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The Global Automobile Industry

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The Global Automobile Industry

Page 1 of 4
Sharon Garcia
International Business management
4/13/11
The Global Automobile Industry in 2009

1To have a thriving and growing economy you have to have a strong manufacturing base that is outputting quality goods in large quantities. In the case of the United States much of the economy in the past has been built on housing sales and the automotive industry. America's modern automotive industry is being hurt by two things: Unionized labor and cheaper imports from Asia. Why build cars in North America where unionized automotive wages are $20+/hour when you can build them in Asia for less than $4/hour and still get the same quality? And in some cases more quality, if you want to consider the amazing durability and reliability of cars and trucks built by Toyota and Honda. There is another factor too: Changing market interests. For years now Americans have been obsessed with buying SUVs and suddenly their interests have changed. They're now buying small, more affordable cars with good gas mileages, mostly built in Asia. Ford, GMC and other North American manufacturers are posting huge losses because they built all these SUVs that they can't sell unless they give out huge discounts.

2Global Market Dynamics - The world's leading automobile manufacturers continue to invest into production facilities in emerging markets in order to reduce production costs and therefore rise in profits. These emerging markets include Latin America, China, Malaysia and other markets in Southeast Asia.

Today’s global automotive industry is full of opportunities and risks which are everywhere — in emerging and mature markets alike. However, profitable growth is becoming more difficult to achieve due to challenges prevailed from the supply chain to the retail environment. Currently, the automotive industry has too much of everything — too much capacity, too many competitors and too much redundancy and overlap. The industry is in the grips of a global price-war.

China today, is one...