Motor vehicles, trailers and semi-trailers in the US Analysis - Free Essay Example

Sample details Pages: 8 Words: 2486 Downloads: 4 Date added: 2017/06/26 Category Transport Essay Type Narrative essay Did you like this example? Motor vehicles, trailers and semi-trailers in the US à ¢Ã¢â€š ¬Ã¢â‚¬Å" Analysis Headlines US motor vehicles, trailers and semi-trailers market value up by 3% in 2013 due to volume and average price increase Industryà ¢Ã¢â€š ¬Ã¢â€ž ¢s production grew by 3% in 2013, thanks to growing sales of new vehicles and efficiency gains of car producers Concentration of suppliers is growing as megasuppliers emerge Growth of the industry is anticipated to accelerate, reaching 4% per annum over the forecast period due to ongoing economic recovery US car producers will face a need to expand production capacity and improve fuel efficiency over the forecast period MArket Trends Motor vehicles, trailers and semi-trailers market value amounted to US$844 billion in 2013, up by 3% on 2012. The market was growing for a fourth consecutive year in 2013 one of the best results since World War II period. This was also a good result in the context of developed economies and Europe in particular where new car sales remained sluggish (car sales in Germany[1] and France[2] were down by 4% and 5% respectively in 2013). Don’t waste time! Our writers will create an original "Motor vehicles, trailers and semi-trailers in the US Analysis" essay for you Create order US market growth was mainly influenced by the need to renew countryà ¢Ã¢â€š ¬Ã¢â€ž ¢s aging car fleet which augmented volume sales, and recovering demand for larger vehicles and luxury perks, which increased average vehicle prices. By the end of 2013 the average age of car in the US reached a record 11.4 years because consumers delayed new car purchases during economic recession. However, growth in income and increasing consumer confidence encouraged Americans to replace old vehicles and bolstered sales of new vehicles. US consumers purchased 15.5 million new passenger cars and light trucks in 2013, up from 14.4 million in 2012. Consumer preferences shifted back to pre-crisis standards when larger vehicles were favoured. Sales of light trucks increased by 11% in 2013 more than twice exceeding the growth rate of passenger car sales. Pickups, SUVà ¢Ã¢â€š ¬Ã¢â€ž ¢s and crossovers were the most dynamic segments in 2013. Lighter metals used in production and hybrid technologies improved fuel efficiency of vehicles, making larger cars more appealing to consumers. Additionally, shale gas made US less susceptible to external energy shocks thus consumers feel safer buying larger vehicles as they expect fuel prices to be less volatile. 2013 was the fourth consecutive year when new heavy truck sales were growing fuelled by strong performance of US road transport industry. New truck sales amounted to nearly 352,000 units in 2013, up by 61% since 2010. Nevertheless heavy truck sales remain well below pre-crisis level when more than 500,000 new trucks were sold annually. This is due to the improved efficiency in transport sector, better routing and fewer empty trucks. In addition, the average distance travelled by trucks in US is declining, thus allowing operating trucks for a longer period. The Detroit Three (Chrysler, Ford and GM) were among leaders in large passenger vehicles. Fordà ¢Ã¢â€š ¬Ã¢â€ž ¢s Escape and Explorer and Chevrolet Equinox were among best-selling models in SUV segment. In light trucks Fordà ¢Ã¢â€š ¬Ã¢â€ž ¢s F-Series was undisputed leader with more than 750,000 sales in 2013, followed by Chevrolet Silverado and Dodge Ram. In overall US new car market General Motors, Ford, Toyota, Chrysler and Honda were the most popular brands in the in 2013. As of 2013 the average price of a new car in the US market stood at nearly US$31,000, up from US$25,500 in 2008. This was not only due to the fact that larger cars were more popular, but also because growing income and consumer confidence led to higher spending on luxury perks, such as high-end stereos, navigations, leather interiors and safety gadgets. Domestic production dominated the US market with 69% of market value in 2013. Imports are fragmented but the largest share comes from the US manufacturing hubs spread across the NATFA territory. Mexico and Canada accounted for a combined 9% of total import value in 2013. production Trends Industryà ¢Ã¢â€š ¬Ã¢â€ž ¢s production amounted to US$538 billion in 2013, up by 3% since 2012. In volume terms US car producers manufactured more than 11.3 million passenger cars and light trucks in 2013, up