Impact Of The Automotive Industry On The United States Trade Market

Three car manufactures also lost U.S market share during this same period. Ford fell from 24.1% to

Ford’s F-Series experienced a 46% drop in sales for 2006 compared to 2007, making a once most wanted truck in the United States almost abandoned by the consumers. The second and the current recession that began in 2007 brought a new wave of impact on the auto industry. At the time banks were more flexible with approving loans and the interest rates were low which attracted a lot of consumers into the housing market. Since many of them were not able to afford it, eventually they turned to foreclosure leaving them with debt and no credit worthiness; thus, banks started raising the interest rates on auto loans. But foreign competition, higher oil prices, and higher interest rates were not enough to destabilize the auto industry on such a scale; it was the recession that shocked it the most.

The American automotive industry has been under a lot of pressure over recent years due to increased concern for the environment and increased global competition. An environmental scan on the American automotive industry shows that the global competition is a great cause for concern, new technology is providing an edge, emissions and laws regulating them are as tight as ever, and consumer opinion is reflecting concern for this.

The automobile industry has influenced the US society in many aspects. The automotive production on commercial scale started in Europe in 1890’s. At this time, they were only able to produce a few numbers of cars in the market. When the automobile industry started in the US, cars were considered as toys for rich. From 1904 to 1908, about 241 auto-manufacturing firms went into business. One of these firms was Ford Motor Company, led by Henry Ford, which outpaced its competitors in a very short time. After Ford Model N success in the market, Henry Ford was encouraged to introduce his Model T car to the market; after several failed product lines. As a result of its durability and price, Henry Ford innovated one of the most important innovations

The automobile industry has fluctuated greatly through the past several decades. In 2008 the United States economy entered a recession, which took a huge toll on the automobile industry. The industry was dramatically hurt by the increase in fuel prices due to the energy crisis in 2003-2008 (Industry Facts). This caused a huge decrease in sales of SUV’s and trucks since they had the lowest mile per gallon ratings. General Motors, Ford, and Chrysler used these types of vehicles as their primary target because they were the highest profit yielding type of automobiles. As the price of fuel increased, the sales started to slide for the three major companies, so they had to make price cuts and discounts on their vehicles in order to stay afloat. However, even this could not help save and some of the automobile producers had to file for bankruptcy and get government bailouts, GM

The financial crisis starting in 2008 and the following recession hit hard the US auto sector. Traditional car makers had to realise that substantial changes were needed in order to maintain their strong position in the

Over the years, the U. S. auto industry's market has been experiencing fluctuations due to many reasons including: price, quality and foreign competition. General Motors Corporation (GM) which had been the leading car and truck manufacturer had been experiencing declining market share and facing stiff competition from both U.S manufacturers and foreign imports such as the Asian auto producers that included Toyota, Honda and Nissan. The main reason for increased foreign competition was that foreign cars were more fuel efficient, smaller, less expensive, and often more reliable than their American counterparts.

High labor costs, product lines that emphasized large vehicles with significant gasoline use and a looming global recession caused a crash in U.S. automaker profitability in 2008. American car manufacturers were struggling to compete against better, more efficiently manufactured products from overseas companies. As of 2015, Toyota earns more than GM, Ford and Chevrolet combined.

In the past few years the statistics shows the stagnation of Automobile sector in unites States of America, Canada and Japan. However, the automobile companies were targeting countries of South America and Asia for their new market as the economy was on a developing phase during this period. China, Brazil, Russia and India are on the target of the automobile companies in the recent path. In the first four months of 2010 the sales figure of cars and commercial vehicles in the world has reached to 17 million which was equal to 13.65 million for 2009 for the same period. During the year 2008, the increase in the oil prices results into the increase in the price of raw material and the change in the spending pattern of customers. Automobile industry is also facing challenges from public transport due to which the preference of customer for having their personal vehicle is changing. The other demoralizing factor is the increasing taxes and other duty taxes on the manufacture of automobiles. As the governments of different countries is under a huge pressure of increasing pollution and emission of green house gases they are introducing more and more policies to discourage car purchasers. It has been expected that nearly fifty one light vehicle manufacturing companies are closing in near future in United State alone. This will create a loss of two hundred thousand jobs in United States.

By the turn of the century hundred of small companies were producing automobiles both in Europe and in America. By 2004, the industry was in different stages of its life cycle in different parts of the world. The US industry entered a period of rapid growth during 1910-28, and reached its peak of production in 1965. In the two decades up to 2004, car production was on a downward trend, but if trucks were included, output was broadly stable (see table 4.2). In Europe and Japan too, total production was showing a declining trend The problem of market saturation was exacerbated by the tendency for cars to last longer(see table 4.3). [Tables 4.2 and 4.3 about here] As a result, the automobile producers have looked increasingly to the newly industrializing countries for market opportunities. During the 1980s and 1990s countries such as Korea, Malaysia, Taiwan, Thailand, Turkey, Brazil, and Argentina offered the best growth prospects. As these markets became increasingly saturated, so China, India, and the former Soviet Union were seen as the ““next wave”” of attractive markets. With the opening of many of these countries to trade and direct investment, the world production of cars and trucks s continued to grow (see table 4.4 ). [Table 4.4 about here]

At the beginning of twenty centuries until now the American auto industry has been growing and in demand. Henry Ford innovated mass-production techniques that became standard, with Ford, General Motors and Chrysler emerges as the “Big Three” auto companies by the 1920s. Manufacturers funneled their resources to the military during World War II, and afterward automobile production in Europe and Japan soared to meet demand. Once vital to the expansion of American urban centers, the industry had become a shared global enterprise with the rise of Japan as the leading automaker by 1980. And Americans dominated the industry in the first half of the twentieth century. Hence, from the

Automobile industry is one of the oligopolistic industries that have experienced a change in its oligopoly market model. The pattern of change is evidently shown in its production, supply chain, pricing, and international trade changes. The paper examines this industry and explains the pattern of change and other aspects within the industry.

The American auto industry has faced many challenges throughout the years since Henry Ford’s first

A decrease in demand for large-sized vehicles caused a decrease in the manufacturing of vehicles. At the time, GM and Chrysler were accustomed to manufacturing vehicles that had low mileage per gallon. The decrease in demand for these gas-guzzlers caused a decrease in vehicle manufacturing. As a result, the GDP of the United States decreased as well (Amadeo). This also reduced the number of manufacturing jobs that were available at GM and Chrysler. Fewer manufacturing jobs available increased the unemployment rate; therefore, the overall GDP was decreased. With such a large negative impact on the GDP, the government needed to bail out GM and Chrysler.

The automobile industry is one of the world’s largest industries, and despite the recession in 2008, the industry shows progress in climbing its way back to the top. The automobile industry includes more than 200 companies, with a combined annual revenue of $230 billion (First Research, Para 3). The purpose of this report is to analyze the industry and relevant trends, in order to evaluate the attractiveness of entering this industry.