The Automotive Industry In the U.S., the 2007 market was approximately 15.9 million cars and light trucks sold, down from about 16.5 million the previous year. Production in North America, during 2006, including cars and trucks of all types, totaled 11.8 million produced in America, 2.6 million produced in Canada and 2 million produced in Mexico. Globally, about 53 million new cars were sold in 2007, up from about 49 million the previous year. These estimates are from Scotiabank Group. There are approximately 244 million vehicles in operation in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007. By 2020, that number will reach 1 billion. Currently, those vehicles burn nearly 260 billion gallons of fuel yearly. In the U.S., as of 2006, the industry included about 21,200 new-car dealerships, 1.07 million manufacturing employees and 1.12 million retail new and used car dealership employees. Total revenues at new-car and light truck dealers exceed $675 billion, according to NADA. The years of 2004 through 2006 will long be remembered as a pivotal period in the automobile industry. It was a period during which high gasoline prices started a sea change among U.S. consumers that is finally creating significant demand for fuel-efficient vehicles. Gasoline prices of approximately $2.00 per gallon started taking a huge bite out of family budgets in 2004, and many middle-class consumers who owned fuel guzzling SUVs and pickup trucks began to wish they had vehicles that were much less expensive to operate. By 2005-2006, with gasoline prices in the $3.00 range, the party was over for traditional, large SUVs. While gasoline prices moderated during much of 2007, they were still in the $2.70 range in most markets. One result was the phenomenal demand for Toyota's Prius hybrid car. Toyota responded by raising the price and planning production increases. Meanwhile, Toyota made investments in its Georgetown, Kentucky plant to enable it to manufacture 48,000 hybrid Camrys yearly there by late 2006Toyota will likely wish it had created even more hybrid capacity. Meanwhile, there has been good demand for Toyota's Lexus RX400h hybrid crossover. Ford launched its first hybrids, and other carmakers, including GM, were greatly encouraged in their own efforts to bring more hybrids to the market. However, response to hybrids from U.S. makers has been lukewarm at best. Consumers generally aren't as impressed with U.S. hybrid technology as they are with that of Toyota models, and actual mileage results on the road have been disappointing, largely due to driver habits such as quick acceleration which uses more fuel.
Increasing environmental awareness, coupled with a responsible American government and improved technology, have all contributed to the comeback of low-and zero-emissions vehicles in the US. It remains to be seen whether the automakers and oil companies will once again work to halt this progress, or embrace it as the technology of a more responsible future.
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.
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 automobile industry began with Henry Ford’s production of the Model T in the early 1900’s. With the creation of the assembly line, cars became cheaper and quicker to produce, thus making them affordable for many people. There were originally 500 auto manufacturers. By 1908, there were only 200; and in 1917 only 23 remained. This vast reduction was due to large amounts of consolidation within the industry.
Automotive production on a commercial scale started in France in 1890. Commercial production in the United States began at the beginning of the 1900's and was equal to that of Europe's. In those days, the European industry consisted of small independent firms that would turn out a few cars by means of precise engineering and handicraft methods. The American automobile plants were assembly line operations, which meant using parts made by independent suppliers and putting them together at the plant. In the early 1900's, the United States had about 2,000 firms producing one or more cars. By 1920 the number of firms had decreased to about 100 and by 1929 to 44. In 1976 the Motor Vehicle Manufacturers Association had only 11 members. The same situation occurred in Europe and Japan.
The automotive industry is considered elastic. The prices fluctuate depending on supply and demand. For example, when the economy takes a downturn and car sales are down the automakers attach incentives to the purchase of new vehicles to stimulate sales such as interest-free loans, rebates and lowered prices to encourage Americans to purchase their goods. Substitutes are available in the foreign car market. Lower cost, more fuel efficient models are available from many foreign car makers. Policy makers have placed limits on the amount of foreign cars that can be sold in the United States but in recent years the demand is higher so policy makers must respond to that demand. Past statistics tell the story of when fuel prices surge, smaller fuel efficient cars are more in demand. Higher fuel prices cause households to reallocate money from other areas to purchase fuels at higher prices because fuel is needed for transportation to and from work. When fuel p...
The manufacturing of automobile parts is always dependent on the demand for new car sales which are dependent on interest rates, the health of the economy, and by the replacement parts market (Hoover's, 2014). The jobs status in America is still growing at a very small place causing would be buyers to stay in their older vehicles longer before making the plunge to purchase. So, buying activity is slower compare to years past making it even tougher for industry competers. In a competitve manufacturing market small companies can compete along with larger ones by focusing on less parts or more specialized parts. In this market manufacturing profits rely on the demand for new vehicle volume. In 2009 from the...
Despite nearing bankruptcy on a few occasions, the company finally took off with the launch of their first car- the Model A, and by 1920 approximately 60% of all automobiles on the road were Ford. Today Ford is the largest truck maker and the number two manufacturer of cars in North America, producing an average of eight cars or trucks per minute. The Ford Motor Company employs 371 702 people at over 2400 branches in 33 countries and sells automobiles in over 200 markets.
was oil prices softened and the demand for small cars that were the most efficient
Advertising=>Each year car manufacturers spend millions on advertising, (TV commercials, bill boards...). They also spend large amounts of money on market research to determine what customers are looking for when buying their vehicles. This is an element that is ever changing especially in recent years, I will elaborate further in the second part of my answer.
According to Brinson, “Although the U.S. Environmental Protection Agency (EPA) declared cars "mobile sources" of pollution, they aren’t the only culprits. Big trucks, bulldozers, ships and boats, trains and even snow-blower 's pollute the air. According to the EPA, motor vehicles collectively cause 75 percent of carbon monoxide pollution in the U.S. The Environmental Defense Fund (EDF) estimates that on-road vehicles cause one-third of the air pollution that produces smog in the U.S., and transportation causes 27 percent of greenhouse gas emissions. The U.S. has 30 percent of the world 's automobiles, yet it contributes about half of the world 's emissions from cars.” The United States has began imposing strict regulations on automotive
Most American cars are not hybrids or fuel-efficient, they are usually big SUV’s or trucks that get eighteen to ten miles per gallon. Most of Hondas, Toyotas, and Hyundai’s get around 20 to 30 miles per gallon, and hybrids get 50 miles per gallon. Peoples demand fuel-efficient cars because oil is i...
Several factors influence the demand for vehicles. In 2008, an economic crisis affected the auto industry in a tremendous way. Consumers, worried about layoffs and financial catastrophe, stopped buying cars and demand for new vehicles fell from 17 million units annually to 10 million annually almost overnight (UAW, 2010). Other
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
The fast population growth rate of humans means that the necessity for transportation vehicles is also enormously increasing. Studies have shown that in 1999 the worldwide number of vehicles registered was 700 million. From this huge number of vehicles, the US has a large share, which includes 200 million cars and light trucks. The number of cars worldwide also grew three times faster