by 10% since 2012. Production growth was influenced by recovering sales of new vehicles and efficiency gains in the industry, such as automation and component sharing. Increasing automation and use of robots in the production process became the norm in the US car industry. Car producers such as Ford, GM and Volkswagen overhauled their production plants and installed more robots for repetitive tasks. This resulted in improved quality and reduction of legacy costs, such as pension funds and union memberships. US car producers reached maximum capacity utilisation and enjoyed growing profits in 2013. Capacity utilisation of the Detroit Three exceeded 90% while factories of BMW, KIA/Hyundai, Mercedes-Benz, Nissan and Volkswagen exceeded 100% of installed capacity. Car producers enjoy profits when capacity utilisation reaches around 80%, thus operation in full speed resulted in 4% increase in profits in 2013, reaching US$48 billion. This was also a good result in comparison to Europe, where more than half of car plants struggled with overcapacity. Detroit Three managed to catch up their European rivals in terms of component sharing and modularisation. Ford was one of the pioneers and started to implement its à ¢Ã¢â€š ¬Ã…“One Fordà ¢Ã¢â€š ¬Ã‚  strategy in 2008-2010. As of 2013 around 10 different Fordà ¢Ã¢â€š ¬Ã¢â€ž ¢s models were placed on the same platform, sharing around 80% of common parts. Similar strategy was implemented by Chrysler, when a company was acquired by Italian Fiat, and US company use between 50-70% of similar components in its most popular models. California emerged as one of the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s leaders in electric car technology, thanks to the US government efforts to reduce dependency on oil. California-based Tesla Motors holds strong positions in US and Europe and cooperates with Toyota and Mercedes-Benz in electric car development. GM and Ford also expanded their fleet of electric cars in 2011-2013. Even though production volumes of electric cars are low, well-developed technologies gives US companies a competitive edge against European rivals in the long term. Car manufacturers in US mostly focused on domestic market as exports represented 18% of product output in 2013. The largest export destination at the end of the review period was neighbouring Canada, receiving 13% of all US automotive exports. Large share of Canadian exports consisted of components supplied to Canadian car plants, where some of the Detroit Three car models are being assembled. Competitive Landscape Number of companies operating in the industry grew for a third consecutive year in 2013, with most dynamic category being micro companies. Out of nearly 20,000 companies in the industry in 2013, 78% were micro businesses employing up to 10 workers. Such companies are more flexible and often act as subcontractors for larger suppliers. Small companies provide various components for car engines, chassis and interiors. However small component suppliers in the US are under pressure from Chinese producers which are more competitive due to subsidies for their production.[3] Meanwhile number of large companies declined as US car producers mirrored global trends where so-called megasuppliers emerged. US car producers were contracting fewer suppliers to provide more car components, in an effort to achieve economies of scale and reduce logistics costs. As a result number of large companies with more than 500 employees continued to decline, reaching 204 companies in 2013. Industry also became more consolidated as five largest companies accounted for over a half of all revenue in 2012 (up from 47% in 2010) marking relatively high levels of concentration. One of the major developments in terms of largest companies was Fiatà ¢Ã¢â€š ¬Ã¢â€ž ¢s takeover of Chrysler. Fiat began accumulating stocks of the US company in 2009, in an effort to save Chrysler from bankruptcy, and took full control of Chrysler in 2014. Chrysler was the smallest company of the Detroit Three, although closer cooperation with Fiat, component sharing and improved logistics network is anticipated to increase competition among US car producers. In terms of production volumes, the largest car production plants were Fordà ¢Ã¢â€š ¬Ã¢â€ž ¢s Kansas City Assembly Plant in Claycomo, Missouri (with annual production capacity of more than 460,000 cars in 2012), Fordà ¢Ã¢â€š ¬Ã¢â€ž ¢s Dearborn Truck Plant in Michigan (more than 342,000 cars) and Hyundaià ¢Ã¢â€š ¬Ã¢â€ž ¢s Manufacturing Plant in Montgomery, Alabama (342,000 cars annually in 2012). Nissanà ¢Ã¢â€š ¬Ã¢â€ž ¢s production plant in Smyrna, Tennessee (333,000 cars in 2012) and Toyotaà ¢Ã¢â€š ¬Ã¢â€ž ¢s Georgetown plant in Kentucky (316,000 cars produced in 2012) were also a close rivals.