Manager

The Automotive Industry Today

The motor vehicle industry is the largest manufacturing industry in the United States. No other sole industry is linked to so much of US. Manufacturing or directly generates so much retail business and employment.

The U.S. automotive industry continues to experience dynamic change--changes that go across national borders. In order for them to succeed, auto manufactures must manage large and complex supply chains, spanning many geographic regions, and seek opportunities in diverse national markets. National policies play an important role in shaping the environment for local manufacturing operations and resulting products, cost competition increasingly drive the industry toward global product offerings. Contributions to the performance of a nation's economy can be made in other areas aside from employment, income, or investment. In recent years other positive changes have introduced by international industries include new technologies and product innovation. Other differences in vehicle technology in the areas of fuel economy and vehicle emissions performance are also evolving.

Forces of Change in the U.S. Market

There are important changes under way all over the world especially in the U.S. Market, both in the type of vehicles preferred by consumers and in the system that delivers those vehicles to consumers. The variety of products supplied by the automotive industry has increased dramatically. Lifestyles have shifted toward the two-wage earning families, and as a result, demand for light utility vehicles has surged. Consumer reports show that their increasing interests are safety and performance. At the same time, average new-vehicle transaction have continued to rise at a rate far higher than the increase in average household income, this posing a serious challenge for the auto industry. Foreign firms are opening new assembly plants in the United States, and foreign suppliers of parts and components are building a domestic presence. Furthermore, consumers have shown a very intense interest in safety and performance of a vehicle. Recent reports show that the average new-vehicle prices have continued to rise at a rate far higher than the increase in average household income, posing a serious challenge for the industry.

SOURCE OF COSTING SAVINGS

There have been dramatic changes in the distribution and retailing side of the automotive industry. They represent approximately 20 to 30 percent of the value of a new vehicle and are an important source of cost savings. These changes reflect a shift that involves inventory investment and information operations which is getting the right vehicle at the right time.

The automobile manufacturing industry has gone through wrenching times in the past 10 to 15 years. The U.S. industry is still home to the two largest vehicle manufacturers in the world, General Motors and Ford. They are responsible for 20 to 25 percent of the world vehicle production in several years since the late 1970's. In the past few years, the U.S. has come closer to closing the gap with Japan with respect to the volume of domestically produced passenger cars and overtaken Japan in increasingly important sector of Trucks, Buses and others.

Japanese investment in automobile production in the United States has often been seen as a helpful way of revitalizing a declining and uncompetitive American industry. Defenders of the Japanese auto" transplants" argue that they bring the world's best production system to the U.S., while helping to retrain