The global automobile manufacturing industry covers all global sales of new cars and light commercial vehicles. Light commercial vehicles include SUV’s, vans, and buses. The industry does not include heavy commercial trucks or motorcycles. In 2006, the sector for cars and light commercial vehicles was worth $1,176.9 billion, an increase of 5.2% from 2005.
The industry has been suffering as a result of poor economic conditions. Sales of new cars has declined in this weak economic environment, since consumers do not have the disposable income or consumer confidence for a high-cost and high-involved purchase such as a vehicle. The growing markets in China and India, however, have enabled the market to stay afloat.
The United States sector has suffered the most, with slow sales since 2002. The US, however, has the greatest proportion of the global sector’s value at 38.4%, and revenues $451 billion in 2006. The Asia-Pacific sector has been the region of strongest growth since 2002.
Improved economic conditions are expected to cause increased consumer confidence and therefore stronger sales volumes in the automobile industry across the world, although barriers to strong growth with remain in the Russian, United States, and South Korean markets.
In terms of value, General Motors held a 17.3% share of the sector, Daimler AG (formerly DaimlerChrysler, Toyota, and Ford held 15.90% in 2006.
The future success of industry firms will depend on their ability to handle rising costs.
Oil and steel prices have increased the costs of production causing upward pressure in prices. Also, high oil prices decrease consumer disposable income and demand for cars and trucks.
In order to boost sales, major US players are offering heavy discounts such as 0% financing and cash-back incentives. However, with reduced production levels, companies are struggling to pay for these deals. European companies have also struggled as a result of increased labor, energy, and raw materials...