The motor industry is over 100 years old and has an interesting history and uncertain future. It provides an interesting example of an industry that had to quickly evaluate due to constant evolution of technologies employed. This evolution was so money-demanding that it caused a typical movement of concentration of the industry. The car industry makes nearly 60 million cars and trucks every year and employees millions of people around the world. Products are responsible for almost half the world's oil consumption and their manufacture uses up nearly half the world's annual output of glass and rubber and 15% of steel. The car industry is the epitome of mass production, mass marketing and mass consumption involving some of the strongest brands in the world. However, in America, Europe and Japan, where over 80% of the world's cars and trucks are sold, the industry has been running out of growth (The Economist, 2004).
[...] The manufacturer charges the dealer a certain price for a car and suggests a retail price for the car (MSRP). However the price the dealer charges could be thousands of euro above the invoice price. Dealers often get money back from the manufacturer once the car is sold or can receive a reward if they sell in volume. Although the car industry is a consumer-led industry, the final consumer does not benefit from this relationship within the industry as the dealers set the final price. [...]
[...] As the car industry has been facing a downturn with many firms failing to survive there may be an opportunity cost in producing more and more cars in a slow market. It may be more beneficial for some of the individual companies to rent factories to other manufacturers or to begin producing parts or components for other related industries. With the increase of mergers and take-overs the opportunity cost is in continuing production over receiving money in a take-over bid. [...]
[...] This is the ideal environment for collusion and has lead to many discussions about the need for a publicly-owned and democratically controlled car industry. A publicly-owned car industry could lead to improved prices benefiting the consumers in the industry, who at the present time may not be receiving their money's worth. A lot of the problem lies in the individual dealerships as the manufacturers only suggest a recommended retail price for the products. The European motor industry is defined by few strong brands such as Mercedes-Benz which will continue to prosper in the market. [...]
[...] The General Motors Daewoo is in fact a partnership, with GM holding a 42% stake, Suzuki and another partner a 25% share and creditors of the car company owning the rest Investigation: Four Major firms The four major firms in the European Car industry are: Volkswagen Group incorporating Volkswagen, Audi, Seat and Skoda PSA Group incorporating Peugeot and Citroen Ford Group incorporating Ford, Volvo, Land Rover and Jaguar Renault Each of these firms occupied a large market share during 2004. [...]
[...] With the mass production nature of the industry there is a need for just-in-time production and production to order. The goods in this industry are homogenous to the degree that they are all motor-vehicles and fulfil the same general purpose. However the products are differentiated by their quality, status, reputation, colour, technologies, etc. The consumer's perception of the product is an important issue for car manufacturers. A car manufacturer's brand identity is therefore a key element to its success. Huge sums of money are spent on advertising to develop the specific brands. [...]
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