Automobile Manufacturing

Automobile Manufacturing

Brief Excerpt from Industry Overview Chapter:

Companies in this industry make passenger cars and light trucks, as well as chassis for those vehicles. Major companies include Ford, GM, Nissan, Toyota, and Volkswagen.

The global automobile manufacturing industry has annual revenue of more than $2 trillion. Leading countries for car manufacturing include Brazil, China, Germany, Japan, South Korea, and the US. Countries in North America and the EU import the most cars.

The US automobile manufacturing industry includes about 200 companies with combined annual revenue of about $220 billion and is expected to enjoy high growth in the next two years. Key growth drivers include continued low interest rates and improving employment.

COMPETITIVE LANDSCAPE

Demand is driven by employment and interest rates. The profitability of individual companies depends on manufacturing efficiency, product quality, and effective marketing. Large companies have economies of scale in purchasing and marketing; smaller companies can compete by focusing on specialized markets. The US industry is highly concentrated: the top five companies account for about 70 percent of sales.

US-based automakers compete with numerous foreign rivals, including companies such as Toyota, Honda, and Nissan that have extensive auto assembly operations in the US. Through stateside manufacturing capacities and exports to the US, foreign carmakers collectively have about half of the US market.

Major sources of imports of cars and trucks to the US are Canada, Japan, Germany, and Mexico. Canada is the largest consumer of US exports. Operating under NAFTA, many US companies assemble autos...