Ford Motor Company

Ford Motor Company

Ford Motor Company was a very successful business.

The automobile industry began with Henry Ford's production of the Model T in the early 1900's. With the creation of the assembly line, cars became cheaper and quicker to produce, making them affordable for many people. There were originally 500 auto manufacturers. By 1908, there were only 200; and in 1917 only 23 remained. This vast reduction was due to large amounts of consolidation within the industry. Currently, the major competitors within the industry are Ford, DaimlerChrylser, General Motors (GM), Honda, Toyota, and Volkswagen. A few United States (US) manufacturers produce 23% of the world's vehicles while Japan is responsible for 21%.

The tendency for the industry is to be a global producer of automobiles; parts can be made throughout the world and assembled in many different places. The trend of consolidation has continued throughout today. Presently, this is evident in the recent acquisition of Chrysler by Daimler-Benz in late 1998, thus forming DaimlerChrylser. These consolidations have proved beneficial to consumers since companies have been able to reduce costs and pass those savings on to the customers. Some of the other major examples of consolidation are Nissan selling off a controlling 37% interest to Renault; General Motor's 49% ownership of Isuzu; and Ford's 33% majority of Mazda.

Other efforts to become more competitive have translated into the European Union dropping trade barriers and European carmakers employing cost reducing efforts. American manufacturers have seen 2-3% growth over the last few years. Some current trends are the explosion in popularity of the Sport Utility Vehicle (SUV) and big luxury vehicles. In the future the global car market is full of potential.

There are currently 44 million vehicles and by the year 2002 experts estimate that number will grow to 64 million. That growth is not expected to be in the US, rather in countries such as: China, India, The Pacific Rim, South Africa, and South America. In America, a current trend is for the neighborhood car dealer to be purchased by a large manufacturer, such as GM, so cars can be sold through retail outlets. Other future endeavors include low emission cars, which are expected to provide expansions in sales. Some major automakers are investing in fuel cells, devices that convert liquid hydrogen into electricity, hoping to make future vehicles more environmentally friendly.

The automobile industry will see more changes in the next 10 years than it has in the last 100. Economic Climate In the past, the oversized vehicle was the body-style of choice among American consumers. In the 1970's, oil shortages led to an increase in demand for more fuel-efficient cars, thus the sub-compact car became popularized. After 1979, Japan's efficiency at producing this type of car allowed them to take 30% of the U.S. automobile market away from American manufacturers.

In 1999, total industry sales have risen 8%2. Now, unprecedented competition has pressured firms to reduce costs. This competition is a result of the mass consolidations occurring among worldwide automotive manufacturers. These immense companies are able to offer many styles and options, but so many options come at a cost. This could become a problem for them as more informed consumers insist on lower prices and more add-ons.

The World Wide Web, which allows consumers to thoroughly research and purchase automobiles from home, has become an essential ingredient to any successful automakers arsenal, and will continue to play a large role in the 21st Century. The luxury vehicle segment has grown more competitive, yet maintains large profit margin potential. American buyers have been showing increased interest in European and Japanese manufacturers.

A study in 1990 revealed 11% of Americans wanted to purchase European luxury cars, a number that has increased to 23% in 1999. The Sport Utility Vehicles (SUV's) segment has emerged as one of today's hottest markets through its increased sales. North-American consumers in higher income brackets are choosing, with increasing frequency, to put SUV's in their garages. Minivans market share was 8% in 1998, which was down 12% from 1991. This is a result of a shift in consumer demand away from these vehicles.

Overall market analyst agreement is that minivans have entered the mature stage of the product life cycle. Pick-up trucks, uniquely American vehicles that span all of the consumer target markets, show good potential for domestic manufacturers. U.S. manufacturers have sustained unparalleled sales in this segment due to the popularity growth of trucks. The largest and most important product segment in the automotive industry is mid-size cars. It is an area of intense competition