The global auto component industry is a highly diversified sector that involves engine and auto component manufacturers, including aftermarket parts manufacturers, suppliers, dealers, and retailers (PR, 2012). The global automotive sector will change as well as increase in quantity of vehicles in use. The number of cars will increase in the world from the present 646 million to 2906 million by 2050 (Kirkwood, 2011). The biggest factor for the industry strength is the demand and grows projected by 2050.
Political factors such as government isolations, import/export taxes, and tariffs can affect the industry as whole or specific companies depending on the acting government it can be a negative for the industry or positive. Different political factors in different countries can effects revenues, liabilities can create or remove barriers for the specific product for specific companies. The manufacturing of auto components is gradually shifting toward Asian countries such as China, India, and others because of higher market potential and the low-cost manufacturing options available (PR, 2012).
The People’s Republic Forecasting Auto Industry By Dan-Sutton to meet regulatory goals at the same time as it has retained old levers of control(Ye & Pearson, 2008). When it comes to China is considered a “regulatory state” The term regulatory state is inherent authority of a government to impose restrictions on private rights for the sake of public welfare, order, and security (Wisped, 2012). Economic trends include consumer income, spending rates, available credit, inflation, and interest rates paid or borrowed funds are economic factors.
The Auto Industry sector within the United States from 2000 to 2006 lost more than 128,200 Jobs, a decline of 26. 2 percent and the auto parts sector in other regions of the country lost 14. 9 percent of its Jobs (Collins, McDonald, & Mouse, 2007). The global auto component industry experienced moderate growth over the last five years and is expected to continue its growth momentum reaching approximately $730. 8 billion in 2017 with a CARR of 3. 2% over next five years (PR, 2012).
A US, French or Japanese car typically contains hundreds of parts and components coming from a multitude of entries, in addition to elements supplied by numerous domestic subcontractors (Kirkwood, 2011). As cars become globalizes collaborations created by fragmentation of production as well as international outsourcing their demographics, also become blurred with globalization. Social aspects effect demographics and culture changes are also being changed by globalization.
Fitch (2012) stated that cultural, social, and personal factors impact the product wants, needs, and preferences of individual purchasers; these factors also shape their perception of the available brands. Psychological influences shape consumers’ motivations to buy and their assessment of the importance of each purchase situation (Fitch, 2012). The biggest weaknesses of the auto industry are it is unknown of the future. What companies will embrace, market and create technological advancements leading to a standardization if the future of the auto industry.
Extremely efficient batteries help create the concept an actuality of both hybrid and electric cars. The number of cars will increase in the world from the present 646 million to 2906 million by 2050 (Kirkwood, 2011). The hybrid and electric vehicle are both efficient and ecologically friendly for the environment. Electric motors are far more efficient than internal combustion engine. Generally, 90 percent of the electric power will be transformed into horsepower (Kirkwood, 2011).
The majority of the energy produced by an internal combustion engine is heat. An electric car itself does not emit pollution, compared to the internal combustion engine. The growing importance of electronics and functional integration of green components and sustainable products will drive growth in the industry (PR, 2012). Environmental and Legislative Policy-makers all over the world realize that they need to support the development of efficient, safe and environmentally clean automotive industries in their countries (Kirkwood, 2011).
Kirkwood (2012) stated the car manufacturers themselves recognize that the industry is in for big changes and are attempting to introduce low-carbon cars to the market. Legislative factors are results from political factors that affect the economy on a global level. Different governments add laws or regulations to various business activities. Unfavorable legislation can affect both profits and the ability to complete business in that environment.
International trade will equalize commodity prices if transportation costs, tariffs, and other barriers (Kirkwood, 2011) do not impede that involves engine and auto component manufacturers, including aftermarket parts manufacturers, suppliers, dealers, and retailers (PR, 2012). The Auto Industry has been embraced Kirkwood (2011) stated globalization has led to an expansion of outsourcing, international fragmentation of production and to the slicing up of the alee chain of products, parts and components, at different stages of production.
Kirkwood (2011) stated the automobile industry is a worldwide industry and is the sixth largest economy in the world. The industry must evolve and change with time for continued success and growth. References Collins, B. , McDonald, T. , & Mouse, J. A. (2007). The rise and decline of autopsy manufacturing in the Midwest. Monthly labor review, 130(10), 14-20. Finch, J. (2012). Managerial marketing. San Diego, CA: Bridgeport Education, Inc. Kirkwood, H. (2011). A new global auto industry?. China and world economy, 19(1), 63-82.