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An Industry Report on the Global Automobile Industry

The Global Automobile Industry: Changing with Times

From a humble origin as a ‘horseless carriage’ manufacturing industry dating back to the 1890s, the global automobile industry of 2008 has come a long way emerging as the market leader in the manufacturing activity, providing employment to one in seven people, either directly or indirectly. Hailed as the ‘industry of industries’ by the Management Specialist, Peter Drucker, the automobile industry (US) set standards in the manufacturing activity by contributing mass production techniques during the early 1910s. The Japanese soon followed by offering lean production techniques in the 1970s. Riding high on economical revival in many developing countries in Asia and Europe, the industry’s global output touched 64.6 million vehicles in 2005. But with a downward slide in the market share, the Big Three was fast losing their dominant position to Toyota, Honda, and Nissan, thereby setting the ground for the emergence of the New Six. Meanwhile UK, served as the single largest customer for European auto-makers. Japanese players were the leaders in the light vehicle market and hybrid market. China and India attracted the attention of global auto-makers, vying for setting up a cost-effective export base for meeting the demand from Asian markets. Despite government controls, the Chinese market boasted of sales of more than 2.7 million commercial vehicles in 2004. With industry reports on the highest growth in mobility in the world at 3% per annum, a further surge in demand was anticipated from the Chinese market. A booming economy and a low interest regime helped India to make its mark in the automobile sector in 2004, with sales figures exceeding more than 1 million in the passenger car segment for the first time. The sale of commercial vehicles showed a record growth of 29% over 2003. Foreign auto-makers such as Mercedes Benz, Volkswagen Group, General Motors, Honda, Toyota, Ford, Fiat and Mitsubishi were all making a bee-line to set up their manufacturing units in India to tap the growing demand.

In the environment front, the Kyoto Protocol, which came into force in February 2005, led to the emergence of a closed loop strategy encompassing production, vehicle operation and recycling in the global automobile sector. On analyzing the response of auto-manufacturers to climate change, it is noticed that despite fragmented views on the ratification of the Kyoto Protocol, automakers were in the forefront of popularizing environment-friendly initiatives. They were investing on engine modifications and related pollution-reducing technologies aimed at producing more fuel efficient vehicles. Hybrid vehicles and green vehicles running on alternative fuels are proving to be commercially viable options with customers queuing up for these products, which offered significant savings on gasoline prices.

The industry report on “Global Automobile Industry - Changing with Times,” traces the genesis, and market trends in the production and the initiatives to spearhead less polluting technologies. The US automobile industry and Ford Motor Company are taken as classic examples to identify Porter’s Five Forces and to do SWOT analysis, respectively. The results stand testimony for the fact that the industry is becoming highly competitive. In the Future Outlook, the growing significance of made-to-order vehicles, and the competitiveness of the emerging markets is dealt with in detail.

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