The Automotive Industry Worldwide - An Overview
A globalised industry dominated by a few firms
Over 80% of world car production is accounted for by six major global groups (dominated by the USA and Japan). Consolidation in the commercial vehicle sector has gone even further, with five major groups dominating the global markets for trucks and buses. A similar process has occurred in the component sector, which is increasingly dominated by large multi-national firms, which seek to establish a leading position in key technologies. Yet in all parts of the industry some smaller independent companies continue to survive, and indeed thrive, in particular sectors of the market.
The retail sector contrasts with this picture, still largely organised along national lines. Retailers are also consolidating, fuelled by increased competitive pressures resulting from new channels to market such as the internet and growth in imports.
Increasing sophistication
The industry is technologically advanced, both in terms of manufacturing processes and in its products. It is characterised by economies of scale and low unit costs, despite the increasing complexity of the fundamental product. Manufacturers are seeking to differentiate their products through technology and branding to restore margins particularly by applying electronics to vehicles. The proportion of electronics in the average vehicle may well double from the current level of around 20% over the next ten years, particularly in the areas of management systems and telematics. The engine management system alone can be at least 10% of the value of the car. Suppliers are taking on an increased responsibility for product development, design and sub-assembly as the manufacturers focus on core capabilities.
A key force driving technological change is environmental regulation. The industry has made major strides in the areas of emissions control and safety, but will face pressures for further improvement.
Intense competition
The industry suffers from global over-capacity and with manufacturing best practice rapidly diffused around the world, the fight to build or retain market share is relentless and competition fierce. Lean production is not enough; companies are striving to improve profitability by building desirable brands, through excellence in design, engineering and marketing. In Europe last year, Ford and General Motors made losses of $1bn and $463m respectively. They are both in the throes of substantial programmes to cut their overcapacity, through plant closures and other rationalisation. Honda, Nissan and Toyota have also been making losses in Europe, despite their impressive record on productivity. The current economic slowdown, which many commentators expect to worsen, may well lead to further reductions in both the United States and Europe. The pressures on suppliers, which were already intense, are likely to increase yet further
http://www.autoindustry.co.uk/automotiv ... ldwide.xml
Over Capacity is the problem then, is that myth or reality,so do we need more car manufacturing plants, cant help but draw similarities between the Taxi trade and the car industry.
Login
Register
FAQ
