The U.s. Automotive Market

1571 Words7 Pages
The U.S. automotive market has had its fair share of challenges in the last ten years. In 2005, gas prices started to surge wildly out of control peaking at their highest levels in mid-2008 that directly impacted sales of less-efficient vehicles. ("Historical Price Charts", 2015) Since the bulk of the profit margins the “Big 3” automakers generate is in the SUV and full-size product categories, the consumer shift to more economical vehicles directly impacted the automaker 's profitability. As the U.S. continued a slide into a full recession, auto manufacturers were faced with a financial crisis of epic proportions. On the verge of bankruptcy, two of the largest auto manufacturers accepted a $2 Billion Government bailout to continue to…show more content…
based automobile manufacturers. As one of the largest industries in the U.S., the top manufacturers rely primarily on their domestic market, along with Canada, to sustain their business. ("BERA: Issue 2 Automotive Industry: Global Automotive Industry", 2015) The current business model for auto manufacturers is to locate their assembly plants as close to the market as possible. As such, most manufacturers have plants located regionally near the countries they are selling and marketing their vehicles. The hard and soft costs associated with transporting large shipments of vehicles around the globe (time in transit as well as the cost of moving the goods) means foreign automotive manufacturers must build their vehicles in the U.S. if they are to be competitive. (Coffin, 2013) There are many foreign competitors that have entered the U.S. market by either importing or assembling their products in the United States. Foreign manufacturers to compete effectively in the U.S. by assembling their products in the United States. However; there is still a stigma with purchasing foreign engineered vehicles. To combat this in the U.S. and abroad, various manufacturers have partnered with unlikely allies to product joint ventures. (Coffin, 2013) These unlikely matches allow both manufacturers to take advantage of either specific technology (as is in the case of GM and Toyota) or to take on the role as a supplier (as is
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