Future Outlook The United States automotive industry has a promising future because of its resurgence that aims at strengthening the production and market structures. According to Rubenstein (2012), the adoption of the technologies will transform the production of automobiles to meet the changing needs and attitudes of the consumers. For instance, the industry will adopt the electric car production technologies to counter the rising costs of fuel and preferences of the customers. The big three (General motors, Ford and Chrysler) is set to experience increased competition from the global players, an aspect that makes it imperative for the companies to adjust its strategies to remain relevant in the market. The industry will also create more …show more content…
Conferring to Kharuband Sharma (2017), the barriers to entry into an automobile industry have remained significant challenges to potential newcomers. This discourages them from investing in the industry due to the uncertainties and unpredictable market trends. The high cost of setting up a car manufacturing plant has discouraged many companies contemplating to invest in the U.S. automotive industry.The rules and regulations formulated by the federal, government do not favor the new entrants, an aspect that prevents them from entering the market. It is common for most new firms to lack equity, an aspect that promotes the ability of a company to enter a new market and industry successfully (Freedman, 2011). Legislation and other government policies such as those dictating safety and checking against emissions deter many automobile companies from investing in the U.S. market. The lack of the ability of a company to distribute its finished goods can also discourage it from investing in a potentially viable market, as noted by Kharub and Sharma (2017). This explains why companies such as Alfa Romeo have been absent in the United States market since the 1990s. However, well-established companies with strong financial base have successfully ventured into potential markets through partnerships withother foreign based firms (Freedman, 2011). This makes it imperative for companies wanting to invest …show more content…
This has significantly lowered the threat of substitutes making it difficult for customers to consider alternatives to automobiles (Ingrassia & White, 2013). The big three automotive producers in the United States enjoy a low treat of substitute, although this could be instigated by the invasion of the industry by other global companies such as Toyota. The well-established companies such as Toyota enjoy strong financial base that has made it possible for them to invest in new markets, the United States inclusive. Product differentiation is also an essential factor that influences and threats of substitutes, as noted by Dälken (2014). The General Motors, Ford and Daimler Chrysler have similar cars with those produced by Toyota and Mazda. This poses a danger of their brands being replaced by those of their competitors owing to the increasing competition in the United States automobile industry. The U.S. automotive industry enjoys protection from the federal legislation and government policies that aim at promoting healthy competition between the foreign based companies and those that are locally owned (Dälken, 2014). Without a doubt, the industry is favorable to the existing companies owing to the improved transportation networks, convenience, independence and utility value in the
The Automotive, or electric car industry particularly, comprises all those companies and activities involved in the manufacture of electric motor vehicles (EV), including most components, such as engines, bodies and rechargeable batteries or another energy storage device. The industry’s principal products are passenger automobiles. Despite the fact that the first electric cars were produced in 1880s , the advances in internal combustion engines, especially the electric starter, soon diminished the relative advantages of the electric car and became the dominant design in the market. Due to this the EV was almost a forgotten industry staying in the early stage of development, conforming to less than 1% of the automotive stock
In the United States, modern car manufacturing has been historically dominated by the American companies including Ford Motor Co., Chrysler Group LLC, and General Motors Co. These three companies, known as the Detroit Three, controlled 95% of the market in the 1950’s and the dominance continued until the beginning of the 21st century. In the 1980’s Japanese auto manufacturers entered the United States, a decade later the Germans, and finally in 2000’s the Koreans. By the end of 2009, the Detroit Three only accounted for 45% of the total U.S. auto market. Another factor that had influence on this was constant fluctuations in gasoline prices and price sensitive consumers. According to the U.S. Department of Energy, gas prices hit record high averaging $3.07 per gallon in May 2007 and kept climbing up to $4.08 in July 2008. As gas prices kept increasing, consumer buying trends have been changing. In 2006 sales for SUVs, pickup trucks, and vans dropped 16%, while the market for compact cars rose by 3%. Unfortunately, the Detroit Three were not prepared for this since their...
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.
Each and every one of them having the potential to discover new technology or create some new edgy design. So in the case of GM their popularity can essential be an industrial threat. There is a new influx of consumers that are looking for individuality, economy and trends. GM has been considered by many in the industry as “old-school” and with the rise of “new-school” they are going to have to be very pro-active about keeping up with the desires of these new consumers. Notably, Tesla has grabbed a large consumer base that is attracted to their non-aggressive sales approach and the idea of made-to-order vehicles. Markedly, Toyota and Hyundai are a large threat because they share target markets. In contrast, Honda has some self-induced threats because of their manufacturing preferences. Honda refuses to modernize its production lines in order to keep people employed, the result being increased labor costs which in turn means higher end prices for consumers. Honda can expect future threats from other manufacturers as they delve into more environmentally friendly vehicles. There is a big push around the world to lessen our carbon footprint and lower emission to reduce greenhouse effect. Honda has always been on the frontline of innovations in these areas so they will have to be steadfast in order to remain top of the class in the coming
Today's automotive industry in very competitive. Ford has had to find ways to keep ahead of the following major companies: BANC ONE, Bank America, BMW, Budget Group, Chrysler, Daimler-Benz, Enterprise Rent-a-Car, General Motors, Honda, Hyundai, Isuzu, Mack Trucks, Mitsubishi, Nissan, Peugeot, Saab, Suzuki, Toyota, Volkswagen and many others. Ford has developed a number...
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:
Currently, 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.
The world of technology is ever changing and advancing. With the automotive industry in play technology is constantly surpassing what is available today with what can be done for tomorrow. Technology and the automotive industry go hand in hand with constant improvement to components of cars. Due to technology advancement there is competition within the car industry, especially between American car companies and European car companies. European car companies provide their buyers with innovative variety and revolutionary luxuries. European car technology is superior to American car technology due to their safety, entertainment, and luxury features.
access, but a lack of effort. The first step required for the U.S. auto makers
(4) Abel, Ivan, Maali Ashamalla, and Robert Camp. Competitiveness of the US Automotive Industry: Past, Present, and Future. Rep. 2nd ed. Vol. 10. Indiana: American Society for Competitiveness, 2010. Print.
The automotive industry is one of the most important sectors of the economy for every country in the world. It involves a large number of corporations and institutions engaged in the manufacturing process of motor vehicles including designing, developing, manufacturing, marketing, and selling. It contributes to the global economic growth by generating a significant return and creating a ripple effect on supporting the supply chain as well as providing job opportunities for the skilled workers (ACEA, 2016).
The Capital investment, skilled and licensed labour force, technological advancements, working with good quality suppliers is considered big barriers of entry into this industry. The future requirement of electric cars and hybrid vehicles has opened this industry to some new entrants like Tesla.
For a couple of years, the automotive industry has been facing substantial challenges. The dominance of the combustion engine in vehicles is being threatened by new developments in electric engines.
The difficult part of this venture is making it a reality considering the high cost of production and challenging market. Investing in an electric car industry may require business to be conducted the old-fashioned way, which is getting people to pay for the business. In addition, setting up the company as a public company has the benefit of increasing investment and market share on the company even though the public will also hold the management of the company accountable (Osterwalder et al., 2010).
The barriers of entry faced by automobile companies in India are at relatively high levels of import duties, a nascent ancillary industry, and product modifications required for relatively poor road conditions and high levels of heat and dust. (Avinandan Mukherjee, pg 36)