CYCLICALITY & CAR ASSEMBLERS

Cyclicality Exert a Powerful Influence on Car Assemblers

Cyclicality Exert a Powerful Influence on Car Assemblers

Introduction

This paper will be discussing that how cyclicality can be used for exerting power influence on car manufacturer's value added, sales, profit performance, and cash flow. Value added sales, profit performance, and cash flow all these factors are always and the first priority for any organization. All these factors are important for a business running. Cyclical industries such as automobiles are always known as profit gaining organization. Therefore for an investor to invest, terms like Cyclical Industry Investing can be a little off-putting to the unseasoned investor. However, the big term is not actually as difficult to understand as it may seem at first glance. Let's take a look a little more closely at cyclical industry investing.

What is a Cyclical Industry?

In its most basic form, a cyclical industry is one that typically experiences large gains during a good economy and large losses during a recession. When you think about it in these terms, a cyclical industry is one in which many Americans will purchase a product when they have a little extra cash lining their pockets. In other words, these are some of the products and services that we may consider luxuries. For example, sales of cars, boats, airline tickets, and homes generally decline during a recession (Micheline, 2000: 8). People often wait to purchase these products and services until the economy is on more solid ground. Additionally, many people suffer financially during recessions, and they may decide to wait on these types of purchases until they have more expendable cash.

Introduction to the Automobile Industry

The passenger car production started in Spain in 1950 with the creation of SEAT. In less than 30 years Spain moves from a situation in which there was no producer to another coexisting six: Seat, Fasa-Renault, Citroen, Chrysler (Current Peugeot), Ford and General Motors (with its subsidiary Opel). Spain has become one of the main world producers of passenger cars, and all this from a state of very low level of car ownership, low industrialization, and almost nonexistent ancillary industries, as well as low levels of human capital (Thomas, 1999, 18). The unique advantages offered by our country were real low labor costs and proximity to a market as important as Europe. The oil crisis led the 80 car makers to initiate a series of measures to limit fuel consumption.

On one hand, began to design low gasoline consumption, higher performance diesel engines to those known in those days and on the other hand were raised for campaigns aimed at weight reduction. In this chapter it is worth noting the beginning of widespread use of plastics replacing metal materials in many components. With both stocks was achieved in a few years will reduce fuel consumption by over 25%. A few years later the demands of the other developments prompted to think about (Norihiko, 2000: 12):

Cleaner Engines

Use of recyclable materials

These changes were aimed at fundamental respect for the ...