Number of car models in the automotive industry of the United States of America
The automotive sector of the United States of America has recorded an increase in the existing car models from 2015 to 2017 (Statista, 2017). Nonetheless, the number of new models in the country has reduced from 2015 to 2016 and slightly increased in 2017 by one model (Statista, 2017). It was observed that there is an overall reduction in the number of new car models manufactured in the United States of America. One of the reasons why the American automotive market has had a notable decrease in the emergence of new models is the saturation of the target market in the country (Statista, 2017). The diminishing American automotive market has been exacerbated by the decrease in the popularity of car models produced in the United States of America in the global market.
| New and Existing Car Models In the United States Of America's Automotive Market | |||
| Number Of Car Models | |||
| Year | New | Existing | |
| 2015(1) | 46 | 221 | |
| 2016(2) | 37 | 226 | |
| 2017(3) | 38 | 237 | |
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Light vehicle retail sales in the United States of America
The retail sales of the American automotive models rose in 2016 compared to 2015 and then decreased towards 2017 (Statista, 2017). The increase in the emergence of new car models in the United States of America is closely linked to the retail sales in units in the country. The reduction in the number of new models in 2017 compared to 2016 has, therefore, led to a decrease in the retail sales of the light vehicles in the United States of America (Statista, 2017). The trend in the retail sales between 2016 and 2017 can also be as a result of the saturation in the American automotive market, which has led to the overall reduction in the demand of the cars in the country.
| Year | No. of vehicles sold | |
| 2015(1) | 17134700 | |
| 2016(2) | 17464800 | |
| 2017(3) | 17396300 | |
United States of America's car exports to the world
The exportation of the American automotive models has increased continuously between 2015 and 2017 (Statista, 2017). The most significant increase occurred between 2015 and 2016, and a slight increase was observed between 2016 and 2017. The increase in the exports of the American cars to the rest of the world has come at a time when the top players in the market have embraced technology in mass production and the increase of efficiency in the manufacturing process (Statista, 2017). The role of technology has favored the consumer demands not only in the United States of America but also in other countries. The reduction in the percentage of exported cars from the United States of America in the automotive industry between 2016 and 2017 correspond to a decrease in the retail sales of the vehicles in the industry and the reduction in the number of new models in the country (Statista, 2017).
| Year | No. Of Cars Exported | ||
| 2015(1) | 56206954695 | ||
| 2016(2) | 56714241118 | ||
| 2017(3) | 56864097709 | ||
Industry Responses to the Challenges Discovered
The automotive industry of the United States of America has been affected by the significant challenges as follows.
Non-competitive Cost Structure
Most of the automotive companies outside the United States of America such as Toyota in Japan manufacture cars that target every financial bracket of the target customers (Minchin, 2017). Most of the American car models tend to have fixed cost structures that may not provide them with flexibility when they have to cope with sensitive economic shocks of the modern world. To ensure that the fixed cost structure is not a disadvantage to both the consumers and the producers, the American automotive companies like Ford and Chrysler have increased their factory efficiency and the quality of their products to ensure that they provide the target consumers with the value they are looking for in a car (Minchin, 2017). The cost structure issue has further been solved by having the companies produce many car models to satisfy the target market's requirements.
Overdependence on the Full-size Pickup Trucks
The American automotive industry has been overly dependent on the sale of the trucks that have a diminishing market in the United States of America (Mansour & Haddad, 2017). The vehicles have also not done well economically outside the country. Some of the reasons associated with the reduction in popularity of the American pickup trucks are their significant consumption of gas and the sensitivity of the economic times (Mansour & Haddad, 2017). However, with the constant research on the market trends in the automotive industry, emergent companies such as Tesla with their innovations on sports cars have reorganized the automotive market with smaller cars to offer the American market (Mansour & Haddad, 2017). The move has seen Tesla accelerate its growth and spark its financial performance in a short span.
Lack of Globally Competitive Product Mix
Compared to the Toyota and Nissan, both based in Japan, the American automotive manufacturers have failed to attain an internationally competitive product mix. The American car manufacturers have found solutions to the lack of a globally competitive product mix. Cars manufactured by General Motors have been reported to do well in other countries across the globe, especially in China (Gilboy, 2016). However, Volkswagen is gradually overtaking General Motors in China. Ford has also not been left behind in the target of the markets outside the United States of America. However, the company needs to do more work in the Pacific Rim since it is not famous and its products are not competitive. To increase the competitiveness in the automotive market across the world, American manufacturers will need to come up with the car models that take care of the various social classes in the world with their requirements.
How the Identified Characteristics and Trends of the Industry Act As Forces Affecting the Industry
The characteristics and trends of the automotive industry in the United States of America shape the sector in various ways. The increase in the level of technology in manufacturing and operations has boosted mass and efficient production spearheading the level of competitiveness in the automotive industry of the United States of America. The top players such as Tesla, Chrysler, General Motors and Ford have integrated the use of technology in the manufacturing of their cars at different levels, which has made it convenient for the companies to increase their vehicle manufacturing. The increase in technology has thus favored the emergence and development of companies in the automotive industry. Soon, the increase in the advancement of technology is set to cope with challenges such as environmental pollution through the production of electric cars in the American automotive industry.
