Automotive Industry Analysis in the Us

Topics: Automotive industry, Ford Motor Company, General Motors Pages: 40 (13032 words) Published: November 12, 2007
Submitted by Team A
Donald Bradley
Morgan Bruns
Adam Fleming
Jay Ling
Lauren Margolin
Felipe Roman
Presented to:
Prof. Alan Flury
December 5, 2005
ME 6753: Principles of Management for Engineers
Team A ii
Executive Summary
Chosen industry:
This analysis focuses on the automotive industry, specifically, large-scale manufacturers of automobiles. The automotive industry is inherently interesting: it is massive, it is competitive, and it is expected to undergo major restructuring in the near future due to globalization and decreasing oil reserves. The analysis team members (we) feel qualified to perform this investigation due to our familiarity with the industry and our education—several of us have studied and worked on problems associated with automobile manufacturing and we are all mechanical engineering graduate students. Analysis Methodology:

The report begins with a historical overview of the automotive industry. This is followed by an analysis of the industry's structural characteristics using Porter's 5 Forces Model as a framework, which provides an understanding of the automotive industry as a whole in its current state. Next, ten representative companies of varying sizes are analyzed and compared; the chosen companies and selection criteria follow. General Motors, Ford, and Toyota were chosen because they are the current market leaders. DaimlerChrysler, Nissan, Volkswagen, and Honda were chosen because of their status as stable international companies who have been in the automobile business for many years. Hyundai, Maruti Udyog, and Shanghai Automotive Industry Corp., based in Korea, India, and China, respectively, were chosen based on their growth potential and their status as relatively new to the industry. These ten companies are analyzed in terms of their market position, their financial situation, and their management strategy. Where useful, specific statistics have been incorporated into the analysis including: market share, return on equity, return on sales, revenues, net expenses, net income, market value added, number of brands, number of models, debt rating, and debt ratio. The examination of the industry as a whole and of some of the major players in the industry provides a good framework within which insightful conclusions can be derived about the current state and future of the automotive industry. Major Findings and Conclusions:

In the conclusions section, we identify and describe attributes of successful companies including: production efficiency, well-planned cost structures, manageable size, distributed management of brands, attention to underserved markets, focused strategy, and well-respected brands and products. We then move from specific company attributes to identifying key trends in the automotive industry as a whole including: international expansion, conglomeration in mature markets, distributed competition in new markets, increased environmental regulation, increased energy constraints, and increased operational efficiency. Using these trends, we predict where the industry is headed and how it will evolve to meet new challenges.

The report concludes with the recommendation section, which provides a prediction of the near-future success of each of the analyzed companies. The outlook is not great for any of the four well-established, Euro-American companies considered in this report: DaimlerChrysler, Ford, General Motors, and Volkswagen. Of these companies, we conclude that DaimlerChrysler seems to be holding up the best. The future looks much more promising for the four Asian companies with international market reach that were studied: Honda, Hyundai, Nissan, and Toyota. Toyota stands out as being best positioned for success in the near future, while Honda will most likely continue to be successful on a smaller scale. And although currently successful, it is much more difficult to predict the future success of Maruti Udyog and Shanghai Automotive...

References: November 9, 2005
7. Rear View Mirror - automotive industry history, Al Binder, Ward 's Auto World, March 1, 2003,
10th, 2005, pp. 63-65.
Hill. 2004
Daimler Chrysler
January 5, 2005.
15. Daimler Chrysler, "Updated Management Report." Interim Report Q32005. October 25, 2005.
17. 2004 Annual Report. Ford Motor Company. Available from
October 25, 2005
19 accessed October 21, 2005
20. Letter to Stockholders (2004).
41. "Toyota, Nissan Add U.S. Market Share as Ford 's Drops," August 3, 2004.
Fortune. 4 October, 2004. Vol. 150 Issue 7, p102-110. October 17, 2005
57. "Major changes in auto industry since China 's WTO entry." April 6, 2004.
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