The Automotive Industry in the 21st Century - Essay Example

? The automobile Industry in the 21st Century Task: The Automobile Industry in the 21st Century Introduction The automobile industry deals with the designing, developing and manufacturing of motor vehicles, as well as their sales. The industry has developed widely in the 21st century. However, much as it has developed, it has also experienced various problems, for instance, difficulty in implementation of some technologies, environmental challenges, political instability, among others. This industry is of great economic meaning to various countries that have exploited it largely for trade and employment creation. It is also evident that the industry has largely experienced change and improvement in technology, though to a limited extent. The case note from European Case Clearing House (ECCH) on the automobile industry covers the social and political significance of the automobile industry within the first ten years of the 21st century. It gives information on the challenges faced by the industry in the constant profit making process at each stage. It also gives details on the value chain involved in the industry. Challenges in the introduction and effects of new technology are also given a wide view, including the rigidity in the application and use of particular raw materials. The competition in the industry has been on with different innovations emerging, as a result. More improvements have been seen, which has brought a variety of commodities for consumers to choose from. The major players in the field include the general motors’ company of the United States, Toyota Motor Corporation of Japan, Hyundai motors of South Korea, Renault of France among others. Background The development automobile traces its origin late in the twentieth century. Entrepreneurs and engineers dealing in machinery in Europe and the US geared its progress. The countries included Germany producing their first car, France, United States and Japan, which also made their first cars between 1890 and 1914. 1) Scale and economic importance of the industry The industry scale is one that can be termed as large in a general view. This is because it ranges from large-scale manufacture of cars and car parts widely spread in renowned nations such as China, Japan, USA, Germany, UK, among others. It is global since the trade barriers reduction has encouraged wide investments in the emerging markets (Mitchell, Borroni-Bird & Burns, 2007). Most manufacturers export their automobile products and some kept for their domestic markets. There is various economic importance of the industry being exhibited worldwide. To begin with, it provides market for fuel producing industries. All automobiles require fuel or energy to propel them. Petroleum is the most widely used fuel by most automobiles. Petroleum refining industries, therefore, market their products to the automobile users. Refined steel has been used constantly used in the bodybuilding, as explained by Constable and Procter (2007). Another sector that has developed is employment creation. For instance, in Germany, the sector provides for not less than 14 percent of people employed in the manufacturing. The world has, to a significant extent, experienced unemployment problems in the 21st century; motor vehicle industry has helped curb the problem through employing engineers, entrepreneurs, and managers, sales personnel among other professionals on permanent and casual basis. The industry is a major source of income. Innovation in the automobile industry has led to an increase in flexibility and mobility of cash inflow to the various countries that deal in the industry. Marketing of the products and their spare parts locally and abroad generates cash. It can be noted that the industry is a major global driver of growth. 2) The static technology of the industry and factors that make it difficult for the industry to change to technology Technological innovations in the automobile sector has been rather static due to various factors including safety, risk of job loss, and market maintenance for some products such as petroleum and steel. 3) The value chain involved in the automobile industry In the automobile industry, the major stages of the value chain include design, raw materials, parts, assembly, marketing, and distribution. Their contribution in the general output and performance may be considered individually. Constable and Procter (2007) outline it as indicated below: Design This involves high value edition. It is determined generally by the customer’s needs. Market demand will dictate the kind of design that is to be availed by the manufacturers. The extensive application of computer software and applications, the industries have worked out a variety of designs. This stage of designing must keep up the pace to meet market demands. Raw materials May include metal, glass, rubber and may be referred to as raw value added. Their costs, however, have increased significantly within the 21st century. Steel bodies are still dominant, despite the escalating prices. Parts and assembly The various parts of the automobiles are made separately to standard levels, and latter assembled before sale to consumers. Some parts are used as spare parts to the consumers. Marketing distribution and sales The market must be conversant with the commodities available and made accessible to the levels that they can be reached. The automobiles are then sold to needy customers (Forest &Richard 1996). All the stakeholders who play a role in the value chain must work hard to keep the stock flow that would enhance increase in profits. Every stage must be efficient since failure at any point may lead to automatic breakdown of the industry. 4) Problems faced by automobile industries Rising petroleum prices have influenced the industry negatively by reducing sales of motor vehicles due to the unsustainable fueling cost, since most petroleum producing countries are not economically stable. Environmental regulation concerned with additives may hinder efficient production of some automobiles. Rise in raw material costs, as well as government legislations that control some automobile availability within their countries also interfere with the productivity of the entire industry (Leone 2006). New technologies in the automobile industry Technology has developed drastically in various applications in the automobile industry. This, however, has been limited by various reasons that have been considered to bar the application of some advanced new technologies. Safety is the major consideration in the automobile industry technology application. Some technological applications, such as use of different types of engine “anti-knocks”, may produce poisonous gases that may prove to be hazardous. Employment can potentially be reduced by application of some technological skills. For instance, use of robotics in the automobile industries or automation in the manufacture application process may threaten job positions of millions of employees in the industry. Market for petroleum fuel, which is an economic anchor for many countries, may also be interfered. Hybrid technology, for example, which uses electric power rather than petroleum fuels, is one that interferes with the markets for the petroleum products. This limits the level of advancement and application of such like technologies. For the above reasons, the industry has been relatively static compared to some sectors such as the information technology and the electronic sector. The use of hydrogen fuels and low carbon oxide emitting fuels can prove helpful to the environment. References Constable, J & Procter, T 2007, The automobile Industry in the 21st Century, ECCH, viewed April 11, 2012, . Forest, L & Richard, R K 1996, Business Management and the Natural Environment: Cases and Text.Cincinnati, OH: South-Western College Publishing. Leone, R 2006, Automobile Industry: Current Issues, nova publishers, New York. Mitchell, W J, Borroni-Bird, C E & Burns L D, 2007, Reinventing the Automobile: Personal Urban Mobility for the 21st Century, MIT Press, Cambridge. Read More