The profitability of the global automobile industry has been declining since the 1960s, as shown in Table 4. A2 highlights this trend starting from the 1980s. The decline in profitability and increased competition can be attributed to various factors. One factor is the intensified rivalry among car manufacturers, which has gradually reduced surplus. Furthermore, there has been a rise in outsourcing of materials, components, and services, leading to cost reduction and enhanced flexibility.
With increased competition, the automobile industry is facing a potential decline as companies are forced to lower their prices to survive. Additionally, anticipated changes in the global automobile industry from 2010 to 2014 will impact competition and profitability. Moreover, many players in the auto industry are developing low-energy vehicles that offer consumers substantial savings on fuel expenses.
Ford introduced its hybrid vehicle in the early 2000s, a significant milestone for many automobile companies. Prior to the hybrid, there was uncertainty surrounding design and technology in the industry. However, today competition primarily focuses on technology and design. The automobile industry has been greatly influenced by advancements in hybrid vehicles, cutting-edge technology, and affordable luxury cars. These factors have ushered in a new era in this sector. Over the next five years, we expect increased competition as new designs and environmentally friendly vehicles are revealed.
The automobile industry is projected to experience a growth in profit over the next five years, primarily driven by an uptick in the number of companies creating hybrid vehicles. This surge in competition will ultimately lead to greater profitability. Key factors for success include an increase in hybrid vehicle production and the outsourcing of materials. Companies must prioritize investments in new technology and cultivate innovative ideas to effectively meet consumer demand.
New technology will lead to cost reduction and profit increase. Additionally, the automobile industry can identify segments within the global automobile market that will offer exceptional profitability in the next five years. To achieve this, companies in the industry should continue to outsource their materials and components. By doing so, a segment with superior profitability can be created over time. Outsourcing enables companies to lower costs and improve flexibility. In terms of product importance, hybrid cars take the lead for automobile companies as they cater to consumers who aim to get more mileage out of their money.
