Environmental Challenges Facing The American Auto Industry

Although the first steam powered automobile dates back to the 1760s, it was not until 1789 when

The first topic I’m going to discuss is the global competition in this industry. The American Auto

There are many environmental challenges facing the American auto industry. In this paper we will focus on; the challenges within global competition, new technologies for powering the products this industry produces, the effect of emissions on the environment and the government’s reactions to these effects, as well as the consumer’s product opinions.

There are four major factors affecting the automotive industry: technology, market, customers and the most influential factor – environment. Environment is a source of materials, infrastructure necessary for manufacturing but everything is limited. The process of car or automotive manufacturing is very complex regarding the usage of numerous resources and different technologies ( P. Golinska & M. Kosacka).

The environmental challenges facing American auto industry is very huge, as a result of large number of vehicles on the road causing air emission, pollution of the environment that has a negative impact to people’s health today, due to the toxicology and the effect of carbon, hydrogen and carbon monoxide emission on the environment. These has also contributed to the climate change, death and disappearing of some species of wild life today in the United States. Waste stream has been accumulated with vehicles that are out of service, road ban, and they are contributing to the environmental concerns in terms of their poor storage management and lack of proper plan for disposal of such hazardous material, lack of adequate recycling plan for vehicle component or parts.

Of the top 10 automobile manufacturers globally, in 2014, America is represented 3 times, by Ford, General Motors and Fiat-Chrysler. The two top selling manufacturers, Toyota and Volkswagen Group are Japanese and German respectively (“Leading automobile manufacturers”, 2015). This indicates that there is significant, global competition and that competition is currently better placed than the American manufacturers. The primary competitors are currently Japanese, German, French and Italian (“Leading automobile manufacturers”, 2015).

With the collapse of the Wall street financial market in 2008, Greece become the center of Europe’s economic crisis. With employment rates more than 25 percent, Greece is suffering from a financial crisis equivalent to if not greater than the U.S. Great Depression. The source of the crisis originated in the inefficient management of the Greece’s economy and government finances. Additionally, Greece’s involvement in the euro zone reflected a monetary policy that was at odds with its fiscal policy. The crisis resulted in troika providing emergency funds to pay off Greece international loans.

The 2008 economic crisis negatively impacted the U.S. domestic automobile industry. GM, Chrysler and Ford reported annual operating costs and sales revenues that mimicked the movement of the overall economy from 2005-2010. Until 2009, all three companies displayed a downward trend in operating costs and sales revenues. These two aspects of automobile manufacturers are directly related to one another. As sales levels increase, inventories and production levels must also increase, resulting in higher operating costs. The opposite is true when sales levels decrease. U.S. economic stability determines the profitability

The European debt crisis began in 2009 when rating agency’s downgraded Greek government and bank debt because Greece’s government debt reached 113% of GDP. Furthermore, in 2010 Greece’s budget deficit for 2009 was revised from 3.7% to 12.7% (13). Since then Greece has received multiple bail-outs and the crisis has spread throughout the Eurozone and many countries like Portugal, Spain, Ireland and Italy have been severely affected. The Eurozone crisis is a combination of sovereign debt, productivity, private debt, asset bubble and banking crisis. Contrary to BOJ in 1990’s, the ECB reacted to the crisis by quickly lowering the interest rate to 1% in May 2009 (14). Furthermore, the ECB started intervening with the securities market directly in 2010 with the ’Securities Markets Programme’, purchase programme to buy bank-issued covered bonds (2011)

The environmental impact of automobiles is becoming a major topic for the manufacturers. New regulations have been created in order to enforce manufacturers to make automobiles that cause less of an impact. These regulations resulted in an increased price for the manufacturers and the consumers. The strict standards have resulted in higher priced automobiles than one would expect (Furth, 2016). With the enhancements made in technology, one would expect the price of automobiles to decrease, yet this is not the case due to the impact of the regulations. The Environmental Protection Agency (EPA) states that automobiles made after 2009 will have a higher price than previous automobiles because of the new regulations that were put in place (Furth, 2016). However, this belief has led to conflicts between academic critics and the EPA (Furth, 2016). Further research is required to determine if the higher costs of automobiles is solely caused by the regulations that are being imposed or if there is another cause. Either way, the price of automobiles has increased in the last several years and this can be problematic for any company in the automobile industry, but especially for newer competitors like Tesla.

Europe is about to enter its third recession in the last three years, says The Economist. Prices fall in eight European countries, inflation fell to 0.3% and the region is prepared to deal with deflation and economic stagnation. The debt crisis in Greece has had a profound impact on the countries of the European periphery (Ireland, Portugal, Spain and Italy) but also had serious consequences for some larger countries because this debt was contracted primarily with French banks and Germans. At the same time, while the government promotes economic measures since 2010 to get support from multilateral agencies, millions of people are suffering the consequences of the crisis without consolation in the short term.

Increasing debt levels and decreasing GDP saw the Greek credit rating reduced numerous times. The government introduced many austerity measures to allow them to repay their debts, however, the debt levels didn’t improve, and the possibility of sovereign default was now real.

The 2008 Great Recession, Greece had the highest debt in the European Union. The Greek inefficient tax collection, and its unemployment was “worse than unemployment in the United States during the Great Depression,” which made it very difficult to cut spending (O’Brien). Prior to joining the EU, Greece already experienced inflation and fiscal deficits (Johnston). Although the

1To have a thriving and growing economy you have to have a strong manufacturing base that is outputting quality goods in large quantities. In the case of the United States much of the economy in the past has been built on housing sales and the automotive industry. America 's modern automotive industry is being hurt by two things: Unionized labor and cheaper imports from Asia. Why build cars in North America where unionized automotive wages are $20+/hour when you can build them in Asia for less than $4/hour and still get the same quality? And in some cases more quality, if you want to consider the amazing durability and reliability of cars

The economy of a country has a controversial impact on the people of a nation, the nation’s relations with other countries and even other country’s economies. Over the course of about eight years, Greece has faced multiple economic challenges that many other countries have struggled with in the past. One of these struggles includes a shrink comparable the size of the United States’ economy during the Great Depression (1). Though facing economic hardships, Greece has found a way to thrive in other sections of the economy. Greece has multiple trading partners that help lead to a very abundant market for the households and firms. They hope that with some help from the European Union they will find a way out of all the debt they have