The increase in the exports of the American car models from 2015 to 2017 may act as a force influencing the trend of the automotive industry of the United States of America. To begin with, the increase in the exports of the American car models is an indicator of the advancing power of the country's automotive industry in the international market. Historically, the global automotive market often rejected the American models due to their high fuel consumption, inflexible cost structures, and the fact that most of the American car manufacturers often manufactured trucks. The change in the manufacturing models to target the global customer is, therefore, one of the most remarkable adjustments that the American automotive manufacturers have added to the car models. That has increased the sales exponentially for the American manufacturers.
The presence of fixed cost structures for the American car models is the other thing that has acted as a force towards the increase in efficiency and mass production of cars in the United States of America. Unlike car manufacturers outside the country like Toyota, the American car manufacturers have combated the reduced sales by having many cars produced to satisfy the demand rather than having the production of various qualities of vehicles for the American market. The increment in the number of manufacturers and the models have therefore accounted for the inflexible cost structures and provided more cars for the American and the global market.
The Indicators Used To Determine the Trends and Suppositions
One of the indicators used to determine the trends in the automotive industry is the United States of America is the vehicles sold per year. The number of cars that are sold in the United States of America, whether to the local or international markets, increased in the year 2016 compared to 2015 and then reduced in the year 2017. The change in the retail sales of the light vehicles in the country over the years is an indicator that can be used to determine the trends in the retail sales in the United States of America's automotive industry. The increase in the number of electric cars produced is one of the indicators that can be used to point to the technological advancement especially in the manufacturing aspect of the automotive industry in the United States of America. One of the American automotive companies known for the manufacturing of electric cars is Tesla, which has spearheaded developments such as the reduction in pollution in various parts of the environment. The increase in the number of cars fitted with the Global Positioning System is another indicator of the increment in technological advancement in the modern cars manufactured in the American automotive industry. The costs of the American car models versus the cost of those manufactured outside the United States of America is another clear-cut indicator of the trend in the automotive industry. Analysts from the various countries across the globe have concluded that the American car models are more inflexible compared to those from the other countries. Most of the American cars from a given company may serve only customers within a specific financial capability while those from other countries such as Toyota from Japan manufactures cars for the different customers based on their financial capabilities.
Similarities and Differences between Major Firms in the Industry
Similarities
One of the most significant similarities between the players in the automotive industry in the United States of America is the increase in the use of technology in manufacturing. Tesla has become well known in the manufacturing of modern cars with the latest forms of technology, which has contributed to the organization's acknowledgment for environmental friendliness. The other companies such as Chrysler and Ford have not been left behind in the technological modifications of their cars where they have fitted them with global positioning system (GPS) maps that have made driving more accessible and more convenient for the drivers than ever before (Li et al., 2017). The other similarity between the major firms in the American automotive market is the increase in efficiency of the manufacturing to target the whole world. Companies such as Ford and General Motors have targeted the market beyond the United States of America in the automotive production. In the advancing age of technological advancement, the other companies in the country are looking forward to manufacturing cars that target the global market. Therefore, the target of the market outside the United States of America is another characteristic that has made the major firms in the industry similar.
Differences
In as much as technological advancement has characterized the automotive industry of the United States of America, Tesla has taken the advent of technology on an entirely new level, one that the other automotive manufacturers in the country have not attained. Debates in the various parts of America have characterized Tesla as a tech company, but since its primary product is cars, the fifteen-year-old company has been classified under the automotive industry (DeBord, 2018). The pursuit of technology for Tesla has led to the company incurring losses with the anticipation of incurring more losses in the coming financial years while it has placed the other players in the industry such as Chrysler and General Motors in a strategic position to increase in profits (De Stefano, Montes-Sancho & Busch, 2016). The other difference between the major firms in the automotive industry of the United States of America is the primary product sold. The major product sold by ford is the pickup trucks while Chrysler and Tesla have majored in the production of cars for the American market.
References
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De Stefano, M. C., Montes-Sancho, M. J., & Busch, T. (2016). A Natural Resource-based View
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Gilboy, G. J. (2016). The Myth behind China's Miracle. In SEEKING CHANGES: The Economic
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Li, Y., Gunopulos, D., Lu, C., & Guibas, L. (2017, November). Urban Travel Time Prediction
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Mansour, C. J., & Haddad, M. G. (2017). Well-to-wheel Assessment for Informing Transition
Strategies to Low-carbon fuel-vehicles in Developing Countries Dependent on Fuel Imports: A Case-study of Road Transport in Lebanon. Energy Policy , 107 , 167-181.
Minchin, T. (2017). “They Didn’t Want to Be Union”: Southern Transplants and the Growth of
America’s “Other” Automakers. Australasian Journal of American Studies , 36 (2).
Statista. (2017). Topic: U.S. automotive industry. Retrieved from https://www.statista.com/topics/1721/us-automotive-industry/
