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US Automobile Industry Analysis - Essay Example

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The automobile industry has experienced significant changes over the recent past. Although the US automobile industry has remained stable in many regards, recent economic trends have changed the industry for good. …
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US Automobile Industry Analysis
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Download file to see previous pages Of the over 60,000 employees, 56,447 work in production, for an total of about 114 billion hours every year. The employees working in the automobile industry in the US cost the industry a combined 5.1 billion US dollars. For the production workers there are high levels of unreleased employees’ wages which were almost 4.5 billion dollars at the time of the 2007 census. Despite the intense focus on production, the export market remained vibrant and was able to ship over 84 billion worth of automobiles and automobile parts, against capital expenditures of less than 2 billion US dollars. The US automobile industry is a big industry, engaging in vicious competition in the highly dynamic car market. For instance, the industry spent a staggering $9,961,000 in advertising for the year 2007. From another perspective, the industry contributed even more to government coffers, spending $111,334,000 in taxes and license fees. The study of the US automobile industry reveals some clear segmentation according to size of the industries. The eight largest companies account for 91.3% of all shipments in an industry that has over 50 car-manufacturing companies. Of the top eight companies, the four biggest accounts for over half of the shipment revenue, scooping a significant 67.6%. The largest 20 companies take a 99.2% share of the export market, meaning that 12 companies following the top 8 companies account for just 7.9%. Thirty of the automobile manufacturers in the US account for just 0.6% of the shipments to overseas markets. Under the Herfindahl-Hirschman index, the 50 biggest car-manufacturers have an index of 1,448.8 (US Census Bureau, 1). The index is used to establish how a group of firms fare with regard to size for the industry. According to the index, a value of below 1,500, as given in our case, usually indicates lack of concentration, with significant amounts of competition within the corporations (Investopedia, 1). For the five-year period ranging from 2007 to 2002, the US car-market experienced considerable growth in revenues from shipments, with a small 3,386 million US dollars. over the same time period, the number of shipments per employee fell from 1,295,000 to 1,094,000 (US Census Bureau, 1). In addition, the annual average pay per employee fell from over 78 thousand USD to about 63 US dollars. From a geographical view of the US car market, it is apparent that most manufacturing interests are located on the eastern side of the US, off the noticeably off the coastal states. Also, the number of establishments per million residents remained constant at 0.6. With regard to states, Michigan is the source of most shipments out of the US, with a 25.17% contribution to the shipment incomes. Only Illinois comes close with a 10.14% value of the shipments, while the others account for the remaining 64.69%. Michigan also boasts of 22 establishments for automobile manufacturing. However, the leading state in this regard is California with 32 automobile manufacturing establishments. Noticeably, the industry has had considerable drops in the number of shipments, value of shipments, and annual payroll amounts. Shipments dropped by 7.6%, which closely matched the fall in establishments, which stood at 7.8% (US Census Bureau, 1). The drop in annual payroll was more steep at almost 20%. Company Analysis: Honda Motor Company Background to Honda Motor Company Honda Motor Company is a multinational car manufacturing company incorporated in ...Download file to see next pagesRead More
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