The car industry: A move to concentration

Résumé du document

The motor industry is over 100 years old and has an interesting history and uncertain future. It provides an interesting example of an industry that had to quickly evaluate due to constant evolution of technologies employed. This evolution was so money-demanding that it caused a typical movement of concentration of the industry. The car industry makes nearly 60 million cars and trucks every year and employees millions of people around the world. Products are responsible for almost half the world's oil consumption and their manufacture uses up nearly half the world's annual output of glass and rubber and 15% of steel. The car industry is the epitome of mass production, mass marketing and mass consumption involving some of the strongest brands in the world. However, in America, Europe and Japan, where over 80% of the world's cars and trucks are sold, the industry has been running out of growth (The Economist, 2004).

Extraits

[...] There is no real timeframe for the car industry in general. Cars have become necessary maybe somewhat essential goods. The timeframe for car models or types is generally short with new cars and models introduced every year. As production techniques improve and there are new developments in technology and safety a cars “shelf-life” becomes relatively short. A certain model may be produced for maybe less than a year before a new and improved model is developed. With the mass production nature of the industry there is a need for just-in-time production and production to order. [...]

[...] Bibliography Books and papers AFP Business News, January EU car industry set for a margin squeeze amid soaring raw materials costs. Available at Yahoo Finance at http://au.biz.yahoo.com/050106/33/2vfo.html The Economist, September Perpetual Motion. Available at the Economist.com at http://www.economist.com/surveys/showsurvey.cfm?issue=20040904 Marslien, J European car market set for shake-up. BBC News available at http://news.bbc.co.uk/l/low/business NERA Merger appraisal in oligopolistic markets. GFT Research Paper. Power, S. October 2004. Europe's car makers face turmoil as Japanese gain in market share. Wall Street Journal, Eastern Edition, New York. [...]

[...] For example, BMW have a reputation for being high performance, high quality, luxury vehicles and they have a price tag to reflect this. They are seen as status symbol goods and can be the result of conspicuous consumption. The horizontal product differentiation comes in the form of the size of the car, its colour, performance and technologies. These differences often depend on the need or the want of the customer. The vertical product differentiations are important features such as fuel efficiency, safety features, e.g. [...]

[...] There are no perfect substitutes to the car industry however other forms of transport would be seen as substitutes. Public transport is a major substitute to a car as it is becoming a more efficient way to travel. Products used to accessorise cars, such as GPS tracking systems, seat covers and floor mats, are seen as complements. There is a degree of vertical relations within the car industry. The manufacturer is the upstream firm with the car dealer being the downstream firm. [...]

[...] However the price the dealer charges could be thousands of euro above the invoice price. Dealers often get money back from the manufacturer once the car is sold or can receive a reward if they sell in volume. Although the car industry is a consumer-led industry, the final consumer does not benefit from this relationship within the industry as the dealers set the final price. The consumer is more than likely not getting the best price possible for the product History of European Motor Industry The European motor industry began at the end of the19th century when, in 1885, German Karl Benz introduced the first successful petrol engine cars. [...]