Overview of Automotive Industry Analysis

Overview of Automotive Industry Analysis

The development of the automobile came from many different people from different countries. The development stated in 1769 in France, with the invention of a three-wheeler that was powered by steam (Gale, 2003). Then in 1800’s the first internal combustion engine was created in Belgian and the first gasoline powered vehicle was constructed in 1885 in Germany (Gale, 2003). Henry Ford built the first car in 1896 (Gale, 2003). He then revolutionized the industry with the invention of the assembly line. The assembly line allowed him to mass produce the cars making them more affordable to the consumers.

Political

Laws and government regulations have affected this industry since the 1960’s. Almost all of the regulations come from consumers increasing concerns for the environment and the concern for safer automobiles. The first safety act passed by Congress was in 1966 and was called the National Traffic and Motor Vehicle Safety Act (Gale, 2004). This act forced manufacturers to improve the safety for the passengers, the driver visibility, and the braking of the car. It also stated that manufacturers had to inform the public when it had a recall on the cars. The motivation for the passing of this safety act was Ralph Nadar’s 1965 novel Unsafe at Any Speed: The Designed-in Dangers of the American Automobile. (Gale, 2004) Safety concerns were not the only concerns during this period. There was also growing concern for the environment even before the oil crisis. According to the article “Motor Vehicles and Passenger Car Bodies”, Congress passed acts in 1965 and in the 1970’s. The Vehicle Air Pollution and Control Act was passed in 1965. This was the first act to set standards for automobile pollution. Then in the 1970’s, Congress passed the Clean Air Act that demanded a 90% decrease in automobile emission within the next six years (Gale, 2004).

In the 1970’s the oil crisis caused another act to be passed. The Energy Policy and Conservation Act of 1975 stated that all automobiles must meet a certain mileage per gallon. The act demanded that all automobiles had to meet a standard of 20mpg by the 1980 model and then 27.5 mpg for the 1985 model. Then in 1992, the Intermodal Surface Transportation Act required the installation of front airbags. (Motor Vehicles and Passenger Car Bodies, 2004)

Demographics

For many years now, the baby boomers generation has been the main target market for just about every product. As their generation is getting ready to retire and spend less money, the automakers are looking at the younger generations. Right now, the focus is starting to turn towards the baby boomers children (Generation X) who are in their mid 20’s and 30’s and Generation Y(Winter, 2002). GenYer’s are now hitting the age where they are able to buy cars. According to Drew Winter, “Analysts say that five years from now Gen X and Gen Y combined will account for at least 40% of vehicle sales.”

Americans today are choosing to purchase larger vehicles over passenger size vehicles. Today’s generations are still buying the trucks, minivan and especially the SUV’s, even with the ridiculous gas prices. It is not only the younger generations either; the boomers who are all reaching the retirement age are more interested in the bigger vehicles (Fetto, 2001). There activities after retirement are way more active then their parents. They are not just sitting around and playing golf or going on vacations. They are still working in some ways and being more active in their grandchildren’s lives. Since the boomers are still active, they want to drive the same vehicles that their children drive in order to make life that much easier. Studies show that trucks, minivans and SUV’s report increased sales nearly every year (Fetto, 2001).

The manufactures target the sales of their cars to certain people and their geographic location. Convertibles are not marketed toward people who live in parts of the world that are cold all year round. A good example of targeting markets is in Paris. A new is trying to be passed that SUVs are not allowed inside the city. They are taking up to much room and the vehicles use a lot of fuel. If this law is passed then SUV’s will not be marketed toward people who live in Paris. Another example is that minivans are mainly marketed toward “soccer moms”. They are marketed toward the moms because they are perceived, as needed a lot of room to haul kids around and the easy access the minivans provide.

Economic

The automobile industry has a huge impact on the U.S. economy. The University