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The Global Automotive Manufacturing Sector
(Source: CESA)
By: Guy Streeter, Kevin Rivas De Paz, Sophia Martin, and Dana Orkin

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____________________________________________________________________________
I. Introduction
The Industry chosen for this case study is the automotive manufacturing industry. The
purpose of this case study is to evaluate the industry using the structure-conduct-performance
(SCP) industrial organization paradigm. An assessment of the basic market conditions will also
be included to relate market structure, conduct, government policies, and the market
performance.
The automotive industry keeps growing and innovating. “There are currently 253 million
automobiles on the road currently”.(Hirsch, 2014) The automotive industry is known for being an
industry that is always innovating. When you look at the cars from just 10 years ago there has been a
significant increase in the technology that each generation of cars has come with. One of the latest
technological car manufacturers are working on is autonomous vehicles. Tesla the manufacturer of of all
electric vehicles announced their automated driving features on October 9th. The computer controlled
driving is being developed and they expect to have fully autonomous cars ready within the next five to six
years. Other companies that have been working on autonomous vehicles is Google, which includes a
parallel parking feature. This is just the beginning of the technological changes that we will be seeing in
the future with automotive manufacturers.
One article written in the Wall Street Journal was titled “Super Glues Are the Secret to
Making Cars Lighter” by James R. Hagerty and Mike Ramsey. Car manufacturing companies
such as Ford and BMW are expanding their manufacturing use of adhesives in their cars instead
of welds, rivets, screws and bolts. This process will lower the weight of the cars so that they can meet
fuel economy requirements. The technological revolution has recently taken its course in all markets,
especially the automotive industry. It is very plausible to see that adhesives are in our future.
______________________________________________________________________________
II. Basic Market Conditions
I. Automotive Manufacturing Industry History
France and Germany were the first two companies to lay the groundwork for the
automotive blueprint as we know it today. Oldsmobile was the first automotive company in the
US starting in 1897(History). U.S improved the process of automotive manufacturing utilizing
mass production with interchangeable parts. Henry Ford’s entrance in the industry in 1903(Ford,
2014) spurred new product pricing and product strategies geared to customers. Ford also started
the first mass produced automotive in 1908 introducing the Ford Model T. This was a simple
machine with very strong steel for the critical components due to the lack of paved roads in the
United States at the time, only 18,000 miles worth. At the time a car was a luxury and you had
many options to choose from making other companies at the time practice a differentiation.
Henry Ford decided to segment his market to the common person and put a vehicle in everybody
else’s possession. GM(who bought Oldsmobile in 1908) and Chrysler adapted this ideology Ford
laid out in terms of the mass production line. This strategy carried out for the “Big 3” into the
1920s.

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The automotive manufacturing industry progressively grew with new technologies
introduced to card. New options like the starter as opposed to the crank, the all-steel body as
opposed to wood, the high-compression engine, hydraulic brakes, syncromesh transmission, and
low-pressure balloon tires all coming in the 1920s. The highlight upgrades for the automotive
industry were the automatic transmission and the drop-frame in the 1930s. Cars remained
relatively the same as far as technology was concerned into the 1950s.
Cars in the 1960s started to form the automotive industry as it stands today. There was
tons of pollution, big block motors, and comfortable rides at the cost of safety and quantity. This
is the changing point in the automotive industry moving forward to the modern day. This helped
shape the safety standards everyone and to shape the creation of more fuel efficient and
alternative fueled vehicles. This also helped to shape the quality standards we see today as well
as the lean production of factories. This progressively improved steadily until the introduction of
hybrid powered vehicles in the early 2000s. This brings us to the creation of the fully electric
vehicles we have come to know surface in the late 2000s into 2010 to the present.
2. Market Definition
The automotive industry is composed of many companies that focus on specific factors of
building an automobile, such as, interior and exterior design, advertising, manufacturing,
research & development, etc.
Product differentiation is essential in the automotive industry. For example, 2013 Ram
1500 SLT replaced the stick shift with buttons. Car companies are constantly evolving their
designs to keep up with today’s technological society. Electric-powered automobiles use pricing
strategies to differentiate themselves. By lowering the price, electric car automakers are hoping
to attract consumers. Henry Ford was the first in his industry to apply vertical integration using
assembly lines into his business model. By doing so, he managed to survive comfortably through
the Great Depression.
The NAICS market definition for the automobile industry is very important to the
industry. It is just right in terms of the product, but it is too narrow in a geographic scope,
because it does not take into account the manufacturers outside of North America. The census
data will be a useful source for us because there are many international companies that
manufacture in North America.
The last couple decades have experienced an international alliance between automobile
companies. The rapid sequence of mergers and acquisitions finally became significant to disrupt
the automobile industry by influencing a movement for other companies to follow suit and
pursue deals.

