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Automotive Industry

Introduction and Size of the Industry

Recent statistics show that automotive industry in the world is dynamically changing due to the

advent of new technologies. It predominantly consists of companies in the world specialized in

manufacturing motor vehicles to facilitate faster movement of people and goods from one place

to another. The automotive industry is decorated as one industry in the globe with entrenched

and intricate histories. Automotive companies originated in the late 19

century in Europeans

countries. However, United States of America is currently rated as the leading automotive

industry in the world. In the early years, a significant percentage of automobile companies were

small shops. Changes in technologies, over time, has sufficiently changed the landscape of

automobile.

America became a dominant country in matters regarding automotive since the start of mass

production in the 20

century. What is more, some countries located in Asia such as India, Japan

and China (emerging economies) are becoming major exporter and importer of automotive. The

size of the automotive industry is substantial since it exists in almost every nation in the world.

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Therefore, the primary objective of this article is to examine and critique different components of

the automotive industry.

Challenges the Automotive Industry Will Face in the Future

New Consumer Demand for Green Standards

Shreds of evidence show that new consumer demand for green standards is perchance one of the

challenges that will confront automotive industry in the future. Arguably, the automotive sector

is rated globally as one of the industries crammed with unique environmental impacts that has

continued to affect plant and animal ecosystems (Calza, Adele, and Ilaria, p.6). Critics say that

motor vehicles often use fuels that leads to ejection of smoke and carbon dioxide that

contaminates or pollutes the atmosphere. As a result, the automotive industry is currently faced

with stringent regulations and restrictions that can be summarized as green standards (Calza,

Adele, and Ilaria, p.6).

Automotive companies are expected to adhere to green standards in order to neutralize the

adverse environmental impact caused by use of automotive products blamed for contributing to

climate change and global warming. Due to increased concern about climate change and global

warming, in future, the automotive industry will be forced to embrace and implement green

innovations. This can be achieved by inventing and designing new business paragons and

technologies that are environmentally friendly (Calza, Adele, and Ilaria, p.7). In a nutshell, green

standards require automotive companies to come up with motor vehicles that reduce the emission

of carbon dioxide into the atmosphere and escalate efficiently.

The Rise of Electric Cars, and How It Might Disrupt the Industry

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The new technologies have continued to support growth and development of electric cars that

might have an enormous impact on the automotive industry in the coming years. Contemporary

inquiries indicate that the demand for electric vehicles is growing exponentially. In fact, it is

estimated that, by 2038, the sales of diesel cars could be overshadowed by electric cars

(Shankleman and Warren, para.3). As soon as electric cars penetrate deeper into the global

markets, the manner in which people travel could entirely change. When electric cars demand

record an increase in future, people will shift from automotive to electric cars hence demand for

automotive in future will be low. Electric cars have the capacity of offering the consumer new

taste and ways which can create a new market in the future. One of the major anticipated effects

of electric cars is the systematic change. This implies that electric cars have the potential of

setting up absolutely new markets in the upcoming years.

Growth Opportunity for the Industry

It is abundantly succinct that global automobile industry has several growth opportunities in the

world. Arguably, emerging economies in the world have provided widened market where

automobiles goods and services can be sold. In the past decade, bits of evidence shows that sales

of automobile products in the emerging markets such as China, India, and Brazil has

significantly increased (Chavan, para.8). For instance, China automobile industry has continued

to witness a stable growth in the past ten years. These emerging economies are characterized by

fast-growing markets that fabricate market for automobile goods and services. Majority of

emerging markets have the low cost of labor (apparent in India and China) and even corporate

tax that has magnetized foreign investors. Automobile companies in the world have taken

advantage of low cost of manufacturing automobile products in emerging market to increase

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their profit margins. Apart from emerging market, automobile industry can explore growing

global economy as an opportunity for expansion (Chavan, para.8).

The global markets are steadily growing hence dispensing a suitable medium for expanding sales

of automobile products. Lastly, the inauguration of new technologies is a sound opportunity to be

explored by automobile companies (Chavan, para.9). New technologies have assisted automobile

companies in manufacturing products that have increased safety for drivers and passengers,

decline emission levels and, to a more significant extent, enhanced comfort.

How the Automotive Industry Affects Our Daily Life and Other Industries

Determines Infrastructure Structure

Infrastructure is peradventure one mechanism that influences automobile industry that has the

direct impact on our daily lives. In fact, the automobile industry has played a critical role in

shaping the transport system of the world (Wang and Zhilin, p.461). People are now able to

move for long distances using shortest possible time due to automobile products. These

automobile products rely on various infrastructure such as roads, railways, and waterways for the

purpose of the movement. For a country to get maximum benefits from the automobile industry,

infrastructure, at all cost, ought to be well developed. In nations or specific places where

infrastructure is poorly constructed, passengers and drivers will suffer from stifling noise,

discomfort and higher degrees of emission.

It is also susceptible to triggering traffic congestions that will lengthen the time and fuel

consumption hence affecting daily lives of people. Inadequate infrastructure can quickly lead to

scenarios of an accident that can cause death. What is more, automobile products depends on

fuel to move from one place to another hence citizen of a given country are forced to buy fuel on

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daily or weekly basis and servicing. In a nutshell, automobile product demands well –established

transport network to have the positive impact on everyday lives of people.

How it relates to Other Industry Such as Insurance, Energy, Etc.

It is a verity that automobile industry has a strong correlation with other industries like insurance

and Energy (Wang and Zhilin, p.465). Conceivably, automobile companies depend on energy

sectors in different ways. Energy sector supplies that fuel needed by automobile products.

Without fuel, automobile products cannot move from one place to another. Majority of

automobile companies have manufactured vehicles and other parts that rely on fuel to drive.

Additionally, changes in the prices of fuel have an impact on the overall demand for automobile

products. When amounts of fuel are kept at minimum or decrease, the cost of driving

predominantly goes down hence the demand for automobile products goes up.

Insurance and automobile industries are related. Insurance industry plays a fundamental role in

protecting automobile industry from losses. Automobile products are prone to accident, and

another myriad of risk or uncertainty hence need for protection against financial loss. In fact,

many countries in the world have compelled the citizen to take insurance cover when they buy a

motor vehicle.

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Work Cited

Calza, Francesco, Adele Parmentola, and Ilaria Tutore. "Types of Green Innovations: Ways of

Implementation in a Non-Green Industry." Sustainability 9.8 (2017): 1301, pp. 1-16.

Chavan, Sunada K. SWOT Analysis of Automobile Industry. 15 September, 2015. Management

Paradise Guru. Web. 16 Dec. 2017:

http://www.managementparadise.com/forums/service-sector-management/201400-swot-

automobile-industry.html

Shankleman, Jess and Warren Hayley. How Electric Cars Can Create the Biggest Disruption

Since the iPhone. September 22, 2017. Bloomberg Technology. Web. 16 Dec. 2017:

https://www.bloomberg.com/news/articles/2017-09-21/how-electric-cars-can-create-the-

biggest-disruption-since-iphone

Wang, Xuehua, and Zhilin Yang. "Does country-of-origin matter in the relationship between

brand personality and purchase intention in emerging economies? Evidence from China's

auto industry." International Marketing Review 25.4 (2008): 458-474.

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