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AutoIndustry - Essay Example

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Autoindustry Introduction The massive earthquake of Japan followed by the tsunami had made it to the headlines for the massive damage caused to the country. However the effect of this destruction will even cross the national territories. The United States automobile industry is to a large extent, reliant on Japan for the components of the car…
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Download file to see previous pages Apart from that there are other renowned companies like Toyota, Mitsubishi, Honda and Suzuki had to close down their factories due to several problems like damage and lack of supply. Many people are optimistic that delivery and shortage of supply of cars from Japan may give a window of opportunity for the domestic manufacturers in the United States market. However this may be hard to achieve because most of the United States car manufacturers are dependent on the Japanese car component manufacturing industries. As a result of the disaster in Japan the global supply chain of the automobile industry have been disrupted. As a result there will be a delay in the delivery of the cars and even the prices of the cars in the US automobile market may rise in the recent years. Japan was a significant exporter of car components, essentially the electrical components to the US automobile companies. Companies like Ford manufacturing hybrid cars used to import the hybrid batteries for their cars from the Japanese company Sanyo. Though Sanyo has not been severely affected by the chain of disasters, the companies that supply their components to Sanyo have been affected. Therefore the supply chain has been destroyed (Rall). Japan is the third largest producer of car component for the US automobile industry after Germany and the domestic car component manufacturers. Year Percentage of Parts Import Percentage of Total Parts Market Value of Automotive part imported (in million dollars) 2000 23.2 5.1 14,535 2001 23.0 5.0 13,150 2002 21.0 4.9 13,498 2003 19.7 4.5 13,745 2004 20.2 5.1 15,494 2005 19.4 5.3 16,448 2006 17.6 4.8 15,377 2007 16.1 4.8 14,757 2008 16.2 5.1 13,486 2009 - - 8,774 (U.S. Department of Commerce, 67) The United States car manufacturing companies are dependent on the Japanese car component manufacturing companies for both the original equipments and the after parts. The original equipments are the components that are required at the factories for producing the cars. The after parts are the components that are used to replace the old components in a used car. The table shows that Japan has a significant share in the United States car component market. However there is significant drop in the value of import of car parts from Japan to United States in the year 2009. However that drop is due to a fall in demand for new cars in the United States market as an effect of the recession that plagued the country. However, the proportion of import of car parts is consistent with the previous trend. Therefore we can conclude about the dependence of the United States automobile industry on the Japanese Original equipment and after part manufacturing industry. Any adverse effect on the latter market will lead to a supply shortage in the United States automobile industry. The trade balance of car components of United States with Japan has also negative value in the considered period with the highest being 13,017 million dollars deficit in 2007. In United States the top 3 domestic companies have been the General Motors, Ford, and the Chrysler Group. They have been named as the Big Three by the industry. However their share of the car market has decreased significantly from 73.5% in 1995 to about 57% in 2005. In July 2006 Toyota had more sales than the previous second ranking Ford. Similarly Honda had more ...Download file to see next pagesRead More
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