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(Source: IBISWorld)
3. Market Size
The total revenue of the U.S car and automobile manufacturing industry is around
$102.3billion. Growth in this market based on revenue is predicted to be at 2.4%(IBISWorld).
While profit of this industry totals $2.9 Billion. The top 4 firms in the automotive manufacturing
industry accounts for one-third of the global GDP(IBISWorld). There are 202 businesses in the
market.
The top five manufacturing firms in the United States are General Motors Corporation,
Toyota Maker Corporation, Ford Motor Company, Hyundai-Kia Automotive Group, and Honda
Motor Co. LTD. General Motors Corporation is the largest of the automotive manufacturers in
the market with a 20.4% share of the market. The brands they manufacture are Chevrolet, Chevy,
GMC, Buick, and Cadillac. Toyota Motor Corporation has a market share of 18.1%, Ford Motor
Company has a share of 15.8%, Hyundai-Kia owns 8.7% and Honda Motor Co. Ltd. has 7% of
the market. The other 30% of the market is shared by smaller manufacturing firms. As this
industry continues to rebound from the recent recession the growth rate of the industry is
expected increase in 2015 by 4.6%.

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(Source: IBISWorld)
The automotive manufactucturing is very large and takes place mostly outside of the United
States. Only 18% of automotive manufacturing locations as a whole are located in North
America, which translates to even less in the USA.
(Source: IBISWorld
4. Technology
The technology used in the industry is known to have sweeping innovations that every
manufacturer then starts to implement. Almost every manufacturers have started using robots in
combination workers to produce more vehicles. This use of robots and technology allows
companies to spend less on wages for workers that would have been used before the robots were
put into place, allowing them to have a greater profit. The investment in these technologies for
auto manufacturers has been substantial because they know that in the long run the
implementation of this technology will greatly reduce costs. Many manufacturers today have
complex systems in their cars to aid the driver. These technologies started first with the luxury
vehicles like mercedes benz and after the cost of these technologies went down more and more
manufacturers started implementing the tech like self parking, blind spot detection and break
assistance. (Auto Alliance) A relatively new technology that is being implemented in the auto
industry is autonomous driving vehicle. Tesla motors CEO sees a fully autonomous car being
ready in 5 years. Tesla is a leader in technology advancements so with Tesla being almost ready
to produce autonomous then like the industry has currently been going other car manufacturers
will be offering autonomous vehicles a little after a current leader has come out with technology.
(Ramsey)

