U.S. Automotive Industry Chosen Industry: Automotive Industry Essay

Length: 30 pages Sources: 30 Subject: Transportation Type: Essay Paper: #20794746 Related Topics: Automotive, Honda, Industry Analysis, Industries
Excerpt from Essay :

¶ … U.S. Automotive Industry

Chosen industry:

automotive industry is the focus of this analysis. More emphasizes are made on the large -- scale automobile manufacturers. This is because of the inherently interesting industry as a result it being competitive and projected to go through a major restructuring due to globalization in the near days to come. The issue of decreasing oil reserves is the other reason that is going to trigger this restructuring. This analysis is carried out by a team of experts who have had extensive experience in the industry and have the right qualifications for the industry.

Analysis Methodology:

An historical overview of the U.S. automotive industry forms the introductory part of the report. Using the Porter's % forces model as the analysis framework, industry's structural characteristics is made carried out providing the current state of the U.S. automotive industry. An analysis of some of the leading companies is then carried out to compare their varied sizes. General Motors, Toyota and Ford are chosen for this analysis due to their current positions as leaders in the industry.

Nissan, Volkswagen, Honda and DaimlerChrysler were not chosen despite being international companies which have been in automotive industry for several years. This is because most of these companies are not U.S. based. They are however viewed as new in the industry and have shown potential growth in the future.

These companies were analyzed according to their financial situation, market position and their management strategy. Very specific and useful statistics like the revenues, return on sales, market value added, debt rating, net expenses, number of business models used, brans used and debt ratio are included in the analysis. For insightful conclusions would be arrived at through this examination which involves both the examination of some of the companies which are major players and the industry as a whole.

Major Findings and Conclusions:

In conclusion, the attributes all the successful companies are identified and described. These would include but not limited to the cost structures that are well- planned, production efficiency, bran management that is distributed and well respected, manageable size and the company's attention to underserved market. The specific company's analysis was then carried out and involved focusing on the company's trends in the U.S. automotive industry while focusing on the whole industry in areas of distributed competition in the new markets, conglomeration in the mature markets and international expansion. Increased operational efficiency, environmental regulation, energy constraints were also included in the analysis. These trends would help in predicting the direction in which the industry was headed in and how to meet the ever growing challenges.

A recommendation would then be made for the future success of the each all the analyzed companies. The DaimlerChrysler according to this analysis is seen to be holding up the best while the general outlook of the four well- established American companies is not great. General Motors, Ford and Toyota have their markets positions down unlike most of the Asian companies like the Nissan, Honda and Hyundai which have good future prospects in the international market having taken up most of the substantive market share both locally in their parent countries and in the international market like the U.S. Some companies like the Shanghai Automotive Industrial Company have however found it difficult to penetrate the U.S. market despite having been successful on the local market and continue to sell well domestically. This is because of the stiff competition from most of the large and well-established companies operating in the U.S.

1. Industry Overview

1.1. History

There are several factors that have influenced the evolution in the automotive industry in the U.S. And worldwide. Some of these factors include vehicle components, manufacturing practices, market changes, fuels, societal infrastructure and the ever changing business structures. History dictates that in the early 1600, the first car was invented and was propelled something else other the humans...


These were sail-mounted carriages and formed the basis of the first vehicle. The discovery of an engine has however been viewed by most historians has the genesis of the development of automotive industry and its subsequent discovery of energy carrying mediums and new fuels like gasoline and gas. The establishment of automotive firms in the U.S. came as result of development of the first vehicles. This took place in the late 17 century.

Other technologies were developed in the early 1900s that sped up the development of U.S. automotive industry. They included the invention of the steering wheel and accelerator that is mounted on the floor. During this period the American society was undergoing infrastructural changes that would enable the proliferation of automobiles. Car sales with time payments were instituted, service stations were opened and driver's licenses were issued. Some of the famous vehicle models in the U.S. such as the Ford's Model T. were developed during this period. All the car designs by this time had taken "motorage" appearance unlike the initial carriage look by 1906.

