Automotive Industry Analysis

Topics: Automotive industry, Renault, General Motors Pages: 3 (894 words) Published: November 26, 2011
Industry Analysis
The automotive industry is considered to be highly capital and labor intensive. The major costs for producing and selling automobiles include: * Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in designing and engineering automobiles. Companies have plants that are human operated and they require pay. * Materials - Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers. Companies now are working more closely with suppliers to limit their cost and reuse parts from previous models. * Advertising - Each year automakers spend billions on print and broadcast advertising; furthermore, they spent large amounts of money on market research to anticipate consumer trends and preferences. Annual revenues in the automotive advertising market will hold steady at $40 billion globally through 2011, but as audiences continue to shift online, auto ad spend will as well, The auto market is thought to be made predominantly of automakers, however, auto parts make up another profitable sector of the market. The major areas of auto parts manufacturing are: * Original Equipment Manufacturers (OEMs) - The big auto manufacturers do produce some of their own parts, but they can't produce every part and component that is required by a new vehicle. Companies in this industry manufacture everything from door handles to seats. * Replacement Parts Production and Distribution - These are the parts that are replaced after the purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this area of the sector. These are sometimes referred to as “after market” parts or products. * Rubber Fabrication - This includes everything from tires, hoses, belts, etc. In the auto industry, a good amount of revenue stems from selling automobiles. The parts market, however, is even more lucrative. For...
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