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Car Industry - Assignment Example

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Car industry is not only capital intensive but labor also plays important. Despite rise in the use of robots in the industry, the cost of labor is still considerable. Advertising and market research now also make a big part of the cost of the car manufacturers as the companies now try to understand and woo the consumers to their brand because main source of revenues for automobile companies is consumer sales…
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Car Industry
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"Car Industry"

Download file to see previous pages Financing is another new dimension to the whole situation as car companies are trying to make a profit on financing by offering lower financial rates than financial institutions. Most giant automobile companies have expanded into providing financial services to car buyers. Leasing has benefited both consumer and manufacturer. With leasing option consumers find cars more affordable and thus they increase the overall demand for cars. However, if leasing is not done at the right value of the vehicles at the end of the lease then it could eventually be a loss for the company.
Technological & Environmental Concerns: Technological changes and advances have also become a key factor in the industry. Advances in aerodynamics, brake assistance, adaptive speed control and global navigation and satellite tracking system etc require a proactive approach by the industry with regard to technology. Increasing awareness of environmental issues has also forced the industry to look into cars with alternative fuel options. Fuel Efficiency has also become a key selling element in the industry. Hybrid cars can be considered a step in this direction with the use of smaller, more-powerful and easily recharged lithium ion batteries for hybrid cars. Such batteries would be able to help in reducing the oil consumption and thus helping in reducing the oil demand. Ethanol, Fuel Cells and Hydrogen Power cars are therefore coming to the limelight putting a lot of emphasis on environment.
Ecommerce: Internet like every business has also affected the car business as consumers can make informed decisions before making an automobile purchase. There sites available that support deliver competing bids for cars, insurance and financing in a way that lowers costs and improves satisfaction among consumers. Not only Internet revolution has helped customers but e-commerce has helped manufacturers in managing their supply chains and controlling their inventories.
Capacity Issues: The industry has also been facing problems of capacity. Plant capacity throughout the world has resulted in an industry that is capable of making more cars for fewer customers meaning that supply exceeds the demand for cars. This sustenance of capacity by creating parallel demand for cars is a challenge for the industry.
Dealerships: Dealership of cars is another area which has seen major changes over the years. Now, nationwide holding companies have got their hands on the best dealers in major markets. Even national chains have acquired the used car business. These changes now affect the way car manufacturers see the delivery of their end products.
Situation of Car Parts Firms: Suppliers have of car parts have an important role to play in the industry. Dash boards, seats, tires, etc. are provided by Original Equipment Manufacturers. Many car parts manufacturing firms in UK are losing ground to cheaper rivals in Eastern Europe and the Far East. Some firms could even get closed, without the upgrade in their setup. There are companies in the region which are investing in their future by getting new equipment to help keep going in the face of growing foreign competition for example, some firms got ability to mould larger plastic car parts with its new machinery. The competition from Eastern Europe and the Far East is very disturbing for the manufacturing industry. A new ...Download file to see next pagesRead More
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