Automotive market

The automotive market is formed by the demand and the industry. This article is about the general, major trends in the automotive market.

The European automotive market has always boasted more smaller cars than the United States. With the high fuel prices and the world petroleum crisis, the United States may see its automotive market become more like the European market with fewer large vehicles on the road and more small cars.

For luxurious cars, with the current volatility in oil prices, going for smaller cars is not only smart, but also trendy. And because fashion is of high importance with the upper classes, the little green cars with luxury trimmings become quite plausible .

Following this trend, General Motors Corporation announced on 2008-06-03 its plans to cease production at four GM truck assembly plants in North America while adding additional shifts at two assembly plants for cars. According GM, U.S. consumer preferences are shifting permanently away from trucks and sport utility vehicles (SUVs) in favor of smaller cars and crossover vehicles. As a result, GM saw significant increases in the retail sales of its Chevrolet Malibu, Chevrolet Aveo, and Pontiac Vibe in 2008 May, while its May sales of trucks to its dealerships are down by 36.7% from last year. Regarding cars and crossovers, higher gasoline prices are changing consumer behavior, and rapidly, significantly affecting the U.S. auto industry sales mix. GM thinks this is not a spike or temporary shift, but is, by and large, permanent

GM is also "undertaking a strategic review" of the Hummer brand and could either revamp the product line or sell the brand.General Motors have cancelled a $2 billion investment program to update their range of full-size SUVs Of course, GM's sales trends are not unique to the company; all the large automakers are seeing similar trends.
For instance, the biggest loser on the American Customer Satisfaction Index list is the struggling Ford's Lincoln-Mercury brand, with a 3.5% drop to 83 from 86 in 2007. Ford Motor Company, in general, saw a 20% increase in retail sales of its cars in 2008 May (compared to last year) and a 4% increase in car sales to its dealerships. Meanwhile, its SUV sales to dealerships were down 44% and its truck and van sales to dealerships were down 29% (note that both Ford and GM did not release retail sales information on their trucks and SUVs). Ford is top-heavy, with several big, gas-guzzling models that have put a damper on owner satisfaction. Ford announced in late 2008 July that it will bring its more fuel-efficient European models to the U.S., but the cars may not arrive in time to stem the company's slide in customer satisfaction.
Toyota Motor also saw big sales gains for its Yaris, Corolla, and Scion xB, although Toyota's car sales overall were down by 21.3% in May, compared to last year. Toyota's light truck sales are down by 15.9%, while Toyota's Lexus division suffered sales drops nearly across the board. "We are looking at the current shift towards fuel-efficient cars (in the United States) as a structural change in demand," Toyota President Katsuaki Watanabe told a news conference. "We intend to respond quickly and flexibly to this environment" . As part of those efforts, Toyota said it would move forward the launch of a "plug-in" version of its Prius .
Likewise, American Honda Motor Company experienced a 30.7% increase in car sales in May, compared to last year, while truck sales were down 11.4% and sales in its Acura division were down by 9.9%.
Chrysler is facing continuous pressure from its rapidly decline sales of trucks, pick ups and minivans as consumers tend to buy more fuel-efficient vehicles given the soaring oil prices . Chrysler Chief Executive Bob Nardelli said the government loans would help speed the electric technology to market. But if they aren't approved, Chrysler will have to spend limited resources on developing new technology and would have to make cuts elsewhere, possibly in employment and development of conventional products. "Unfortunately we have had to furlough many families as a result of the economy turmoil and certainly the downward spiraling in the industry," he said. "I'd like to make sure that we don't have to go further to be able to support advanced technology work."

