Automotive and Truck Division Market Trends
explanatory Essay
1492 words
Market trends that Eaton Corporation will be faced with will be reviewed and analyzed. Eaton Corporation is divided into Electrical, Truck, Automotive, and Fluid Power. I will focus on the automotive and truck division throughout this paper. Impacts of market structure, technology, prices, competitors, cost structure, benefits and price elasticity are some of the topics that will be discussed throughout the paper. The automotive division of Eaton Corporation is an OEM manufacturer for air, transmission and fuel management controls, automotive fluid connectors, engine air management systems, cylinder head modules, engine valves, lifters, limited-slip and locking differentials; clutches and brakes for industrial machines and golf grips. . Eaton’s automotive division provides 90% to domestic OEM’s and 10% to the foreign market. Eaton automotive produces OEM’s for GM and Ford. Toyota took over the domestic market share from GM and Ford in August of this year. Eaton’s market structure will change by targeting hybrid trucks that create new savings, efficiencies, and produce less pollution which are what trucking companies want says John Beering, director of global marketing for the 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.
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- The U.S. Automobile Industryexplanatory essayThe American Automotive Industry, popularly known as the U.S. Automotive Industry is one of the most rapidly evolving industries in North America. It is generally oligopolistic with a few players who in the past have been known to avoid price competition among themselves. The industry consists of industries manufacturing vehicles, car parts, replaceable parts and those engaged in assembling parts into complete models. However, the most dominant players in this industry are the vehicle manufacturers. The players design various models, produce the various parts that each model needs and assemble them into a finished product before availing them to the market. General Motors, Chlysler and Ford motors, dominate the U.S. Automotive mobile. They are popularly referred to as “The Big Three”.
In this essay, the author
- Explains that the american automotive industry is oligopolistic with a few players who in the past have been known to avoid price competition among themselves.
- Explains that although the big three dominate the market, there are other players in this industry, though most operate as foreign branches.
- Explains that michael e. porter of harvard university developed five forces to assist in analyzing different aspects of an organization in terms of its competitiveness in the industry in which it operates.
- Explains that buyers of a company's products may have power over the firm hindering its scope decisions that directly affect them. sensitivity to price, poor brand identity/product differentiation, large volume of purchases and lack of buyer incentives increase the buyers' bargaining power.
- Explains that firms and individuals who supply labor, raw materials and other components can be a source of pressure to the firm by charging very high prices or by switching completely to its competitors.
- Explains that a major determinant of competitiveness of an industry is the strength of the rivalry among competing firms.
- Explains that an industry with high profitability attracts many potential firms, but when these new firms enter the industry, the high returns will reduce. the u.s. automotive crisis was heightened by high exit barriers and expensive inputs.
- Explains that consumers' propensity to switch to alternatives is high when the cost of switching to other sellers is low, product quality and differentiation are low and the consumer is well informed.
- Explains that economic conditions change rapidly, either favorably or unfavorably, especially when the political environment is unstable. 2009 was a particularly hard period for the u.s. automotive industry with general motors and chlysler facing bankruptcy.
1547 wordsRead More - Ford Motor Companyanalytical essayIn the future the global car market is full of potential. There are currently 44 million vehicles and by the year 2002 experts estimate that number will grow to 64 million. 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. In America, a current trend is for the neighborhood car dealer to be purchased by a large manufacturer, such as GM, so cars can be sold through retail outlets. 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 elec...
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.
3002 wordsRead More - The U.S. Automobile Industryanalytical essayThe United States recession (which lead to a world recession), began in 1997 and significantly impacted the United States automobile industry during the recession period. The United States automobile industry is still reeling from the effects of the recession throughout the period of economic recovery that continues today. According to Chu and Su, “In this credit-driven recession, one of the hardest hit sectors was the automotive industry, along with the housing and financial markets. Chrysler and General Motors were pushed into bankruptcy; and 276,000 jobs in the automobile and parts industry were destroyed, a whopping 36 percent of the total employment in the sector”.
In this essay, the author
- Describes factors creating value in the industry and factors that will most likely input demand.
- Explains that the average cost of a car today is approximately $30,000, an increase from an average of $27,958 in 2009. average vehicle costs historically have not influenced vehicle sales.
- Opines that high unemployment rates, high oil and gasoline prices and changing demographics of the american consumer are the three factors that will most likely affect the u.s. automobile industry over the next five years.
- Explains the porter five forces framework with feedback effects as related to the u.s. automotive industry.
- Explains that the threat of new entrants into the u.s. automotive industry is low. government restraints such as safety and epa emission requirements coupled with high up-front capital requirements (sunk costs), brand equity or reputation required of a new firm make entry in the industry difficult.
- Explains that automobile manufacturers have offered consumers huge incentives such as low finance rates, and huge discounts as incentives for buyers to purchase new cars.
- Explains that consumers can easily switch between automobile dealerships and automobile manufacturers, so price pressure from substitute or complementary products is high in the u.s. auto industry.
- Analyzes how competitive pricing within the industry erodes automotive manufacturer’s profits by reducing their price-cost margins, while competition using consumer incentives drives up the fixed cost of new car development and increases the marginal costs of adding new features to automobiles.