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5. Substitutes
There are many substitutes to automobiles these include motorcycles, public
transportation, bicycles, and walking. All of these substitutes in the US are not used readily. The
public transportation industry in most of the United States is not as developed as other nations
which means that cars are the main mode of transport in the United States. In other countries the
public transportation is a lot more developed offering busses, high speed rail, and bike lanes.
(Richard)
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Market Structure
1. Number of Buyers and Sellers
There is approximately 202 automobile manufacturers in the entire world. Most
developed countries have a high number of cars per capita resulting in a high market demand.
The five largest firms in this industry are General Motors Corporation(20.4%), Toyota Motor
Corporation(18.1%), Ford Motor Company(15.8%), Hyundai-Kia Automotive Group(8.7%), and
Honda Motor Company(7.0%). The concentration ratio of these five firms is 70% of the
industry. This shows a moderate concentration market share. But this concentration limits us
from seeing the state of the remaining firms in the industry and an accurate ranking of degree of
competition for each firm in the industry. The Herfindahl-Hirschman Index(HHI) is a better tool
to assess the level of competitiveness and provides a general idea of the industry’s structure.
These market shares have remained pretty much stable over time except for the change in
mergers that have lowered the concentration within the market. This is shown through the market
share of automotive manufacturers since the year 2013 with the following market shares: (GM
17.9%, Ford 15.9%, Toyota 14.4%, Chrysler 11.6%, Honda 9.8%, Hyundai-Kia 8.1%, Nissan
8%, Volkswagen 3.9%, Subaru 2.7%, BMW 2.4%, Damier 2.2%, and Mazda 1.8%) - *(Statista).
Dealerships are also a buyer of automobiles. Dealerships buy and sell new and used passenger
vehicles and act as a middleman between the automotive manufacturers and the everyday car
buyers. The dealership market is a massive one earning around $799.5 billion and profiting
around $18.4 billion. (IBISWorld) Most dealerships in the united states are highly fragmented
with the two leading industries only accounting for 4% of the Market, inventory purchases make
up a large percentage of expenses because they spend a lot purchasing the automobiles. (Ibis
World) Recently Tesla won a direct to sales court battle in Massachusetts. Tesla motors a smaller
automotive company only sells its vehicles directly and this has upset many dealerships because
they were unable to get Tesla to sell them their cars. The dealerships tried to stop tesla from
selling the vehicles directly to consumers because they said it cut into their sales. Many courts
are ruling in favor of Tesla and this includes the state of Massachusetts. (Ramsey)

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Year # of Firms CR4 CR8 HHI (for 12
firms)
2013 12 59.8 89.6 1,177.13
*(Numbers from Statista Source)
(Source: IBISWorld)
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2. Barriers to Entry and Exit
There are high barriers to entry in the automotive industry. The capital of the firms in the
industry are high and for firms to enter into this industry and attempt to compete with highly
developed firms. Especially with the technological advancements that these big corporation
make it is difficult for firms to enter and compete with this changing industry. Established firms
have lower cost structures than entering firms which are at the advantage of surviving in this
market. As discussed in the Wall Street Journal, these major companies like Ford are more
frequently using adhesive glue for there cars. Companies who enter this industry may not be as
knowledgeable of adhesives and would already be at a disadvantage to the major companies.
Along with adhesives car manufacturing companies need advanced equipment that may be
running at a low supply or high cost. Many manufactures tend to have long standing contracts
with equipment suppliers, which may be difficult for newer firms to build trust without any
outstanding relations. Along with supplies, entrant companies need a lot of land and floor space
to establish assembly plants. Even the labor force is difficult to obtain for these entrant firms.
The workforce needs to be licensed to build the design for the cars so that they are an efficient
model and up to scale on safety and environmental requirements.
In the recent years there has been a number of new firms to enter this industry. Since the
market is so competitive to enter the new entrant firms have specialized on a progressive agenda
of electrically powered cars. Coda Automotive and Wheego Electric Cars are two of the newer

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firms to enter the industry based on the new electrical powered feature. Tesla is another firm to
enter the industry which focuses on sporty racing models.
(Source: IBISWorld)
3. Cost Structures
The minimal profit earned by the big three domestic automakers has prevented from
making a comeback because there has been weakened demand and structural inefficiencies. The
recent bankruptcies of general motors has forced new contract negotiations with unions that
eliminated pension liabilities. In 2014, automakers are expected to turn a profit of about 2.8% of
revenue. There are many components that need to be purchased in order to generate automobiles
purchases are about 78% of the industry costs. Wages make up the biggest part of the industry
costs taking 5.1% of revenue. The top three automakers have been trying to maintain profitability
with these expensive labor unions. Unions are responsible for keeping wages high. Research and
development is also another part of the cost structures it makes up 3.0% of the cost. R&D is used
to obtain a technological advantage due to no real monopoly and heavy competition. Auto
manufacturers don’t publish their costs so determining the minimum efficiencies of scale is
difficult. One of the smaller car companies that is successful is Tesla even though they are
considered small they are still made $932 million in revenue for the last quarter they are also
planning on producing 35,000 cars (Tesla) . In order for a company to have a economies of scale
in the auto manufacturing industry they must either produce a lot of cars or produce a few

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amount of cars that will sell for millions. Bugatti is an example of a car manufacturing company
that has been successful in producing super high quality cars that sell for over a million dollars.

