AUTOMOTIVE INDUSTRY



Automotive Industry

Automotive Industry

Introduction

The global automotive industry, increasingly characterized by global mergers and relocation of production centers to emerging developing economies, is in the grips of a global price-war. The industry is subject to imperfect competition which has resulted in too much of everything — too much capacity, too many competitors and too much redundancy and overlap. The industry is concerned with consumer demands for styling, safety, and comfort; and with labor relations and manufacturing efficiency. In this context, the paper examines the growth patterns, changes in ownership structures, trade patterns and role of governments in the automobile sector.

Analysis

Due to its deep forward and backward linkages with several key segments of the economy, the automobile industry is having a strong multiplier effect on the growth of a country and hence is capable of being the driver of economic growth. It plays a major catalytic role in developing transport sector in one hand and help industrial sector on the other to grow faster and thereby generate a significant employment opportunities. Also as many countries are opening the land border for trade and developing international road links, the contribution of automobile sector in increasing exports and imports will be significantly high (Copeland Adam, Wendy Dunn & George Hall; 2005).

Growth of Automobile industry

Increasing global trade also act as a major factor for rising growth in world commercial distribution systems, which has also increased the global competition amongst the automobile manufacturers. Japanese automakers have instituted innovative production methods by modifying the U.S. manufacturing model. They are also capable of adapting and utilizing technology to enhance production and increase product competition (Warf Barney 1990).

Economics of Automobile Industry

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 ...