Ford and the World Automobile Industry

1516 WordsOct 25, 20087 Pages
1. Changes in the structure of the auto industry The 1965-1972 automobile industry was a low competitive environment, and as a consequence was a profitable industry. Indeed, during this period:  Industry rivalry was rather low:  The automotive market was fragmented into separate national markets and the primary concern of manufacturers was their domestic sales. As a consequence only a few competitor were disputing each market.  The supply was meeting the demand in a correct manner: the production could provide the number of vehicles bought each year, without a major over-capacity. As a consequence, fixed costs were “under control”; no manufacturer was trying to gain market share in order to spread fixed costs over sales volume.  Car…show more content…
The automobile industry has undergone major changes in 40 years. The major increase in competition due to globalization, the industry structural changes and consumer evolution has made it much more difficult to generate profit. 2. Next 5 years structure changes? Observing the current automobile industry, one can try to predict some major trends that will characterize the future market. Competition will probably intensify above the current level, with several emerging countries on the verge of entering the world market (e.g. Tata Motors from India and Chery Automotive Company from China – see [3]). As a consequence, new major plants will probably being built by those new competitors, to provide the market with their own model, while existing leader will go on building their own on growing markets. So excess capacity will last. The price on war resulting will probably induce industry concentration, which will be divided into two different categories: on the one hand, one can predict mergers and acquisition, as it has existed until now, resulting in fewer competitors. On the other hand, closing of brands owned by international companies are likely to happen, because their profitability plummeted due in particular to lack of investment . From the customer point of view, several trends are to be noticed. First customer all over the world will become more and more concerned about environment. This problem along with the high oil price
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