The automotive industry

The automotive industry today is in the middle of a dramatic and largely unprecedented transformation. The heart of this transformation is not about how the auto company does its work but rather how it defines itself. The model of the car company that Henry Ford created and Alfred Sloan perfected—integrated, scale-driven, “product-push”- oriented—prevailed for decades. It drove the consolidation of the U. S. industry from dozens of manufacturers to four to three to two-and-a half.

It governed the development of the post-war European industry, albeit with fits and starts engendered by that region’s distinctive social and cultural politics.

And it was the model upon which the Japanese manufacturers relied as they shot up the global league tables having made timely and effective adaptations that were overlooked, for a while, by the once-dominant U. S. industry. Prior to globalization the car industry has an oligopoly market structure.

Today, it is still an oligopoly market since the car industry exists with many different suppliers/producers within the same market.

Several different car producers are Ford, BMW, VW, Rover, Honda, Nissan, Toyota, and General Motors. Although cars manufactured by the different car producers around the world are different and not identical to one another, few different producers exist and they are all in competition against each other in trying to beat competition and manufacturing a better car than one manufactured by another producer.

Customers have a wide range of suppliers to choose from, the cars manufactured are of different sizes, colors, benefits, and makes to one another.

In the existing structure, car companies continuously manufacture innovative and new car models to distinguish the products from other competing firms. As a result, the products turn out to be much better with new, updated features to the industry all the time in order to stay on top of competition, increase profits, and attract more buyers.

Such firms also try to compete against car prices ensuring that they do not price their cars too high so customers are not lost. In such a market firms compete to keep prices of cars low and match them to apposing competitors thus leading to most firms having similar prices for the cars manufactured in the market. When a new car is manufactured by one firm, the new car is advertised, this encourages the competitors within the same industry to gather ideas and manufacture a new car for their own firm, which is also then advertised until another firm manufactures their new car and so on.

While the structure of the car industry has not changed after globalization, it could be observed that major trends could be observed in the car industry. There is shakeout and consolidation of giant suppliers. The number of giant suppliers is decreasing as there is a search for deep technical expertise, efficiency, and equipped with agile manufacturing techniques. The market of the car industry has shifted from local to global markets. Globalization pushes the industry to expand in foreign markets and the advent of Internet has also helped in reengineering the entire supply chain.

The new electronic options allow customers and suppliers to lower costs and prices, compress cycle time, automate simple transactions, increase accuracy, and decrease service response time. The car industry is more active in technology and engineering innovation to be able to attract the target consumers and original equipment manufacturers are now seeking integrated solutions with higher quality and longevity products and components.

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