Macroeconomic Policies Affecting the Auto Industry
In most countries, the level of automotive production is closely correlated to domestic or regional automotive sales. Also the level of automotive sales and production is closely related to disposable income levels, interest rates and finance availability, consumer confidence and other factors influenced by macroeconomic policies. Production in particular often has long lead times, so consistent and predictable economic progress is important. Therefore, national macroeconomic and monetary policies which produce stability and consistency in GDP per capita growth are generally very significant factors affecting the level of automotive sales and production.
The following are the
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(e) Monetary policies which promote low interest rates (affordability) both affordability of vehicles and availability and cost of capital are critical in developing a healthy demand for vehicles. Governments that rely excessively on monetary policy rather than fiscal policy can induce a large reduction in vehicle sales and production, if they try to control the economy through interest rate mechanisms.
(f) Stability in exchange rates. The industry is global and thus subject to the vagaries of exchange rate fluctuations. However sourcing decisions are generally not flexible in the short term. Thus widely varying exchange rates can move an industry from a viable to a non-viable situation in a short period of time. Devaluation increases the cost of imported competition. This threat to viability can quickly eliminate jobs and productive capability built up over a long period of time.
(g) Improvement of automobile infrastructure (roads, parking lots and complementary public transportation. An appropriate balance between automotive infrastructure and public transport investment should be sought. Good infrastructure is required to allow the benefits of motoring to be enjoyed by as many as possible. However if this is done at the cost of running down public transport infrastructure, chronic traffic problems may result.
(h) Low to moderate inflation. High inflation inevitably leads to high nominal interest rates
The town of Halton Hill’s population includes the areas of Georgetown and Acton and other communities such as Erin, Oakville, Burlington and Milton regions. This is what is considered to be my community because these are the many places that I am visiting most often and they are always referred to together as “Halton Hills Region” (p.5, 2011). With the substantial increase in population in the Halton Hills region, more specifically Georgetown, there should be a strong demand for a public transit system to counteract all of the environmental disturbances that are being caused due to this increase. One of the things that is happening is that there are so many trees they are cutting down in order to expand and grow the population with houses being built. Statistics are showing that the population of Halton Hill’s region will expand by 54% over the next 20 years (p.5, 2011). By the year 2031, employment rates will increase by 75%, leaving Halton with 42,100 jobs being offered (p.5, 2011). With this rapid influx of citizens, this will only increase the demands of travel to get to these work places as well as other destinations (p.5, 2011). Over the past couple of year’s the traffic congestion on the major roads in Halton Hills such as Trafalgar Road and Regional Road 25 with individuals trying to get to and from work. There used to be very little traffic in these areas, however since Halton Hill’s has continued to expand, the utilization of automobiles has significantly increased due to the fact there is no public transit system. The Transportation Demand Management in Halton Hill’s is noticing the increase in automobiles stating that there needs to be a major shift in more efficient ways of transportation, yet there still has been nothing improvised (p.7, 2011). The Transportation Demand
Exchange Rates: The Exchange Rates are other important global factors for which company’s ultimate revenue is affected. For example sudden major change in the Exchange rate of UK with other countries is a great threat or facility for TESCO PLC business.
Transportation in the region has a long and successful past. However, public transportation has consistently taken a back seat to the personal automobile. There has been a strong core of persons who rely on public transportation to achieve mobility, and governmental
Detroit, Michigan grew up around the automobile industry. At its peak, Detroit was the fifth-largest city in the United States, becoming the home to over 1.8 million people by 1950 (Davey, Monica 2013). The prolific population was due greatly to the success of the auto industry in the city. At that time, Detroit was flying high, its name coined “The Motor City” (americaslibrary.gov), and automobiles greatly impacted commercialization. From transporting goods to hastening production, to selling parts, to manufacturing and selling new automobiles, the auto industry completely transformed Detroit. Things seemed
Before we look at these forces, we should sketch out how exchange rate movements affect a nation 's trading relationships with other nations. A higher currency makes a country 's exports more expensive and imports cheaper in foreign markets; a lower currency makes a country 's exports cheaper and its imports more expensive in foreign markets. A higher exchange rate can be expected to lower the country 's balance of trade, while a lower exchange rate would increase it.
* Exchange rates may affect profitability on the business if they are sourcing materials (all the ingredients used to
III. Mass Transportation- Encourage usage of mass transportation to improve air quality and traffic congestion.
When an input (machinery, components, capital, labor, etc.) is denominated in a foreign currency, the risk exists that an unfavorable exchange rate movement will increase the cost of doing business. When the products are priced and sold in a foreign currency, an adverse exchange rate movement will make the product appear more expensive to consumers, decreasing demand or forcing the company to reduce its own profit margin to maintain lower price levels. For companies with integrated international business systems, an exchange rate shock can literally force them out of business, with their operations experiencing pressures from both cost and profit centers.
Currency risks are majorly involved with expanding into foreign markets. Due to the fluctuations of exchange rates, apples profits can vary due to demand and supply. The value of a currency is varied due to currency depreciation and appreciation and this fluctuation and
c. Exchange rate risks: significant portion of revenue stream born currency exchange risk (peso vs. USD) regardless of geographical and product diversification. These risks were absolutely external and thus could have been hardly mitigated.
Public transportation can help reduce stress caused by driving, save money, and also protect our environment by reducing the number of vehicles on the road. In order to get more people off the road and into the public transportation system we must increase the number of buses and taxis that are available. We must also increase the number of stops available for daily bus routes. With more stops on the map more people are likely to use the bus system. Each city or town will be able to decide where more bus stops are needed and make the adjustments necessary to provide better service for the taxpaying citizens. Of course, none of this is possible without adequate funds in each town/city and the gas tax is guaranteed to provide those funds. Providing more public transportation will help us reach our ultimate goal of protecting the environment and ourselves.
Economic and the currency: first of all, every business is trying to avoid risk, therefor, the economic status of a foreign country is what the company looking for, they want the low unemployment rate, inflation rate and stable economic environment. Furthermore, the currency difference will change the product price strategy.
The political factors differ from country to country. During difficult times of recession, every country’s government helps the automotive industry players by taking out various remedy policies like when Toyota got a loan of $2 billion sanctioned from the Japanese government. According to the new laws Toyota has been asked to reduce Cos generated from its cars, which has created a big challenge for the company.
| Advocates of active monetary and fiscal policy view the economy as inherently unstable and believe that policy can manage aggregate demand, and thereby, production and employment, to offset the inherent instability. When aggregate demand is inadequate to ensure full employment, policymakers should boost government spending, cut taxes, and expand money supply. However, when aggregate demand is excessive, risking higher inflation, policymakers should cut government spending, raise taxes, and reduce the money supply. Such policy actions put
* Physical infrastructure like roads, highways and bridges affect the use of automobiles. Better these infrastructures better will be the growth opportunities in this sector.