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(Source: IBISWorld)
4. Differentiation
With such a large global market, the automotive manufacturing industry uses various
tactics tailored to specific demographics. Every car serves a specific purpose. Passenger vehicles
are built to commute passengers safely from A to B daily activities, SUV’s and vans are built to
support a larger group of people and use accessories such as inlaid tv screens on the back of front
passenger seats to provide families with a comfortable and entertaining commute. Pickup trucks
are produced to move large loads and often used by small businesses especially in the
landscaping industry. Utility vehicles are heavy duty commercial vehicles used by large
businesses that handle large orders or finished products or raw materials.
From an aggregate outlook of the market automotive companies are differentiating their
services in the technological side of cars. The rate of technological change in the global
automotive manufacturing industry is very high (IBISWorld). The two drivers in this instance are
the use of the internet and supercomputers to design every aspect of automobiles and be able to
test them and make changes instantaneously. This allows auto manufacturers to be able to
address pressing issues with recalls and to improvements to model years, and everything

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inbetween. Another trend in the technological change is the more fuel efficient vehicle trends.
from the “more efficient, greener vehicles”(IBISWorld). The push in this industry is to get more
efficient in hybrid, electric, and hydrogen powered automobile engines. This not only increases
fuel efficiency that consumers crave with increasing gas prices, but it also cuts down on
greenhouse gases. Right now hybrid vehicles own the biggest share of the vehicles
manufactured. Some automotive manufacturers want to stick with the hybrids as they are the
cheapest “green” vehicle to produce. Others choose to pay the higher costs to engineer fully
electric vehicles, which is the long-term goal of the automotive industry(IBISWorld).

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5. Vertical integration
(Source: IBISWorld)
The major players, especially GM, have their
own production process and retail locations, but
extend their business outside of the industry for raw
materials such as metals and fabrics.
Vertical integration allows automotive
industries to cut costs by having their own plants,
mechanical support, transportation vehicles, and
company retail locations. Some automotive
manufacturers sign agreements with outside
dealerships to spread their products out
geographically.
6. Diversification
Automotive manufacturing companies have
seen most of the growth of the automotive industry
was from diversification. Companies in this industry
tend to merge and acquire other companies in order to
diversify which is shown through feedback loops.
Examples of this are Ford acquiring Mercury, which
was purchased in order to be the mid-priced section of the Ford Motor Company. Also Ford
acquired Lincoln, who was purchased to be the upper-mid-level priced vehicle segment. Also
with the as well as producing more vehicles, automotive manufacturing industries also
differentiate their products with customizable features.
Automotive manufacturers guard themselves against market failure by introducing
modern technology in their vehicles. Modern technology is a reference to the iPhone, iPod and
bluetooth compatibility, Many cars are now introducing technology that allows the car to
practically drive itself with cruise controls and the ability to parallel park on its own. Touch
(Source: Strategicmanagementinsight.com) screens and LED tv’s are a popular accessory
incorporated in the manufacturing process. Driving performance is another area where
automotive manufacturers focus on for the customers concerned with safety, speed, comfort. Car
manufacturers are also concerned with green manufacturing and sustainability by working on
fuel efficiency and environmentally friendly vehicles. Buyers have the option to drive cars that
can operate both manually and automatic by the touch of a button opposed to the aged stick shift.
These areas of diversification serve the automotive manufacturers interest in bloating revenues
and maintaining brand loyalty among buyers.

