FREE ESSAY ON AUTOMOTIVE INDUSTRY

AUTOMOTIVE INDUSTRY

Automotive Industry
The Automotive Industry is one of the largest industries 
in the world. Transportation needs is something that effects 
all of us. In the automative industry there are several 
production types, parts, accessories, vans, mini vans, 
trucks, SUV's, compacts, sedans, sports and luxuries. 
There is over 30 different manufacturing automotive 
companies. Many of these companies have merged and have 
part ownership of each other. The two largest companies 
today are GMC #1 and Ford Motor Company #2. Ford and 
GMC both consist of about ten companies each. Sales of 
these cars is done form companies to dealers and dealers to 
consumers. Consumers can do this over the Internet or at a 
dealer. In 1998 Internet sales were 80 billion and expected 
to be 726 billion by 2003. The Internet seems to be a 
convenience because you don't have to find your vehicle and 
deal with sales men. You can even have it delivered at your 
door for a similar cost. The Internet decreases incremental 
marketing, advertising, and personal cost per sale. Prices 
range from lowest around ten thousand and highest around 
one hundred thousand. The average car today runs about 
twenty-five thousand dollars new. There are many factors in 
the price of cars. Prices rise when options become standard 
like airbags, safety standards and emission controls become 
strict. When consumers demands fluctuate prices go up 
and down. When sales go down automakers offer rebates 
and discounts to bring them up again. Also the demand 
factor goes up when the economic growth and employment 
are good. Also safety, style, and engineering helps sell cars. 
Having a name is important also. Safety captures every 
buyers interest because of the great danger in driving. 
Scrap rates also help sell cars because getting beaters of 
the road causes people to buy new cars. Twelve and a half 
million cars were scraped since 1998. This made sales grow 
greatly. Over the years there has been around 125 million 
cars less than three years old on the road. This shows how 
people continue to want new cars and that business will 
never completely die. Before 1999 the US light vehicle 
markets volume had stayed around 15 million units. In 1999 
the record was set at 16.9 million units. Trucks, SUV's, and 
mini-vans rose at 8.7 percent and production of these has 
grown. Hybrid vehicles of these three types has also began 
in production. Vehicles for sale now are the Chevy 
Avalanche, Ford Sport Trac, and the Pontiac Aztec. This 
industry operates in steps. First the car is produced then 
sold to a dealer and the then sold to a consumer. 
Automobiles are built in factories in North and South 
America, Eastern and Western Europe, and Asia. A major 
location in the US were cars are made is Detroit, Michigan 
the United States auto capital. Another part in sales is 
replacement parts and accessories. This is a whole other 
part in a car dealer. Money isn't just made in sales but in 
repair and service. People like accessories and need service 
all the time.
The world impacts this industry greatly. People, oil, and 
banks all take part in auto sales. If people aren't making 
money then they cant afford cars. If there is a bad 
reputation for a company people wont buy either. If banks 
aren't giving low loan rates then cars wont sell because 
people cant afford them. If oil prices are high then people are 
going to want efficient cars andalso they will choose public 
transportation. All these factors have to stay stable and 
they will keep the economy flowing. Also the companies have 
to be competitive and produce cars as cheap and safe as 
possible. The US industry also try to beat foreign company 
competition cars will be produce cheaper if companies 
merge and have to concentrate on less competition. 
This industry usually stays strong when our economy is 
strong. The United Sates economy seems to keep growing 
and a long with the automotive industry. Each year more 
cars are sold and profits keep going up. Sales have reached 
record marks and 2000 is looking good for this industry. 
Technology is so advanced and every one wants new cars. 
People and economy are doing well which will lead the 
industry of cars to continue to up roar like a bull market.
I have chosen to give a capsule on Ford and Mitsubishi. 
Ford Motor company is the #2 Automotive leader of the 
nation. Ford was founded and began production in 1903. It 
first produced the Model A. twelve investors produce a 
28,000 dollar company. In 1908 the model T was invented 
and more then 10,000 were sold for $825. In 1913 ford 
introduced the assembly line and was able to produce a 
model t every ten seconds. In 1920 60 percent of all 
vehicles are Fords. Ford had a 58 million dollar debt and was 
able to pay it off with there 80 million dollars in cash, 1921. 
Henry Ford raises the company's minimum wage to $6 
dollars a day in 1935. 1946 Ford takes a hit and has losses 
at a rate of 10 million a month. In 1946 Henry Ford dies but 
bye 1946 Ford brought its profits up to $177 million 
dollars. In 1958 the company lost 250 million dollars in low 
sales of the Edsel a very expensive car. Bye 1983 Ford had 
to lay off 33% of the work force and experienced a 658 
million dollar loss. Ford invents top selling Taurus in 87. In 
the last ten years Ford has continued to grow and now owns 
Aston Martin, Ford, Jaguar, Land Rover, Lincoln, part of 
Mazda, Mercury, Think, and Volvo. They have gone through 
there usual ups and downs. Right know Ford is number 2, 
but has plans to pass GMC up. It employs about 370,000 
people and pays its CEO 6 million a year. 
Financially they are doing well. It is going threw a 
struggle over a Tire crisis right know. Ford is going to take 
a loss due to Firestone. Both companies new about a 
problem in atx tires for at least two years. It is in defect for 
6.5 milliontires. Ford is doing everything it can to fix the 
problem and plans to but Michelin tires on all 2002 
Explorers. This affects both companies greatly and make 
them look bad. Stocks have dropped and the problem still 
hasn't been completely fixed. General information on financial 
and stocks is located in these charts.... (seen at end of 
report) as you can see the company goes up and down with 
the economy.
Mitsubishi is a smaller company in the industry. It dates 
back to the 1920's when it started making engines and 
aircraft's. The company continued to grow and in 1964 the 
company had 77,000 employees and $700 million in sales. 
Chrysler Corp. took over 15% of Mitsubishi in 1971 and 
started selling Mitsubishi in the US In 1982 Mitsubishi 
invested in Hyundai. Revenue reaches 1 trillion dollars in 
March of 83. Mitsubishi launches its first commercial on 
television while trying to reach its goal of increasing sales by 
40% in 1989. In 1992 the agreement with Daimler-Benz 
group remained limited to several Mitsubishi dealers selling 
Mercedes Benzes. Chrysler finally sold its 2 percent share in 
1993 and both continued to buy from each other. 
Mitsubishi remained the worlds third largest automotive 
company. 1996 Mitsubishi planned for a 10% reduction in 
workforce by 2000. This year Daimler took over 34% of 
Mitsubishi. Also discovered that Mitsubishi admitted that it 
had been concealing consumercomplaints about defects 
since 1977. Said it secretly repaired cars to avoid recall. It 
has recalled 620,000 vehicles and was banned for 18 
months from selling cars. This company owes 1.47 trillion 
dollars and faces criminal charges. This kills its stock and 
make Mitsubishi tumble down. General information on 
financial and stocks is located in these charts.... (seen at end 
of report) as you can see the company goes up and down 
with the economy. 
Buying stock is a major decision. Every company goes 
through its up and downs. Buying is like gambling and you 
either make money or u don't. Buying in Ford seems logical 
to me. Ford has continued to up roar with economy over the 
last 100 years. Mitsubishi doesn't seem to be such a great 
companies to buy stock with. It is at a greater fall right now 
and may not roar again like Ford. Ford seems to be a sure 
money making investment if you have time. It has went up 
and down a few times but still remains one of the best.