Automotive Industry in the United States

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.