The Automotive Industry is one of the largest industries
in the world. Transportation needs is something that effects
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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.