US Auto Industry Market
explanatory Essay
1343 words
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 which include quality, price, and foreign competition. The Ford Motor Company, General Motors Company, and the Chrysler Corporation are the three largest manufacturers of automobiles in the world. These three companies hold nearly 75% of the market and produce over 8 million automobiles per year. The largest competitors of these three companies are Japanese auto producers that include Toyota, Nissan, and Honda. These three foreign manufacturers hold 20% of the market and produce about 2.7 million automobiles per year. They all have adopted e-business/commerce services and pushed the U.S. auto industry into a different area. In future, there will be more technological innovation involved in the auto industry, which will also change the customers' demand of the market and the way of operating business for car sellers as well.
Information Technology (IT) has made it possible for consumers to become "picky" about the products they buy. IT has made it possible for people to research features and prices on just about everything from personalized ink pens to computer hardware. An area that has really been affected by this phenomenon is the automobile industry.
Two ways the automobile manufacturers have become effect are moving upscale or down-market or both and slicing and dicing their cars and trucks to fit ever narrower niches. Even companies such as Mercedes and BMW finding it necessary to move their marketing focus just to stay competitive. Cobb explains, "But like other automakers who have expanded their reach by moving up...
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...ess opportunities along with new customers. Automakers can allow customers to view and purchase cars online with desired features without having to go to the dealership and perform complicated transactions.
As you can see due to the advances in IT there are definitely new marketing opportunities that may open. Not only will there be websites that allow customers to view how a vehicle will look and cost in the configuration they most desire. Also there is the possibility for new businesses to open where people will have the option to buy or possibly rent a body for their vehicle platform for the short time use.
Works Cited
Cobb, James G., "Niche Mania! ", New York Times (Late Edition (East Coast), New York, N.Y.: Oct 23, 2002. pg. G.1
In this essay, the author
- Explains how automobile manufacturers have become effect by moving upscale or down-market or both and slicing their cars and trucks to fit ever narrower niches.
- States that cobb, james g., "niche mania!", new york times.
- Explains that the u.s. auto industry's share of the market has experienced fluctuations over the past 50 years due to quality, price, and foreign competition.
- Explains that automobile manufacturers are attempting to fill marketing niches to gain a minute percentage of certain markets due to their ability to produce so many vehicles in different configurations.
Related
- analytical
- opinion
- explanatory
- Ford Motor Companyanalytical essayCurrently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors (GM), Honda, Toyota, and Volkswagen. A few United States (US) manufacturers produce 23% of the world’s vehicles while Japan is responsible for 21%. The tendency for the industry is to be a global producer of automobiles; parts can be made throughout the world and assembled in many different places. The trend of consolidation has continued throughout today. Presently, this is evident in the recent acquisition of Chrysler by Daimler-Benz in late 1998, thus forming DaimlerChrylser. These consolidations have proved beneficial to consumers since companies have been able to reduce costs and pass those savings on to the customers. Some of the other major examples of consolidation are Nissan selling off a controlling 37% interest to Renault; General Motor’s 49% ownership of Isuzu; and Ford’s 33% majority of Mazda. Other efforts to become more competitive have translated into the European Union dropping trade barriers and European carmakers employing cost reducing efforts. American manufacturers have seen 2-3% growth over the last few years. Some current trends are the explosion in popularity of the Sport Utility Vehicle (SUV) and big luxury vehicles.
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.
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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.
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- 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.
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- 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.
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In this essay, the author
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In this essay, the author
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- Explains that the u.s automotive industry lost most of its share stocks across the globe as their european rivals were enjoying the luxuries and sports divisions.
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In this essay, the author
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In this essay, the author
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- Explains that general motors company was established in 1908 by william c.durant and has experienced multiple financial ups and downs which ultimately led to bankruptcy.
- Explains that president obama declined to provide further financial aid to gm. the re-emerging company is smaller and leaner than its predecessor.
- Explains that gm re-established its leadership management team at the beginning of january 2015 with a new leader to propel the organization into achieving greater results.
- Explains that gm plans to introduce in 2017 the world’s largest automotive deployment of 4g lte high-speed mobile broadband, as well as incorporating a highly automated driving technology called super cruise.
- Explains that gm is planning to establish a flagship brand and expand its luxury car market segment into china in the next five years.
961 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
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- 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 - Foreign Competition in the Automobile Industryanalytical essayIn 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.
