The Automotive Industry overview is comprised primarily of the world’s largest passenger automobile and light truck manufacturers. Through broad dealership networks, most members of the industry sell vehicles in the global market, covering developed and emerging countries. Automotive manufacturers offer a variety of makes and models, though there tends to be limited brand integration at the marketing, advertising, and dealership levels. Automotive Industry overview, The bulk of these companies operate production facilities in multiple geographic regions.
Automotive Industry overview Revenue Streams
Automobile manufacturers are subject to the demands of a vast international pool of customers. Economic conditions affect overall industry sales. Car lot traffic perks up during a boom period, and empty showrooms are commonplace during a downturn.
The price of gasoline Automotive Industry overview (and diesel fuel) is an important factor influencing customer demand. Indeed, the rise and fall of gas prices since the 1970s has caused buyers to place varying degrees of emphasis on vehicle fuel efficiency, durability, engine power, and quality.
To assist customers with purchases, and support sales, many companies offer low-rate financing programs and attractive incentives, such as discounts and cash back. Warranties, covering defects and repairs, are another means to lure drivers into showrooms. Another
The auto industry is both capital and labor-intensive. These companies have to manage numerous costs and expenses associated with facilities, materials, parts, equipment, product development, and employment. At times, the prices of key raw materials, such as
The cost of labor for Automotive Industry overview has a big impact on competitiveness and profitability. North American and European manufacturers are heavily unionized. Though their power and influence have been waning for a number of years, members of the United Auto Workers, for instance, still make up a good portion of the U.S. and Canadian workforces and have an effect on the industry’s health. Medical and pension benefits are substantial and can be a competitive disadvantage, especially compared to car makers based in Asia, where wage costs are lower. Domestic union salary and benefit concessions, and import tariffs help to narrow the price advantage of foreign competitors.
Over its history, the American automotive industry has built up a considerable scale and, at the same time, weighty pension and healthcare obligations. U.S. manufacturers have had to rely on debt to maintain operations and pay out benefits. Interest expense is significant. Production plant and dealer network consolidations have become common in an effort to protect net profits. Domestic companies have suffered market share losses over the longer term.