Environmental Challenges Facing The American Auto Industry

The government also required Chrysler to merge with Fiat, forcing them to set new auto efficiency standards so as to become more competitive with Japanese and German auto makers (Amadeo, 2016).

Cost of repairs is an important decision maker for the average working American. Not only do they want a dependable vehicle, but one that won’t break the bank when is time for repairs and preventative maintenance. Foreign cars hold a strong reputation for being very reliable, but that parts used to manufacture them can be expensive. In the case of German cars such as BMW, Audi, Mercedes-Benz, and Volkswagen, make great quality parts, but those parts are difficult to source and expensive to replace, making German manufactures the “most expensive luxury vehicles to repair are the Audi A8 and Mercedes-Benz G Class, both with five-year estimated repair costs of $1,640” (Mitchell). Requiring special tools, as well as knowledge to repair at a specialist

In conversations globally the environment is a hot topic. Issues with the ozone layer, depleting natural resources, and health risks associated with emissions and changes in climate coupled with its resulting natural disasters; have pushed conservation issues into the spotlight. The environmental issues presented today are not the result of one country, one type, or one-industry actions but a communal failure of a mixture of several. With that said many countries and industries are going through policy changes to combat environmental issues that will hopefully benefit the environment, the consumer, and industries.

Since Henry Ford invented the mass production techniques that made cars affordable to the public, the United State 's economy has been dramatically influenced by this key component in its affluence. Exponentially, jobs were created because the auto business grew. Employees were needed for the constantly growing assembly lines. Consequently, Ford 's model Ts became the primary preferred, affordable, mass manufactured cars. (Davis, 2012). For more than a century, the United States ' automotive industry constantly had a large impact on the national economy. The quantity of cars sold annually has always been a reliable indicator of the nation 's economic well-being. Thus, once the recession hit in 2008, automotive sales declined sharply, indicating the decrease in customer purchase power. Environmental challenges impacting the American automotive industry consist of, yet not limited to, fierce global competition, vigorous technological advancements race, emissions and governmental approach toward a cleaner environment and, finally, customer satisfaction of the American product.

The American automotive industry has expanded since uprising in the early 1900s. “Americans dominated the industry in the first half of the twentieth century, although Germany and France perfected the blueprint for the modern automobile. Henry Ford initiated mass production techniques that became standard, with Ford, General motors and Chrysler emerging as the ‘Big Three’ auto companies by the 1920s (Foner & Garraty 1991).” The automotive industry has always been among the leading industries for environmental aspects and hazards around the world, in the United States especially. These issues include; global completion, new technology for powering the product, the effect

challenges, however, are the most difficult ones to face and overcome. Some environmental issues that

The Global Purchasing and Supply Chain division was responsible for streamlining the supply chain and the year 2013 was a good one for the U.S. automotive market as sales rose 7.6 percent to 15.6 million vehicles. This is a substantial comeback from the levels of 2009-2010 when severe recession forced the bankruptcy of General Motors and other automobile companies and caused many other automakers to lose revenue and profits hence reducing labor and operation costs by massive worker layoffs and downsizing by closing manufacturing plants.

Introduction Automotive parts consumption is linked to the demand for new vehicles, since roughly 70 percent of U.S. automotive parts production is for Original Equipment (OE) products. The remaining

The United States Automotive industry has been dominated by five major auto manufacturers: GM, Toyota, Ford, Chrysler, and Honda. As globalization increases the domestic automotive market (GM, Ford, Chrysler) suffers from foreign competitors. Although with high entrance barriers the market suffers little to none from new entries. There are several reasons for this the largest being capital. It takes a lot of capital to obtain manufacturing plants, raw materials, as well as to hire and train employees. PASTEL Analysis

Peter Dicken (2011) describes the automotive industry as an “assembly industry” with a producer-driven structure, which gathers a huge number of goods from a wide range of industries. Three major manufacture processes are identified at the core inside the circuit: “the manufacture of bodies, of components, and of engines and transmissions.” (Dicken, 2011).

As it relates to the competitive structure, or the number and size distribution of companies within an industry, the automobile industry is considered a consolidated industry, where a small number of large companies dominate and are able to set prices. Traditionally, in America, these companies were called “The Big Three,” Chrysler, Ford, and GM, but Toyota, was also a major rival during the recession. “In consolidated industries, companies are interdependent, because one company’s competitive actions or moves (with regard to price, quality, and so on) directly affect the market share of its rivals, and thus their profitability” (Hill & Jones, 2012, p. 62). The relative power of consolidation on the automobile industry was high.

As stated, an initial informational basis for the merger must be outlined. PA and RK, both manufacturers of automobiles, have significant synergies in terms of business fit—similar markets and potential goals for cost cutting, increased market share, etc. These synergies are specific and thus give rise to potential clear motives for the merger. Mergers produce a single unified company, constituting the production of a new company through the conclusion of another. It is due to this fact that it is necessary to review

In 1990 the consolidation auto industry was increasing cost of developing more sophisticated vehicles and worldwide production overcapacity. Both Nissan and Renault were eagerly looking for a partner to compete in the 21st century. Nissan was rebuffed by both Chrysler and Ford. Renault was turned away by other Japanese automakers that made both companies reach an agreement on a global alliance in 1999.

The automobile industry has experienced different progressions. Marukawa (2013) makes reference to the World Motor Vehicle Statistics. According to the World Motor Vehicle Statistics, gathered by the Japan Automobile Manufacturers Association, some countries that had a vast collection of automobile corporations in 2010 were the United Kingdom, which had 21 automobile manufacturers, and Malaysia, which had 26 automobile manufacturers. However, China had to a greater extent the highest number of automobile manufacturers in the world, according to the World Motor Vehicle Statistics. According to Marukawa (2013), an important characteristic of the Chinese automobile industry is the magnitude of small-scale producers. Marukawa (2013) discovered that car and engine production are mostly vertically fragmented in China. Research by Marukawa (2013) showed that firms that want to enter the industry could outsource production inputs such as engines and design, which minimizes the entry restrictions for new firms in the industry. The minimization of entry restrictions, and the rising demand for automobiles in China favored entry into the automobile industry, according to Marukawa (2013).

Chrysler is the largest automobile manufacture in the United States. In the recent years, the company is facing many obstacles. Chrysler established a poor business strategy and lack of innovation that resulted in financial problems. From a strategic management view, they were more unsettled than any other automakers. Their business strategy was focusing on SUV and trucks in an economy where gas prices were high and consumers were looking for more fuel efficient vehicles. Another poor business strategy was the historic May 1998, merger deal with a German automobile Daimler-Benz AG (Daimler) It was called the “marriage of equals” (Garsten, 2000). The mergers have failed to achieve the expected results. At the time of the merger, Chrysler was the most profitable and cost efficient carmaker and Daimler was known as the luxury carmaker. Daimler relied heavy on quality and Chrysler was prone toward cost effective vehicles. Culture crash also failed because there were a