Extract


Motor Vehicles

SIC 3711

NAICS 336111

One of the largest sectors of the global economy, the automobile industry manufactures passenger cars, trucks, commercial cars, and buses. Included in this discussion are firms that build chassis and passenger car bodies. Although some industry companies also manufacture motor vehicle parts, this topic is covered separately under the heading Motor Vehicle Parts and Accessories.

INDUSTRY SNAPSHOT

In the mid-2000s, the worldwide leader in the motor vehicle industry was the United States, followed closely by Japan in second place, and Germany in third. The top six companies in the industry secured more than half of global sales, although the rest of the industry's (ROI) companies were steadily gaining market share on GM, Toyota, Ford, DaimlerChrysler, Volkswagen, and Honda. Although the three mature world markets—Japan, North America, and western Europe—continued to account for the majority of global motor vehicle production and sales, nearly all of the industry's future growth was projected to come from emerging markets in the Asia-Pacific region, Latin America, the Middle East, and eastern Europe.

Due to increasing globalization, the saturation of mature markets, and economic decline in North America and Europe, the automobile industry worldwide is characterized by intense competition. As a result, most major manufacturers restructured operations in an effort to speed product development, reduce costs, and improve production efficiency. In addition, many manufacturers shifted production facilities to developing countries to take advantage of less expensive labor, reduce exposure to currency fluctuations, and avoid trade restrictions. Automakers also have been forced to lower prices, trim their ranks, and slow production to deal with waning demand for new vehicles. Adding difficulty for automotive manufacturers was the rise in steel prices, which increased by 30 to 40 percent in 2004. Iron was expected to rise in price by another 20 percent in 2005, according to Datamonitor. Automakers and suppliers were both seeing reductions in profits as a result.

At the same time, the growing worldwide environmental movement has prompted automakers to increase research and development expenditures in an effort to build commercially viable electric and electric-gas hybrid vehicles and to make their cars fully recyclable. In the mid-2000s, Toyota was leading the way with "Prius," its gas/electric hybrid sedan. According to the Alliance of Automobile Manufacturers (AAM), 2004 "Tier 2" vehicle models were almost 100 percent cleaner than those of three decades before. In fact, more than one-third of all new vehicles met the strict, mandatory 2009 standards a full five years early. R.L. Polk & Company reported that registrations for hybrid electric vehicles in the United States were 81 percent higher in 2004, at 83,153 new registered vehicles, than in 2003. The Toyota Prius captured 64 percent of that market, with 53,761 new registrations. The Honda Civic Hybrid took 31 percent of the market with 25,586 registered hybrid cars in 2004.

ORGANIZATION AND STRUCTURE

The global automobile market can be divided into roughly six segments: three mature markets and three relatively new markets that reflect emerging economies. As they had been for decades, Western Europe, North America, and Japan were dominant in ...

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