The development of new societal infrastructure and new technologies continued in the 1900s.This coupled with new business strategies and manufacturing practices revolutionized the U.S. automotive industry in the U.S. The installation of traffic lights and road signs further changed the way the U.S. automotive industry was viewed in the U.S. The launching of the famous Henry Ford's assembly line in 1913 lead to a new turn of events that resulted in mass production of vehicles. This lead to the achievement of economies of scale as it also involved the use of interchangeable and parts that was standard. Mergers and acquisitions of other companies started to be evident during this period. A case in point the acquisition of Chevrolet by GM. The automaker also expanded to other markets like Canada e.g., GM of Canada.

Through the 1920's new manufacturing practices, merging of companies and development of new infrastructure continued. Some of the mergers included Ford and Lincoln, Chrysler and Dodge and Benz and Daimler. Roads continued to be built in the U.S. As the enactment of Kahn-Wadsworth Bill that facilitated alongside the support of the Bureau of Public Roads. There was also better establishment of methods of mass production in manufacturing. This resulted in better and more efficient and satisfactory cars to the public. There was however varied production strategies employed by different companies. GM for example provided a variety of products in the market helping the company to increase its market share to about 20% while that of Ford which focused on one product reduced in its market share by up to 24%.

As it continued to the 1930's new brands were developed which include the Lincoln Continental, Volkswagen and Ford Mercury which gained high demand and preference from the public differentiating both the American market and other international markets like the European market. The U.S. market for instance preferred powerful and luxurious cars. The European market on the other hand preferred the low-priced and smaller cars. There was however continued competitive advantage by GM over Ford making it to gain as Ford lost in their market.

Military vehicles were 'however manufactured by these automotive companies during the World War II (WWII), this was during the 1940's and had to change the way civilian vehicles were manufactured. This paved way for the coming up of the several companies especially from some Asian-pacific and European countries. These included companies like Toyota from Japan. Most of the first models were however similar to those of the pre-war designs. This is because it was time consuming and expensive hence was hard to establish the manufacturing plants.

Technological innovations continued into the 1950s and 1960s the development of fiberglass and higher compression ration fuels, allowed the manufacturers to focus on customers' specifications which included the look, feel and comfort of the vehicle. This was mostly motivated by the need to have a more environmentally safe vehicle with the front seat beats and speed limits becoming the benchmarks alongside other features like the ventilation and heating equipment.

The 1970s were marked by stricter environmental regulations and the oil embargo of the early 70s, which led to the development of low emission vehicle technologies, such as catalytic converters, and a 55-mph nationwide speed limit in the U.S. Foreign cars like the Japanese Honda Civic started appearing in the U.S. market. The Civic was marketed as a fuel efficient and low-emissions vehicle, which given the recent high oil prices and strict environmental regulations made it well-received. Despite the entrance of new competitors into the U.S. market, U.S. automakers underestimated the threat of foreign automakers to their market shares.

In the 1980s, the U.S. automotive industry began losing market share to the higher quality, affordable, and fuel efficient cars from Japanese automakers. In response to this market share loss, U.S. automakers began focusing on improving quality by adopting different Japanese manufacturing management philosophies, such as JIT. Although their adoption of JIT and other philosophies helped improve the quality of U.S. vehicles, it did not fully bridge the gap between the quality…

Sources Used in Documents:


A Brief History of the First 100 Years of the Automobile Industry in the United States, Chapter 1 - A

century whittles auto makers to 3,

A Brief History of the First 100 Years of the Automobile Industry in the United States, Chapter 16

Japan's sun rising as new world becomes one,
History of the Automobile. http://inventors.about.com/library/weekly/aacarsassemblya.htm; accessed
2010 Annual Report. Ford Motor Company. Available from Ford Motor Company: History http://www.ford.com/en/heritage/history/default.htm accessed
General Motors Investors Relations. http://www.gm.com/company/investor_information/
Balance Sheet and Cash Flow, from Yahoo Finance, http://fiance.yahoo.com
Honda Motor Co., Ltd. (ADR) (HMC), from MSN Money, http://moneycentral.msn.com
Honda in America History Timeline, http://corporate.honda.com/america/timeline.aspx
Honda Annual Report 2011, http://world.honda.com/investors/annualreport/2011/index.html
. Honda Motor Co., Ltd., http://vandijke.com/history.htm
Inside Line: Honda Civic, http://www.edmunds.com/insideline/do/Feat

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