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______________________________________________________________________________
IV. Conduct
1. Pricing Strategies
As most of us know cars are not cheap to make and cannot be sold at an easily affordable
price. But with high demand for cars in todays era consumers price shop for the most affordable
car. Automobile manufacturers find ways that they can sell their cars in a more attractive manner
to consumers through different pricing strategies. All firms in the industry offer plans where the
buyer can send lower monthly payments, leasing, to obtain the car right away. Firms may vary in
pricing strategies in the following ways:
● Pricing Discrimination based on social class - Some firms offer deals to a variety
of different consumer segments such as college students. Ford is currently
offering a deal to full or part-time college students where they can save $500 if
they buy or lease one a model from the last two years just for being enrolled at a
college. Firms like ford understand that college students have extremely high bills
from tuition and rent and give deals like this to differentiate themselves from
other firms in the industry and to attract this selected consumer group. (Ford)
● Premium Pricing - Many firms set a high price for a new model to impress the
consumers view of their new car. If a new model for GM comes out at the same
time that one from Ford comes out and is priced higher the consumer market will
assume that the GM car is of higher quality. Firms keep their pricing high to
encourage favorable perceptions amongst buyers.
● Bundling - Many firms offer different versions of the same car to promote
bundling to raise revenue. A firm may offer a car with a package that comes with
a rear view camera, heated seats, and a blind spot information system for only
3,000 than a the model without these features. These pricing bundles are more
elastic for consumers and this price discrimination strategy has been known to pay
off well for automobile manufacturers.
● Used Cars- Since consumers are always looking for the next model from the
leading car manufacturers, depreciation is huge in this industry. The price of a car
each year depreciates a substantial amount since there is a new model of that car
out with more impressive features. But not all consumers have the ability to buy
the newest model and wait for the price of a later model to depreciate to their
affordable amount they are willing to pay. Automobile firms offer deals for used
or old cars which still accounts for a large part of their sales as a firm.
Prices vary in the market for the automobile industry as a result of product differentiation
and different cost structures. Larger firms may use the following price strategies listed above to
gain advantage in this competitive market. Automobile manufacturers have not seen to use limit
pricing as a way to keep potential entrants out.

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2. Product Strategies
When evaluating product strategies we look at product design, product features and
benefits , product quality, product branding, product target market. The automobile industry
offers a variety of product designs to sell to as many people that they can. There are many
different types of car styles these include coupes, sedans, trucks, suv’s, vans, wagons, sports
cars, convertibles, hybrid cars, luxury cars, crossovers, and electric vehicles (NADA). With such
a wide variety of product designs the automobile industry is able to meet the demands of a wide
consumer audience. Every big manufacturing firm offers most of these different product designs.
Product features and benefits are what a manufacturer adds to the product that may
increase the benefit offered to the target market. In order to determine the product features and
benefits you have to look at the bundle of benefits to the buyer. There are many benefits that
automobiles offer some of these are flexibility, and personal mobility and independence. Along
with the product features and benefits product quality is hard to define because each consumer
has a different definition of what quality products consist of. With each consumer having
different opinions of each car manufacturers products it is difficult to determine overall product
quality for any brand. The luxury brand of vehicles are seen as the most quality types of cars
because of the overall cost of these vehicles. Although not always true the more a car cost
generally means that it has more to offer to the consumer whether it be a car that can go faster or
a car that offers more luxuries it really depends on what a consumer is looking for in a vehicle
that determines the quality of the vehicle.
Product branding and target market go hand in hand for the almost every industry and the
same can be said about the automobile manufacturing industry. There are many different target
markets in the automobile manufacturing industry this can be seen in the wide variety of product
designs that are offered. Each product design is targeted to compete individually for a target
market and the product branding hat follows is used to compete against other manufacturers of
the same product design of which there are many.
Many car manufacturers seek to diversify the products that they offer. To do this car
manufacturers produce different brands under their company, other companies just exclusively
seek a high quality image. Manufacturers like Nissan and Toyota produce luxury cars that offer a
high quality image for their consumers under a different brand Nissan produces under the
Infinity brand and Toyota produces under the lexus brand. There are many more manufacturers
that do this. Then there are companies like Mercedes Benz, BMW, and Porsche that stick to just
producing high quality image automobiles. There are also manufacturers that produce to meet the
low cost demand of the market, these low cost cars are small economical cars that don’t have a
lot of features.
"Cars by Body Style, Category & Type." NADAguides. Web. 5 Dec. 2014.
<http://www.nadaguides.com/cars/body-styles>.