- Explains that u.s. auto manufacturers require inputs such as labor, parts, tires, electronics and components. the united auto workers (uaw) exerts leverage over the benefits and wages provided by the big three.
- Explains that the united states recession began in 1997 and significantly impacted the automobile industry during the recession period.
- Analyzes the recent events that have affected the u.s. auto industry during the recession and the strides made by automakers to recover from near devastation.
- Opines that the supply and demand curve for u.s. automobiles should continue to rise as long as economic recovery continues.
- Analyzes the decline of passenger car production in the united states from over 4 million units in 2004 to just over two hundred thousand units. the sharp decline in sales in 2009 reflects the effects of the recession that began in 2007.
- Explains that the u.s. automotive industry is driven by the need to provide vehicles that are economical to operate. since the 1970's, the horsepower of small cars has increased dramatically.
- Explains that the market structure of the u.s. automobile market is considered to be an oligopoly which helps to minimize the effects of price-based competition.
- Argues that gm should use a cooperative game theory approach to sustain its corporate recovery.
2538 wordsRead More - The Impact Of The Automobile Industryexplanatory essayhe American auto industry has seen many changes since its first car was built. From steam powered vehicles to electrical automobiles, the industry has literally paved the way for some of the most innovative ideas the world has ever seen. However, to remain in the forefront, the industry has had many obstacles stand in its way.
In this essay, the author
- Explains that the american auto industry has seen many changes since its first car was built. from steam powered vehicles to electrical automobiles, it has paved the way for some of the world's most innovative ideas.
- Explains that the biggest impact globally for us automakers comes from east asia, where china produced 23,722,890 vehicles, with europe coming in second with 16,976,883. the us was the industry and world leader in automobile production.
- Explains that car makers must look to advancing technology to stay ahead of the consumer curve and remain profitable. bluetooth connectivity enables the driver to pair their cell phone to the stereo for hands free and safer driving.
- Explains that cars can produce many different types of gases and elements, including carbon dioxide, and sulfur oxides. the us has many standards car manufacturers must abide by.
- Explains that the us auto industry has restructured and made many improvements to their vehicles. consumers feel the reliability of this car has improved substantially.
906 wordsRead More - The United States Of The Automotive Industryopinionated essayWhen it comes to the automotive industry, the United States of America was at the top. It reigned supreme with the biggest percentages of sales coming from the “Big Three” car companies: General Motors (GM), Ford, and Chrysler, with the smaller percentages of sales coming from other brand names from different countries.
In this essay, the author
- Explains that the united states of america was at the top of the automotive industry with the biggest percentages of sales coming from the "big three" car companies: general motors, ford, and chrysler.
- Explains that market shares are falling for all three companies — general motors suffered from many recalls and lawsuits because the ignition switches were faulty, airbags were defective during crashes, among other problems.
- Opines that technology will always update, and the automotive industry is no exception.
- Explains that cars can be a serious harm to the environment, as well as the disposal of cars and old car parts.
- Explains that the government has the public get emission inspections every so often on every car. in my state, you get a notice from the motor vehicle administration to get your car inspected every few years and pay $14 for the inspection.
- Opines that the auto industry has come a long way, and their family has three cars and one van and they love all of their vehicles.
- Opines that once automotive companies have a set plan to deal with issues like theses, these newer high tech cars will be more trustworthy to the public.
- Opines that the automotive industry has changed the way we travel by land and is an industry that is always constant and it will never die out as long as people need a faster way to get to places.
953 wordsRead More - The Crash Of The Car Crashexplanatory essayThe auto industry in the United States has been through a rough decade. Starting in 2008 with the industries crash, followed by a series of government regulations and legal battles, and has consistently been in competition with foreign automakers who have been taking over the domestic market. The industry is not entirely in ruins and has been seeing a slow but steady recovery. While it is still dealing with the after-effects of the market crash it has been turning its outlook around by accepting the challenge from foreign competitors and taking bold leaps in the technology they put into their product.
In this essay, the author
- Explains that the auto industry in the united states has been through a rough decade, starting with the 2008 industry crash, followed by government regulations and legal battles, and has consistently been in competition with foreign automakers.
- Explains that the current state of the us auto industry can be directly attributed to the crash of 2008. companies were forced to take emergency actions to stay in business.
- Opines that technology is advancing by leaps and bounds. sensors placed around a vehicle’s exterior combined with gps navigation will one day reduce the burden placed on them. remote shutdown systems will enable law enforcement to instantly put an end to high-speed chases
- Explains that the 2008 crash favored foreign automakers who had already emphasized fuel efficiency and affordability. the us market share of us companies dropped, and the japanese car company toyota saw greater profits.
- Explains that consumers have rewarded foreign automakers for their early initiative into efficient and environmentally friendly vehicles, but us companies have not been forgotten.
