The U.S. Automobile Manufacturing Industry

Topics: Automotive industry, Ford Motor Company, Automobile Pages: 10 (2934 words) Published: May 4, 2011
External Remote/macro-environment Analysis: Socio-cultural, Technological, Economy, Environmental/Ecological, Political, Legal (STEEPDG)

The US automobile manufacturing industry includes about 200 companies with combined annual revenue of about $250 billion. Major companies are GM, Ford, and Chrysler (which is controlled by Italy's Fiat). The industry is highly concentrated: the top three companies account for more than 90 percent of revenue. Selling the Vision

Most US auto manufacturers have experienced difficult times in recent years, including loss of market share, financial losses, increasing legislative pressure, and investor dissatisfaction. With improvement plans in place, CEOs must convince employees, investors, suppliers, and customers that the plans will work to restore the company to a position of strength. Building confidence with these various constituencies is a prerequisite to successful execution. Business challenges

Import Competition — Imports represent a rising percentage of US auto sales. US market share for Chrysler, Ford, and GM dropped from 73 to 44 percent between 1996 and 2009. Imports that generally are smaller and more fuel-efficient increase in popularity when fuel prices rise. Offshore manufacturers also enjoy the advantages of substantially lower wages and benefits for employees and lower costs for suppliers. The strength of the dollar against the yen and other foreign currencies can impact import prices. Sociocultural

Today's society judges people on the type of car you drive. Society does not like to admit to this but it is very true. Manufactures know this happens and targets their markets by these thoughts. For example, anyone who drives a mini van is perceived as a soccer mom. This is because the manufactures target mini vans to mothers. Anyone who drives a nice vehicle is thought to be wealthy. No one wants to be seen driving an unattractive piece of junk because of what other people will think of him or her. Consumers also just feel better when they are driving a nice or new car, if makes them feel better about themselves.

Another aspect of the sociocultural is the environmental concerns for the need of fuel-efficient vehicles. Many environmentalists are worried about the impact that the gas cars have on the environment. There is even legislation that requires cars to average a certain miles per gallon.


The internet has affected just about every industry in the world and has also had a huge impact on the automobile industry. A study was conducted by J.D. Power and Associates in 2002 and involved more 27,000 new vehicle buyers. The study showed that 60% of the buyers referred to the internet before making their purchases and out of that 60%, 88% went to the auto websites before going and taking a test drive. Business-to-business marketplaces have given the industry many opportunities because of the internet, such as more efficiency and lower cost. Ford, GM, and Daimler Chrysler announced in 2000 their plans to create a global online exchange for suppliers and the original equipment manufacturers. The exchange was originally called NewCo, and then it was changed to Convisint. According to Motor Vehicles and Passenger Car bodies, "In August 2002 General Motors announced it was about to begin sending requests for quotes to suppliers through Covisint using a tool called Quote Manager."

Concerns for the economy and global warming have caused the automobile industry to develop alternate fuel vehicles. In the beginning, automakers did not want to look into the development because of the high cost and the many risks involved. Because of new legislation, they had no choice but to come up with the technology to make the fuel-efficient cars. The automakers decided that electric cars would be the best way to meet the legislation demands. "Early models were unpopular because of slow cruising speeds and lack of performance, but by the end of the century, electric car...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • U.S. Automobile Manufacturing Essay
  • Automobile Industry Essay
  • automobile industry Research Paper
  • Automobile Industry Essay
  • Impact of Recession on Automobile Industry Essay
  • Introduction to Automobile Industry Essay
  • Ford and the Automobile Industry Essay
  • Audit of Automobile industry Essay

Become a StudyMode Member

Sign Up - It's Free