Navigation Menu+

Automotive industry business model

Auto Industry Business Model Needs a Major Overhaul

gmf.gifThe challenges facing the automotive industry will require a major change in the business model, which is unlikely to arise without government intervention, according to Oxford Analytica.

General Motors’ (GM) announcement that it is collaborating with more than 30 electric utilities in the United States and Canada, as part of its plan to accelerate the introduction of plug-in electric vehicles, exemplifies the automobile giant’s effort to remain competitive in a changing global environment. Nevertheless, there are still major challenges facing the industry, OxAn says in Changes demand automotive rethink.

In the first century of its existence the automotive industry delivered major economic, social and industrial gains. However, the 21st century has brought a series of new challenges to the industry. Strong growth in emerging economies — particularly China and India — has placed upward pressure on global oil prices. This is also increasing demand for major commodities. The average cost of raw materials going into a car (including steel, aluminium, iron, plastic resins, rubber and glass) has risen almost 80% since 2003. The nature of competition in the automotive industry makes it difficult to pass on these cost increases to the end consumer.

There are growing signs of disruption and dysfunction in the automotive industry, which reflect its difficulty adapting to major external change. A major change in its business model is required.

Finding a new model is likely to entail abandoning various practices, including:

  • trying to make consumer durables into cult objects that confuse the need for personal transportation with self-image and motorsport;
  • retailing new vehicles exclusively through proprietary networks;
  • selling new cars below full cost;
  • changing the mindset of the industry that more products will solve problems;
  • financially undermining systems, components and materials suppliers; and
  • lobbying forcefully against any new legislation or regulations.

OxAn says major change is unlikely to arise from within the industry. Much of the impulse for change will probably need to come from regulation, legislation, standards-setting and fiscal measures. “This presents a huge challenge for the formulation of public policy.”

CreditSights, meanwhile, takes a look at the increasingly parlous state of the debt the “big three” US automakers in a new report Autos: Summer of Our Discontent Part 1.

The challenges to the macroeconomic story and the narrower “macro industry variables” are as complex as any we have seen in three decades of auto cycles.

Voyageur Press The Bigger Book of John Deere: The Complete Model-by-Model Encyclopedia Plus Classic Toys, Brochures, and Collectibles
Book (Voyageur Press)

Entrepreneurship... SE and 1099 defined:

by Sparky123

Entrepreneurship - think like a buggy whip maker just as the Model T was coming into being. What would you do? Give up or shift into the automotive industry?
SE - You worked your tail off as an IT guru and Dataworks merged and became Epicor. Do you file for permanent unemployment or create a business and sell your talent?
1099 - you can be working full time and have a moonlighting gig going all the time on the side.
Who are you in this?

Hybrids are STILL not profitable!

by -

Toyota is not yet making a profit on the Prius.
Many members of Congress believe they know what the car company of the future should look like.

"A business model based on gas -- a gas-guzzling past -- is unacceptable," Sen. Charles E. Schumer (D-N.Y.) said last week. "We need a business model based on cars of the future, and we already know what that future is: the plug-in hybrid electric car."

But the car company Schumer and other lawmakers envision for the future could turn out to be a money-losing operation, not part of a "sustainable U

A1 My Life and Work [Illustrated]
eBooks (A1)
WAM HTC One M8 HTC One M8 Premium Transparent Clear Composite Material Back Cover Case (For 2014 HTC New Flagship Android Phone) + Car Charger + 1 of New Assorted Color Metal Stylus Touch Screen Pen (Red TPU Edge With Clear Plastic Middle)
Wireless (WAM HTC One M8)
  • Perfect fit for HTC One (M8)
  • Premium Back Cover Protector Case + Car Charger + Metal Stylus Touch Screen Pen
  • Made of High Quality Durable Plastic / TPU Material
  • Provides Great Protection from Scratch and Scrape
  • 1 of New Metal Stylus Touch Screen Pen (4 Height, Random Color- Black, Silver, Hot Pink, Green, Light Green, Red, Blue, Light Blue, Purple and Gold)
LAP LAMBERT Academic Publishing The Qualitative Analysis Of Automotive Industry Cluster In India: Qualitative Analysis; Cluster Development Approach and Model; Chennai Automotive Industry Cluster; Tamil Nadu; India
Book (LAP LAMBERT Academic Publishing)
Related Posts