedly, the automobile industry is an important and significant market. Motor vehicles are a major form of transportation as many people in the U.S. own at least one car.
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
In 1944, Kia Motors Corporation of Seoul, Korea, was founded as a manufacturer of steel and bicycle parts (Kia.com). During the early1950’s, the company changed its name officially to Kia Industries and began production of Korea’s first bicycle (Kia.com). In 1957 Kia began producing Korean’s first motor scooter, the C-100 (Kia.com). Korea’s first truck, the K-130 was introduced in 1962 (Kia.com). In 1971, the Titan, a 4-wheel cargo truck was produced (Kia.com).
My interest in the field of Automobile goes back to my early years in high school which is when I decided to pursue a career in engineering. As a child I was always fascinated by the very concept of automobile. Further, my father’s constant involvement in the automotive industry as an insurance claims assessor further enhanced my interests in automobiles. He was the one responsible for showing me the correct path to pursue my career in automobile field. Hence, after having completed my primary education, I decided to delve straight into the world of mechanics and engineering and pursued a diploma in mechanical engineering followed by a bachelor’s degree in mechanical engineering. Since there were very few options in India & there was no direct path to get into automobile field.
A vehicle is one of the biggest purchases a person will ever make. Over the years, the prices of an automobile have increased due to the rise of inflation. Due to a price index, the price of an automobile changes over a certain period of time. Economists compare averages of automobiles to calculate the cost of each vehicle that presents itself on a car lot. When all of the above is calculated within the purchase of an automobile, it affects every area of making the automobile to selling the automobile. All of these factors are impacted together for the automobile industry as a whole.
Company Overview: Bayerische Motoren Werke AG (BMW) is a German holding company and automobile manufacturer that focuses on the automobile and motorcycle markets worldwide. Franz Josef Popp founded the company in March 1916. BMW is headquartered in Munich, Bavaria, Germany. It also owns and produces Mini cars, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad. It divides its activities into the three main segments: Automobiles, Motorcycles and Financial Services. Its BMW automobile range encompasses the 1 Series, including three-door, five-door, coupe and convertible models; the 3 Series, including sedan, touring, coupe and convertible models; the brand new 4 series, featuring an only coupe design; the 5 Series, available in sedan and touring models; the 6 Series, available as a coupe or convertible; the 7 Series large sedan; the Z4 roadster and coupe; the sports utility vehicles, X3, X5 and X6 and M models, such as M3, M5 and M6. It has producing, assembly, service and sales subsidiaries throughout the world. For the sake of this project, I will be focusing on BMW’s automobile range mentioned above but specifically the 3 series line. The BMW 3 series proves to be the most profitable line due to its relatively low cost and affordability whilst featuring the thrill and power of a German engineered vehicle.
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