The 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 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...
The 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”.
he 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.
When 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.
The 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.
Ford’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.
The 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
U.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.
These 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