789 wordsRead More - Levels Of Planningopinionated essayFord’s production plants rely on very high-tech computers and automated assembly. It takes a significant financial investment and time to reconfigure a production plant after a vehicle model is setup for assembly. Ford has made this mistake in the past and surprisingly hasn’t learned the valuable lesson as evidence from the hybrid revolution their missing out on today. Between 1927 and 1928, Ford set in motion their “1928 Plan” of establishing worldwide operations. Unfortunately, the strategic plan didn’t account for economic factors in Europe driving the demand for smaller vehicles. Henry Ford established plants in Europe for the larger North American model A. Their market share in 1929 was 5.7% in England and 7.2% in France (Dassbach, 1988). Economic changes can wreak havoc on a corporation’s bottom line and profitability as well as their brand.
In this essay, the author
- Explains that planning is an essential process in today's organizations. the purpose of this essay is to focus on the strategic level of planning for the ford motor company.
- Opines that corporate citizenship in response to environmental disasters should be part of the overall strategy.
- Explains that the automobile industry is among the largest industries in the world and this competitive advantage directly influences the company's strategic planning.
- Explains that foreign policy directly affects ford's ability to be successful in international markets and is another component of its strategic planning.
- Opines that if ford motor company wants to stay competitive, they need to make vehicles that are more fuel efficient. washington wants automakers to achieve 4.5% annual improvements in federal standards.
- Explains that ford's innovation is contributing to their leadership in the green aspect of manufacturing and their commitment to the customers and communities that they serve.
- Explains that the ford motor company faces significant challenges in such a competitive industry and evolving market. ford's strategic plan must adequately address these issues or industry changing opportunities may overlooked leaving the company poorly position against its competition.
- Opines that the ford motor company faces significant challenges, based on their current weaknesses. the threat from current competition and alternative and flex fuel competitors has never been greater.
- Explains that many economic factors impact the development of ford's strategic plan, such as currency devaluation, oil prices, and the demand for smaller vehicles.
- Analyzes how ford, general motors, and ibm, the emergence of the transnational enterprise, helped customers rebuild from hurricane ike.
- Cites hardigree, m., a to z of materials, and intenational security & counter terrorism reference center.
1709 wordsRead More - General Motors Case Analysisopinionated essayThe company must continuously keep up with automobile trends, new technology, and government and safety demands. According to General Motor’s SWOT Analysis provided by MarketLine, the company’s “robust technological capabilities enhances new product development,” ( Marketline, Pg. 32). The SWOT Analysis also outlines a company opportunity for the advancement of hybrid electric and alternate fuel vehicles (Marketline, Pg. 32). GM has strong capabilities for new product designs and research and development. The company has spent nearly $15 billion on research and development activities in the last two years with the focus of developing new products and services, improving existing products and services, and improving fuel economy and safety of vehicles (Marketline, Pg. 33). The company’s top innovation priorities lie in development and advancement of alternative propulsion strategies, fuel efficiency. They now offer the FlexFuel vehicle that can run on gasoline-ethanol blend fuels as well as electric cars and hybrid cars (Marketline, Pg. 34). General Motors maintains its spot as an industry leader of innovation and development, which in turn gives it a strong competitive
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.
968 wordsRead More - U.s Auto Industrys Market Share And Fluctuationsexplanatory essayU.S Auto Industry's Market Share and Fluctuations The U. S. auto industry's share of the market has experienced fluctuations over the past 50 years. These fluctuations have been caused by many reasons, but some of the main reasons include quality, price, and foreign competition. The Ford Motor Company, General Motors Company, and the Chrysler Corporation, a.k.a.
In this essay, the author
- Explains that the big three hold nearly 75% of the market and produce over 8 billion pounds of goods.
- Explains that gm's share of the market dropped to below 30% in 1985, resulting in a sudden drop in its share.
- Narrates how cars held 25% of the market in the late 1970s and early 80s.
- Narrates how chrysler took over production of the model a in the 1950s and 1960s.
- Explains how chrysler began selling cars in europe and competed with ford and gm on the european market.
- Describes the factors that led to a rise in sales of chrysler-branded cars in the united states.
- Opines that the market share for the 'quot;big three'' should remain steady or even steady.
- Explains that ford could increase its market share in europe and asia and avoid high tariffs placed on foreign cars in china and japan.
957 wordsRead More - Automobile Case Studyanalytical essayThese new foreign companies with no link to tradition instead set up in southern US states like Alabama, Mississippi and Georgia, which are “right to work” states – basically minimal right to unionize, very low wages, no pensions, very minimal if any benefits. By doing this they were able to dramatically reduce labor costs and gain a competitive advantage in this area. Also people began to recognize that they sold top quality products that were far higher in quality than similarly priced US products. Toyota has even made significant inroads into the previously untouchable US pickup truck market. Foreign auto makers have been far ahead of their US counterparts in developing hybrid and electric technology and practically zero emission vehicles. As China increases its consumption of oil and raw materials the world supply shrinks which creates instability for the US Auto makers as they are so reliant on “yesterdays” technology especially when compared to foreign auto makers such as BMW who have advanced greatly in the areas of carbon fiber and exotic aluminum alloy development. Another area of weakness for the US automakers is that they have not updated many of their plants and are facing significant governmental imposed restrictions on production due to their plant emissions and waste. The US government is also tightening emission and MPG regulations on automakers products. Foreign automakers are
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.
966 wordsRead More