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3. Advertising
There are numerous social benefits and costs of advertising when considering firms
within an industry. Advertising is used to to convey information about price, location, or
quantity. In the automobile industry advertising is a key ingredient used by firms to distinguish
themselves as a prevalent company. From newspaper, tv commercials, billboards, to magazines
automobile manufacturers are seem almost everywhere to stimulate interest in their brand.
Advertising helps manufactures take on economies of scale in the distribution and production of
automotive manufacturing. But there are also a lot of social costs of advertising that come with
brand management.
Advertising Leaders of Industry(As of 2009):
*(Industrial Organization: Theory and Practice, 457)
1. General Motors - $2,215 Million
2. Ford - $1,517 Million
3. Toyota - $1,286 Million
4. Honda - $936 Million
5. Chrysler - $825 Million
6. Nissan - $691 Million
7. Hyundai - $402 Million
According to this chart the three biggest advertising firms in the market are GM, Ford, and
Toyota. As we saw earlier in the Market Structure these are the largest firms in the industry.
Although we cannot say that there is a direct correlation between amount of dollars spent on
advertising and market share; we can suggest that advertising does play a substantial role in
increasing the market share for firms within an industry.
The article, Auto Manufacturers, Dealers Put More Coordinated Ad Dollars to
Digital, shows the progression of advertising in the automobile manufacturing industry
and its expected continuous rise. The U.S. Auto
Industry is on track to become the second biggest
spender in paid online mobile media by 2015,
according to emarketer. Its digital ad spending is
expected to reach $7.8 Billion by 2017. As the
smartphone and tablet industry is rapidly
growing the growth of mobile ads has risen as
well. In 2002 newspapers were the biggest
endorser of ads in the U.S. but by 2011 it quickly
switched to television and internet. Automobile
manufacturers have abided by this change and
shifted their advertising investments to fit this
consumer demand. (emarketer)

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3. Research and Development
The automobile industry is the leading spenders in research and development that any
other industry. They spend approximately just over $100 billion dollars on R&D annually, which
is four times greater than the aerospace and defense industry put together. But how could the
automotive industry invest in more research than the aerospace and defense industries? It could
have to deal with there being an actual demand high consumer market. Car manufacturers need
to differentiate their product by increasing quality
and price by investing in research and
development. Research and Development in the
automobile manufacturing industry has three
main goals: lower cost of manufacturing, increase
car safety, and to build an attractive model. If a
firm was able to find a new cheaper material that
could be welded easily to construct the frame for
the car would certainly be at an advantage to
other firms since their cost structures would lessen. This industry has also seem increases in
educated workers with college degrees which has only enhanced R&D even further.
The Center for Automotive Research (CAR) defined a high tech industry with the
following principles:
● R&D expenditures > 3% of output
● Technical Employees(Engineers, technicians, scientists, mathematicians) make up
10% of workforce
● Continuous engagement in innovation of technical knowledge of production
The automotive manufacturing industry clearly abides by these principles and CAR labels it as a
leader in technological developments and applications. It could only be assumed that this
industry’s R&D is expected to grow exponentially over the years to keep up with the high
demand and competition within the industry.
4. Mergers
In the automotive industry mergers can be a useful tool for firms to benefit in the market.
Most mergers take place because a company believes the acquired company is worth more than
the acquired company believes they are worth. Mergers in the automobile industry are used to
improve market power, increase efficiency gains, reduce risk, build capital, and to rescue failing
firms.
Timeline of Automotive Industry Mergers:
1979 - Ford buys stake in Mazda
1998 - Volkswagen buys Bentley
1998 - Chrysler and Daimler Benz announce $38 billion merger
1999 - Ford buys Volvo

