The auto industry is a very important part of the economic growth, having wide-ranging connections in the cultural and industrial structure in the United States. The auto sales in the U.S. have improved by over 50% ever since the financial crisis in the year 2009 (16 million from 10.4 million in the year 2014).
Between 2010 to 2014, the auto makers have exported over $560 billion in parts and vehicles.
Auto makers as well as their dealers are the biggest manufacturing sector of America; accountable for approx 2% to 3% of America’s GDP. Auto manufacturing sector produces maximum jobs in American. They purchase American steel, rubber, iron, glass, and semiconductors every year worth billions of dollars. Today, over 735,000 Americans are working for the auto supplier industry.
General Motors, Chrysler, and Ford produce more vehicles, purchase more parts, as well as carry out more R&D than their opponents in the U.S General Motors, Chrysler, and Ford together, spend yearly over $13 billion for R&D in the US.
In 2014, General Motors, Chrysler, and Ford have manufactured 5.8 million vehicles for the U.S., having the assistance of over 200,000 employees, who work at over 180 assembly factories, plants, distribution centers, research labs, as well as other facilities, situated in 31 different states. They are working with over 10,000 dealerships that employ more than 580,000 workers.
Automakers have replied to newer domestic cost benefits by shifting the production of other countries into the U.S. Ford has moved some manufacturing of Fusion sedan to Michigan from Mexico as well as Transit van to Missouri from Turkey. Automakers have centralized the production in higher functioning markets including the U.S. that can export on same body frames or main components to assembly the facilities across the world.
As the automotive industry has become very competitive, the income margin on every vehicle is moderately small. As producing trucks and cars is very demanding from the capital prospective, automakers have to maintain scale for remaining competitive on the costs. For that reason, tax policy, trade agreements, and rules have massive impact on competitive status of every automaker.
|Base Year||2016||Researched through internet|
Other Key Market Trends
Research & Development
Suppliers and automakers spend around $18 billion for R&D every year in the U.S. – around $1,200 for every vehicle sold. Whereas R&D spending had slow down during the fiscal crisis of 2009, this has returned strongly. Between the 2012- 2013, the auto had R&D augmented by $7 billion. The suppliers and automakers in the U.S. have invested around $18 billion in the previous year for alternative fuels development, superior power trains, newer materials and superior sensors. And for that, they are given around 5,000 patents every year.
Auto R&D is concentrated on the in-vehicle electronics that can embody 50% of the new vehicle costing. In the last decade, auto R&D has provided braking technology as of anti-lock brakes (that help driver to break quicker) to electronic solidity control (that keeps the vehicle moving securely if the driver loss the control), to trial automated emergency steering system (that controls steering, braking, and choke)
In the year 2011, the U.S. auto industry, replying to the requirement of improving safety in the vehicles, customer demands for newer model types by superior cosmetic and driven performance characteristics, as well as emission regulations, invested around $11.7 billion for R&D. In the period of 1999-2007, the auto R&D has spent around $15-$18 billion. In the year 2008, the U.S. auto R&D expenses fell into $11.7 billion as well as in the year 2009; this continued to turn down under $10 billion.
Over 1.5 million natives are employed in the automotive industry. Additionally, this industry is an enormous buyer of services and goods from other sectors as well as contributes to the net employment involvement in the U.S. financial system of over 7 million jobs.
Jointly, the 16 main automakers in the U.S. recruit around 300,000 Americans. General Motors, Chrysler, and Ford employ over 200,000 Americans from these. The General Motors, Chrysler, and Ford together have 65% share of the U.S. automotive jobs which is amazing, because they have only 45% market share in the U.S. The reason behind this disproportion is very simple. The General Motors, Chrysler, and Ford produce majority of their vehicles, conduct research, and purchase their parts from here. Therefore, they have 8 times more global workforce than their opponents in the U.S.
Last year, the international automakers have directly hired 100,000 Americans for over 380 facilities. Every auto job has guided to the making of extra jobs somewhere else in the financial system—a wave effect which helps the employment of more 500,000 Americans in the country. Additionally, almost 10,000 international dealerships of nameplate franchises have created over 500,000 jobs.
Before the year 1980, the GM, Chrysler, and Ford who accounted 90% of country’s auto sales— designed and produced their parts internally. Ever since the time, they have provided much of their work to the financially independent suppliers who now produce and design around 70% of industry’s parts.
Re-shoring of the Manufacturing
Many manufacturing firms are “re-shoring” jobs (bringing formerly outsourced jobs coming back) at the United States. The main reason of re-shoring the jobs is wages in previously lower cost countries have amplified whereas real wages are having little increase in the U.S. A more supple and creative workforce as well as intensive usage of automatic manufacturing techniques has decreased the significance of labor costs while producing domestically or overseas, whereas other factors like energy and freight costs are more important.
Concerns about logistics, and freight-in as well as freight-out costs, have provided pressure on the supplier firms for locating facilities near the customers. Manufacturing companies are also responsive to the indirect costs like the risks connected with more remote supply chains. The risks have not resulted in a few companies bringing the manufacturing back again to the U.S., and also encouraged the re-agglomeration of the auto suppliers to main auto producing regions.
Market Size and Forecast
In the year 2013, Americans have bought over 15 million cars as well as trucks. Around 11 million of these cars as well as trucks were made at one of the America’s 44 auto assembly plants! A usual plant needs over $1 billion of initial capital investment as well as employment of 2,000 to 3,000 employees. Every assembly plant work supports equal to 9-12 others at the suppliers’ and within surrounding community. One single plant that produces 200,000 vehicles every year, may contribute to nearly $6 billion in America’s GDP.
Every vehicle assembled in these plants has around 8-12,000 different parts. Over 5,600 suppliers are producing auto parts for the U.S. Marketing, distributing, selling as well as servicing the vehicles employs thousands of Americans.
The U.S. auto employment forecast plans that from 2013-2018, the employment will rise by around 10.8 %, with complex average expansion rate of 2.1 %. The production in the U.S. is estimated to continue growing, expanding at compound increase rate of 2.4 %; this result is projected raise of 12.6 % within production in 2013-2018.
In the year, 2008-2009, the recession hindered newer investments and guided many suppliers and automakers to provisionally idle or eternally close a lot of factories, in following years, suppliers and automakers have invested as well as reinvested in the U.S. amenities. From the starting of 2010 till the 2014 end, automakers have proclaimed investments totaling about $70 billion within North America. The investments consist of newer facilities, as well as retooling and expanding the existing facilities. These facilities consist of engine, transmission, assembly, stamping, as well as parts plants together with other facilities. From the investments made by North Americans during this period, nearly 67 % of the investment went to the facilities situated in the U.S.
Other investments which are announced in the 2014 consist of:
- BMW is opening an area distribution centre at Texas
- Mercedes is building newer offices at California
- Mercedes is expensing the assembly plant at Alabama
- Tesla is building $ 1 billion battery giga-factory at Nevada
- Tesla is establishing a smaller manufacturing site at California
- Toyota is setting up its super HQ at Texas, moving the operations from California and Kentucky
Key Market Players
In the year 2013, Ford had maximum market share of 21% by total cars sold, trailed by General Motors (19%) as well as Chrysler (14%). More key players consist of Toyota (12%), Honda (12%), Hyundai/Kia (7%), and Nissan (7%). BMW had only 3% of market share, whereas Daimler and Volkswagen have below 2% of market share.
- http://www.americanautocouncil.org/sites/default/files State_Of_The_US_Automotive_Industry_2014.pdf