The Automotive Industry is one of the largest industries in the world. Transportation needs is something that effects all of us. In the automative industry there are several production types, parts, accessories, vans, mini vans, trucks, SUV’s, compacts, sedans, sports and luxuries. There is over 30 different manufacturing automotive companies. Many of these companies have merged and have part ownership of each other. The two largest companies today are GMC #1 and Ford Motor Company #2. Ford and GMC both consist of about ten companies each. Sales of these cars is done form companies to dealers and dealers to consumers. Consumers can do this over the Internet or at a dealer.
In 1998 Internet sales were 80 billion and expected to be 726 billion by 2003. The Internet seems to be a convenience because you don’t have to find your vehicle and deal with sales men. You can even have it delivered at your door for a similar cost. The Internet decreases incremental marketing, advertising, and personal cost per sale. Prices range from lowest around ten thousand and highest around one hundred thousand.
The average car today runs about twenty-five thousand dollars new. There are many factors in the price of cars. Prices rise when options become standard like airbags, safety standards and emission controls become strict. When consumers demands fluctuate prices go up and down. When sales go down automakers offer rebates and discounts to bring them up again. Also the demand factor goes up when the economic growth and employment are good. Also safety, style, and engineering helps sell cars. Having a name is important also. Safety captures every buyers interest because of the great danger in driving. Scrap rates also help sell cars because getting beaters of the road causes people to buy new cars. Twelve and a half million cars were scraped since 1998. This made sales grow greatly.
Over the years there has been around 125 million cars less than three years old on the road. This shows how people continue to want new cars and that business will never completely die. Before 1999 the US light vehicle markets volume had stayed around 15 million units. In 1999 the record was set at 16.9 million units. Trucks, SUV’s, and mini-vans rose at 8.7 percent and production of these has grown. Hybrid vehicles of these three types has also began in production. Vehicles for sale now are the Chevy Avalanche, Ford Sport Trac, and the Pontiac Aztec. This industry operates in steps.
First the car is produced then sold to a dealer and the then sold to a consumer. Automobiles are built in factories in North and South America, Eastern and Western Europe, and Asia. A major location in the US were cars are made is Detroit, Michigan the United States auto capital. Another part in sales is replacement parts and accessories. This is a whole other part in a car dealer. Money isn’t just made in sales but in repair and service. People like accessories and need service.
The world impacts this industry greatly. People, oil, and banks all take part in auto sales. If people aren’t making money then they cant afford cars. If there is a bad reputation for a company people wont buy either. If banks aren’t giving low loan rates then cars wont sell because people cant afford them. If oil prices are high then people are going to want efficient cars andalso they will choose public transportation. All these factors have to stay stable and they will keep the economy flowing. Also the companies have to be competitive and produce cars as cheap and safe as possible.
The US industry also try to beat foreign company competition cars will be produce cheaper if companies merge and have to concentrate on less competition. This industry usually stays strong when our economy is strong. The United Sates economy seems to keep growing and a long with the automotive industry. Each year more cars are sold and profits keep going up. Sales have reached record marks and 2000 is looking good for this industry.
Technology is so advanced and every one wants new cars. People and economy are doing well which will lead the industry of cars to continue to up roar like a bull market. I have chosen to give a capsule on Ford and Mitsubishi. Ford Motor company is the #2 Automotive leader of the nation. Ford was founded and began production in 1903. It first produced the Model A. twelve investors produce a 28,000 dollar company. In 1908 the model T was invented and more then 10,000 were sold for $825.
In 1913 ford introduced the assembly line and was able to produce a model t every ten seconds. In 1920 60 percent of all vehicles are Fords. Ford had a 58 million dollar debt and was able to pay it off with there 80 million dollars in cash, 1921. Henry Ford raises the company’s minimum wage to $6 dollars a day in 1935. 1946 Ford takes a hit and has losses at a rate of 10 million a month. In 1946 Henry Ford dies but bye 1946 Ford brought its profits up to $177 million dollars. In 1958 the company lost 250 million dollars in low sales of the Edsel a very expensive car. Bye 1983 Ford had to lay off 33% of the work force and experienced a 658 million dollar loss. Ford invents top selling Taurus in 87.
In the last ten years Ford has continued to grow and now owns Aston Martin, Ford, Jaguar, Land Rover, Lincoln, part of Mazda, Mercury, Think, and Volvo. They have gone through there usual ups and downs. Right know Ford is number 2, but has plans to pass GMC up. It employs about 370,000 people and pays its CEO 6 million a year.
Financially they are doing well. It is going threw a struggle over a Tire crisis right know. Ford is going to take a loss due to Firestone. Both companies new about a problem in atx tires for at least two years. It is in defect for 6.5 milliontires. Ford is doing everything it can to fix the problem and plans to but Michelin tires on all 2002 Explorers.
This affects both companies greatly and make them look bad. Stocks have dropped and the problem still hasn’t been completely fixed. General information on financial and stocks is located in these charts…. (seen at end of report) as you can see the company goes up and down with Mitsubishi is a smaller company in the industry. It dates back to the 1920’s when it started making engines and aircraft’s.
The company continued to grow and in 1964 the company had 77,000 employees and $700 million in sales. Chrysler Corp. took over 15% of Mitsubishi in 1971 and started selling Mitsubishi in the US In 1982 Mitsubishi invested in Hyundai. Revenue reaches 1 trillion dollars in March of 83. Mitsubishi launches its first commercial on television while trying to reach its goal of increasing sales by 40% in 1989.
In 1992 the agreement with Daimler-Benz group remained limited to several Mitsubishi dealers selling Mercedes Benzes. Chrysler finally sold its 2 percent share in 1993 and both continued to buy from each other. Mitsubishi remained the worlds third largest automotive company. 1996 Mitsubishi planned for a 10% reduction in workforce by 2000. This year Daimler took over 34% of Mitsubishi. Also discovered that Mitsubishi admitted that it had been concealing consumercomplaints about defects since 1977.
Said it secretly repaired cars to avoid recall. It has recalled 620,000 vehicles and was banned for 18 months from selling cars. This company owes 1.47 trillion dollars and faces criminal charges. This kills its stock and make Mitsubishi tumble down. General information on financial and stocks is located in these charts…. (seen at end of report) as you can see the company goes up and down Buying stock is a major decision.
Every company goes through its up and downs. Buying is like gambling and you either make money or u don’t. Buying in Ford seems logical to me. Ford has continued to up roar with economy over the last 100 years. Mitsubishi doesn’t seem to be such a great companies to buy stock with. It is at a greater fall right now and may not roar again like Ford. Ford seems to be a sure money making investment if you have time. It has went up and down a few times but still remains one of the best