Auto Social impact

The 1920s were the great decade of expansion; private cars in use grew from 315,000 in 1922 to 1,042,000 in 1930, along with 334,000 trucks and 700,000 motorcycles. The gentry who bought cars before 1939 found driving was easy on rural Britain’s smooth road surfaces in its generally mild weather. The rural roads were famously narrow and winding, so cars were small with stiff springs for good handling characteristics on them. High taxes on gasoline and crowded streets encouraged smaller, fuel-efficient cars in the cities, where traffic lights came into use in the 1930s. Most cities replaced their trams with trolley-buses between 1926 and 1939. In London the first double-decker buses appeared in 1923

During the war all production was concentrated on war materials. After 1945 Britain became the world's largest automobile exporter, providing 52% of the world's exported vehicles in 1950. In 1953 Morris merged with Austin to form the British Motor Corporation (BMC), becoming the UK's largest producer. BMC specialized in small, economy sedans and sports cars, with 4 cylinder engines.

By the late 1950s, West German automobile manufacturers were benefiting from the Economic Miracle and rapidly gained market share, followed soon by the French and Italian producers, and the UK lost most of its continental market through neglect and stagnation. At the end of the 1950s, the Rootes group acquired Singer. In 1966 BMC merged with Jaguar Cars and Pressed Steel to form British Motor Holdings, which then merged, in 1968, with the Leyland Motor Corporation, which had by then acquired the Rover Company and the Triumph Motor Company, to form the British Leyland Motor Corporation (BLMC) as Europe's fourth largest automaker. Chrysler UK finished acquiring the Rootes group in 1967, a process it had started in 1964.

By 1970 Japanese firms identified the British market as the first major European market to attack because of the relative weakness of the domestic car industry.

Stiff competition from Japanese and German cars, a reputation for shoddy workmanship and a breakdown in labor relations brought the British companies to near bankruptcy by 1975. The UK government effectively nationalized the bankrupt BLMC in 1975, rationalising the company into British Leyland, which produced 40% of the cars sold in Britain. The government provided £11 billion (in terms of 2008 £, or $16.5 billion in 2008 $) in bailouts. Wildcat strikes consumed more than 32 million worker-hours in 1977. Management cut employment in half, from 200,000 to 105,000 to cut expenses. In 1977 Chrysler sold its European interests to Peugeot, with Chrysler UK being renamed Peugeot Talbot.

After a decline in the UK market's significance for multinational automakers, Japanese manufacturers hoping to get around EEC trade restrictions established manufacturing plants in the UK. Nissan, Toyota and Honda all manufacture passenger cars in UK factories, primarily for car markets in Europe, Africa and the Middle East.

After a series of divestitures, British Leyland was renamed the Rover Group, which was eventually acquired by BMW, then split up into various divisions that were sold separately. MG Rover finally went bankrupt in 2005, ending the era of mass production by UK-owned automobile manufacturers. The remnants were bought by the Chinese government-owned manufacturers, SAIC and NAC, which later merged. Former British Leyland car brands include Jaguar and Land Rover, now owned by Tata Motors, MINI, owned by BMW and MG owned by SAIC/NAC. Only 22,000 workers remain employed at successor firms.

Automotive industry

The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles. In 2007, more than 73 million motor vehicles, including cars and commercial vehicles were produced worldwide.

In 2007, a total of 71.9 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The markets in North America and Japan were stagnant, while those in South America and Asia grew strongly. Of the major markets, Russia, Brazil, India and China saw the most rapid growth.

About 250 million vehicles are in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India.

In 2008, with rapidly rising oil prices, industries such as the automotive industry, are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage.

The automotive industry crisis of 2008 occurred mainly as a result of the global financial crisis and the related credit crunch. In the United States, other contributing factors were pricing pressures on raw materials and substantially more expensive automobile fuels which, in particular, caused customers to turn away from large vehicles such as SUVs. In certain countries, particularly the United States, the industry has also suffered from relatively cheap imports available from countries such as Japan and South Korea and to some extent from Europe. As of November 2008, the Big Three U.S. manufacturers, (General Motors, Ford and Chrysler), indicated that unless additional funding could be obtained over the short to medium term, there would be real dangers of bankruptcy.