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2000 - GM buys Saab
2006 - GM and Ford have merger talks
2008 - GM and Chrysler hold merger talks
*(CBC News)
Mergers have been very prevalent in the automobile industry over the years as companies
with small stakes in the market concentration try to survive by merging with larger
conglomerates. If GM and Ford ended up merging after their initial talks in 2006 it would
completely reshape the automobile industry. It would mean that one firm would hold about a
35% share of the entire market. This firm would be the clear frontrunner in the market and could
expect to start to see almost monopolistic situations with the market.
_____________________________________________________________________________
V. Performance
Allocative Efficiency
In terms of performance the automotive industry is moving more towards allocative
efficiency. There are many people in the firms and the profits have been dropping in the
automotive industry to where price is starting to equal marginal cost. If we look at the table in
the cost structure section we see that the profit of the automotive industry in the year of 2014 is
only suppose to be 2.8%. This is almost at the zero profit level and is hinting toward an
allocative efficient level.
Production Efficiency
This industry is getting more productively efficient due to the technological advances in
manufacturing. What used to be man made and human assembled is now mostly robotic and
controlled which cuts down on flaws and creates consistency amongst the processes done and the
final deliverable. This has been an improving trend since the 1960s just because of the social
issues of polluting vehicles and the lack of safety standards in cars. All of this mixed together
with the concept of many output flaws like mentioned above and in the History article that there
were 24 cars with defects per unit of them sold which is a significant level of imperfections.
Quality and Service
This ties into quality and service as well because if the quality is good and consistent, the service
should be too. The rate of technological advance is moving at a fast pace to reach the next
greatest improvement in the automotive industry. The greatest quality and service for automotive
makers is to meet the regulations imposed on them to make more fuel efficient vehicles. This
will come to the production of electric vehicles(IBISWorld) because you will now have a motor
that requires far less maintenance, no fuel, and will cost relatively the same as a gasoline
powered motor. although in the past like the 1930s to the 1950s the technology of cars stayed the
same for nearly 3 decades. Being able to deliver a car that has more power, better gas mileage,

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burns cleaner, appeals to the consumer, and to lower profit margins in order to do so
demonstrates quality and service.
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VI. Conclusion
The automobile industry has been one of the largest global markets of the last 50 years.
Its leading investment in R&D are what shape its progressing future. With new firms that have
taken on different features such as electric powered, impressive add-ons, improved safety
features, and high speed performance cars keep his industry as a competitive and high gross
industry. Consumers have been impressed with these improvements of the next generation
models and eagerly look on to set whats ahead. The fuel efficient cars and improved safety
features (blind spot protection, rear view camera, etc.) have cohered with society's interest in
improving its social welfare. Reduced car emissions and accidents have shown the progression
that this industry in a positive way. The firms such as Coda Automotive and Wheego Electric
Cars have shown that new firms can enter the industry and succeed. I would recommend entry to
potential entrants as long as they have enough infrastructure and capital to compete with these
large firms. This industry has shown to be successful for past entrants and I could see more firms
entering the market in the near future that are powered from a source of renewable energy. The
big firms like GM and Ford are still depending on the consumer demand for oil, but as prices rise
new alternative sources of energy will be looked to. I would assume that GM and Ford would
shift their agendas to renewable sources if this came to be the case, but the companies that invest
first clearly will be at the advantage with lower cost structures and advanced R&D in this field.
This is a progressing industry and I would recommend consumers to invest in such an elite
market. Hyundai-Kia Automotive Group since according to IBISWorld it is expected to gain
market share and in the next 5 years. It has seen an increase in revenue in the last four years as
well and seems like a stable progressing firm in the automotive industry.

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______________________________________________________________________________
VII. Citation
1) Automobile Manufacturers Association. Automobiles of America, 2nd ed. 1968. Detroit:
Wayne State University Press.
2) May, Geoge S., Ed. The Automobile industry, 1896-1920. 1990. New York: Facts on File.
3) May, Geoge S., Ed. The Automobile industry, 1920-1980. 1989. New York: Facts on File.
4) Peterson, Joyce Shaw. American automobile workers, 1900-1933. 1987. Albany: SUNY
Press.
5) Ramsey, Mike. "Tesla Expected to Announce Automated-Driving Features Thursday."
Business. 6 Oct. 2014. The Wall Street Journal. Web. 9 Oct. 2014.
<http://blogs.wsj.com/corporate-intelligence/2014/10/06/tesla-expecte<http://blo
s.wsj.com/corporate-intelligence/2014/10/06/tesla-expected-to-announce-automa
ed-driving-features-thursday/?KEYWORDS=automotive>.
6) White, J. (2013, April 16). “Changing Gears: Auto Makers Ditch Familiar Shift Levers.”
The Wall Street Journal. 16 April 2013. October 8, 2014.
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