The Global Automotive Industry

The Global Automotive Industry

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Industry Structure
Over the past 140 years, the top producing manufacturers have operated throughout the global competitive marketplace. The acceleration that has occurred since the early 1990’s due to the construction from overseas sites and the future establishment of merging multi-national automakers in history development. However, the global markets of automobiles have been broken into three major factors such as: (1) global market dynamics; (2) establishment of global alliances and (3) industry consolidations. At this time, the manufacturing industry for automobiles has established a high level of capital and labor demands. In North America, the historic labor and market has grown to become part of the Big Three, which is known as: General Motors, Chrysler and Ford Motor Company. Also, there are two foreign manufacturers that have become well established and they are: Toyota and Honda.
Example Auto Industry Structural Chart

Future Outlook
According to research, the top ranking sellers within the automotive industry will shift and the market would look totally different by the year 2019. New technology adjustments will take place and emission regulations and fuel-economy forces will change as well. Also, top producing companies will emerge into one business platform while strategizing for the near future to come. China will prevail and continue building its large volume topping India and other foreign and domestic markets. Overall, the sales growth will slow down its profits from a double digit to a single digit annual percentage.
Porter's Five Forces Strategy Analysis as it applies to the Auto Industry
Bargaining Power of Buyers
The bargaining power of makers within the automobile industry has been faced with unchallenging and unlimited potential buyers since the beginning of times. American consumers over time became annoyed with the everyday style of automobiles and wanted a significant change. Foreign and domestic cars were the way of life for these consumers but their preferences were set upon lower prices for their purchases.
Bargaining Power of Suppliers
The regional market has shifted its power of suppliers toward the regression of technology as it has progressed over the past few years triggering new standards and patterns of structural changes within the automotive industry. A large number of investments had placed pressure upon the lower level of probability functions creating a risk through the use of liquidity concerns and bankruptcy. The strategic positioning over the next couple of years is expected to grow and eliminate those previous challenging errors creating new dynamics and growth opportunities.

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Globalization is a major requirement that must take place in order to strengthen and help build the consumer relationships within the automotive industry.

Competitive Rivalry in the Industry
The industries of automobiles have been intense for many years causing lower profits in an oligopoly market. The price-based competition level has been so drastic in engaging the fierce competition. Although the margins are set low and the pressure derived from the rivalries are at an all-time high, the profitability’s and innovation levels has remained as a top factor within campaigns, production development, etc. Today, the top major car-producers that rival one another are those of the foreign and domestic imports such as China, Germany, India, France, Japan, Italy, and the United Kingdoms.
Threat of New Entrants
The entry into the auto industry is a great opportunity for gaining revenue and sales throughout the automobile market. This potential opportunity will allow those competitors to compete and bid for lower prices and grant the privilege to cause inflation costs while reducing the current profitability of car sales. The industry is very demanding and has room for a sufficient amount of growth although the past history was known to be very vigorous causing retaliation toward entrants as well as rivalries. Also, by the entrants being new to the marketing scheme there is a potential chance of a disadvantage within the capital markets.
Threat of Substitutes
At this time, there does not appear to be any major threats within the automotive industry. Although other means of transportation are available, the uses of foreign and domestic cars are more reliable than the use of a bus, train, motorcycle, etc. Although it may cost less to utilize those other means of transportation, the use of a personal vehicle is more of a demand and preference from majority of the consumers.
Since the beginning of the automotive industry until now, the market has remained steady although it has reached its all-time low and high peaks. In the year of 1890, the launching of the automotive industry was one of the largest empires to ever reach the United States of America. Today, there are over 100 manufacturers that helped to reach the success level within the industry alone. General Motors, Ford and Chrysler are all top ranking organizations who have made large contributions to the development stage of automobiles. Over the past 4 years, America has produced more than 8.1 million vehicles per year in the United States alone. The supplier within the automotive industry has produced over $171 billion in shipments, which accounts for roughly 3 percent of the manufacturing of the United States. Over 3.3 million jobs have become available since 2007 for the automotive industry sector. The growth and continuation of growth for the automotive industry will remain consistent over the next couple of years. As stated by the great author, Ashton Kutcher, “I think about the automobile, I think about like, when I was a kid, you know, the invention of the answering machine, which I was like, 'Wow.' Or call waiting, which was, like, very big. It was a very big thing. Call waiting was a very big thing. And these incremental innovations happen constantly” (

Works Cited

Porter, M.E. (1979) "How competitive forces shape strategy", Harvard Business Review, March/April 1979.
Porter, M.E. (1980) "Competitive Strategy", The Free Press, New York, 1980.
Porter, M.E. (1985) "Competitive Advantage", The Free Press, New York, 1985.
R. Sobel, The Car Wars (1984); J. Fink, The Automobile Age (1988); J. A. C. Conybeare, Merging Traffic: The Consolidation of the International Automobile Industry (2004); B. Vlasic, Once Upon a Car: The Fall and Resurrection of America's Big Three Automakers (2011).

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