In this essay, the author
- Opines that foreign competition is expected in a capitalistic country, such as the automobile industry, where america competes with its various rivals.
- Analyzes toyota's claim that the camry remains the top-selling passenger car in america. the toyota corolla ranks in at no. 8 with 216,934 units sold.
- Analyzes how the honda accord is the best selling passenger car, while the smaller honda civic is no. 6 on the list.
- Explains that although american corporations have their own hybrid innovations, foreign autos dominate. according to edmund's.com, 8 out of the 10 best selling hybrids in the united states are japanese.
- Concludes the discussion of foreign vehicles on automotive news data center’s top ten list of best selling vehicles in the united states.
- Analyzes how the ford f-series dominated sales with 616,785 units sold, while chevrolet silverado, dodge ram, impala, and chevrolet cobalt were the most popular choices among buyers.
- Analyzes how domestic industries lobby for government action in order to protect themselves from international goods.
- Opines that gas prices are up but not fuel economy. honda. advertisement. msn autos.
- Analyzes nissan altima's advertisement on msn autos.
- Analyzes stern, perry, et al. "america’s bestsellers of 2006...so far." msn autos.
- Explains stern, perry, et al., "2007 toyota camry." msn.com, 2006.
1195 wordsRead More - As most car dealers know there has been a huge boost in customers wishing to personalize their vehicles. Many customers consider their vehicle an extension of their own unique personality. But the key to successfully selling aftermarket products as a dealer is showcasing unique vehicles that will catch the eye of the customer. When the customer sees a one of a kind vehicle with clean smooth car window tinting vs. a car with no window tinting at all they are more likely to go for the one with the car window tinting because it is more appealing. If a customer sees a truck that he likes at a dealership but it doesn't have all the features that he saw initially in an add or commercial he may decide not to buy that truck. The customer is more likely to buy a vehicle if it has at least one or two special aftermarket features.
In this essay, the author
- Explains the benefits of car window tinting and aftermarket automotive accessories for car dealers.
- Explains that car window tinting is a personal preference for most vehicle owners. it shields the eyes from the sun and prevents glare from sources of extreme light.
- Explains that customers buy a truck for the convenience it offers for hauling, and recommends installing an aftermarket bed liner. drop-in bed liners protect from impact damage and are scratch resistant.
- Explains after market accessories have become more of a trend in recent years. custom car window tinting, bed liners, or even rims definitely helps in selling products.
- Explains that offering aftermarket accessory customization to your dealership profit center will increase profit as well as customer satisfaction.
707 wordsRead More - Doing Business in Italyexplanatory essay... both advantages and disadvantages. The current auto market, mostly dominated by domestic players due to the consumers loyalty toward domestic brands, shows very little appeal for new entrants. Some foreign carmakers, Ford for example, are showing signs of growth in this market. Ford has been able to do this by appealing to the consumers desire, for small affordable cars.
In this essay, the author
- Explains that italy is a promising business environment with projected increases in gdp per capita. however, there are many cultural, administrative, geographic, and economic differences that make it different from that in the us.
- Explains that italy's automotive market doesn't show much room for sales growth as shown by a high car ownership per capita.
- Explains ghemawat's four dimensions of distance; culture, administrative, geographic, and economic shows that while there are costs and risks associated with doing business in italy, there also are advantages.
- Analyzes how hofstede's cultural dimensions shows the differences between italy and the united states. the us is individualistic while italy is collective.
- Explains that administrative differences in italy are the most important to look at. the constitution provides basic freedoms of thought, speech, press, and the right to work.
- Explains that foreign firms must overcome domestic players' barriers to be successful in italy's auto industry. fiat holds 90 percent market share in terms of production and a quarter of the market.
- Explains that by focusing on what the italian consumer wants, small affordable fuel efficient cars, ford has increased its market share in 2009. manufacturers are paying close attention to their productions in order to cut costs and avoid excessive inventory.
- Opines that italy will face many problems over the next years. low business productivity due to manufacturers operating at reduced capacities to avoid excessive inventory accumulation. disadvantageous demographics are also a concern.
- Explains that italy is different from the us because of the cultural, administrative, geographic, and economic differences. the current auto market, dominated by domestic players, shows very little appeal for new entrants.
- Explains that italy autos report - q1 2010 was published by abi/inform trade &industry.
1023 wordsRead More