Challenges in the Business Environment Facing the American Auto Industry
The American auto industry has faced many challenges throughout the years since Henry Ford’s first
Model T rolled off the production line in 1908. From an initial reluctance on the part of the public, as noted in The Evolution from Horse to Automobile: A Comparative International Study (Chiu, 2008) to more recent challenges such as the repeated oil crises and competition from foreign manufacturers, the automobile industry has had many ups and downs. However, the current business environment may be bringing a challenge that will change the face of the auto industry as we now know it world-wide.
For the many decades car ownership has been a given in the United States, as …show more content…
(Rosenthal, 2013) While the same article notes that these trends began before the economic crisis, costs are certainly one of the driving factors. In addition, there more shopping choices available in the marketplace beyond ‘drive to the store.’ I will go over those when we come to the technological impacts.
Global Trends
In the 1970s, the American car market was rocked by a flood of foreign imports, mostly from Japan. This led to the American auto industry playing ‘catch-up’ for a number of years. In response to a “Buy
American” sentiment, foreign manufacturers have built manufacturing plants in the United States. In addition, the Big Three auto makers in the US formed joint ventures with foreign auto producers to reduce the loss of sales. This led to some models being manufactured in America and being shipped back to Japan. The 21st century has seen auto manufacturing move south to Mexico. Globally, sales increases are slowing down. According to the Wall Street Journal (2016), “Although volumes have consistently grown since the industry’s tailspin during the financial crisis, the pace of sales increases has consistently slowed since 76 million vehicles were sold in 2012.“ …show more content…
Semi-autonomous are already on our roads and fully autonomous vehicles are on the way. Cities are already envisioning a future where they are serviced by fleets of self-driving cars.
Carlo Ratti, director of the Sensible City laboratory at the Massachusetts Institute of Technology (MIT) in a recent article in Science Alert online said ”‘Your’ car could give you a lift to work in the morning and then, rather than sitting idle in a parking lot, give a lift to someone else in your family – or, for that matter, to anyone else in your neighborhood, social-media community, or city." Ride sharing services are also changing the way Americans get around. General Motors is partnering with Lyft to set up hubs where people can rent cars short term to drive for Lyft. ("General Motors, Gazing at Future, Invests $500
Million in Lyft - NYTimes.com", 2016) This article quotes John Zimmer, president of Lyft, as saying
“We strongly believe that autonomous vehicle go-to-market strategy is through a network, not through individual car ownership.”
Conclusion
The automotive manufacturing industry in America is on the cusp of industry changing advances.