[JL1] Ford Motor Co was a leading company as of 2012. It is a US-based company, which designs, assembles and markets cars, trucks and automobile parts. The most popular brands of the company are Ford and Lincoln. Ford divides its business into four segments of North America, South America, Europe and Asia Pacific Africa. Ford North America was the strongest and most profitable division of the company as of 2013, although company expects that its European division will recover and be in the black in 2014. General Motors Co is a US-based company, which designs, assembles and markets cars, trucks, and automobile parts and provides financial services. The company has global presence with the most popular brands being Buick, Cadillac, Chevrolet, GMC and Opel. GM enjoyed strong performance in North American, Chinese and Russian markets, although companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s divisions in other countries had difficulties. GMà ¢Ã¢â€š ¬Ã¢â€ž ¢s European division Opel reported a loss in 2013 and parent company also axed Chevrolet brand in Europe. GM also announced it will stop Australian production by 2017 due to appreciating Australian dollar.[4] Toyota Motor Corp is a Japanese-based company, which designs, manufactures, assembles and markets cars and parts in North America, Europe and Asia. North America is one of the key markets for the company, generating around one-fifth of companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s revenue[5]. In North America the company operates 15 manufacturing plants, 11 of which are located in the USA. Toyotaà ¢Ã¢â€š ¬Ã¢â€ž ¢s Camry and Corolla are among best-selling models in the US, while its luxury brand Lexus also enjoy strong sales in the US market. Chrysler Group LLC, a part of Fiat SpA, is a US-based company, which designs, assemblies and sells cars and trucks. The company markets the vehicles in North America, South America, Asia Pacific and Europe. In 2014 Fiat completed takeover of Chrysler and now controls 100% stake in the company. Merger is expected to create synergies in component sharing, car design process and logistics, increasing Chryslerà ¢Ã¢â€š ¬Ã¢â€ž ¢s competitiveness in comparison to other Detroit Three producers. [6] American Honda Motor Co is a US-based subsidiary of Honda Motor Co Ltd. The company manufactures and markets motorcycles, cars and power equipment under Honda and Acura brands. North America is the key market for Honda, as around half of companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s revenue from auto sales is generated there[7]. American Honda Motor Co operates four manufacturing facilities in US. All manufacturing plants increased their output in 2013 due to growing demand for Accord, Civic and CR-V models.[8] Besides these companies other car producers, such as BMW, KIA/Hyundai, Mercedes-Benz, Nissan, Volkswagen also held car manufacturing and assembly activities in the US. Most of the car production plants of aforementioned companies were located in the US South, namely in Kentucky, South Carolina and Tennessee. Geographically, the US automotive industry was mainly concentrated in Michigan, Indiana, and Ohio, although an increasing number of jobs were located in other parts of the country, particularly the South. At the end of the review period US auto manufacturing took place primarily along a north-south axis that runs from Michigan south to Alabama, Georgia, Mississippi, and Texas, dubbed Auto Alley by some observers. Its backbone was comprised of the north-south interstate highways, which form a latticework with east-west interstate routes through much of the Midwest and South. Prospects Industryà ¢Ã¢â€š ¬Ã¢â€ž ¢s growth is anticipated to accelerate. It is forecast that motor vehicles, trailers and semi-trailers industry will grow at an annual rate of 4% over the forecast period. This is associated with economic recovery, increasing consumer confidence and continuing replacement of old vehicles. However fuel efficiency and exceeded utilisation of production capacity will be a challenges that US car industry will face over the forecast period. New car sales in US are expected to grow due to economic recovery, increasing consumer confidence and ageing car fleet. It is forecast that US sales of new passenger cars and light trucks will reach 18-20 million units by 2020[9][10]. Large vehicles are anticipated to perform well as consumers are shifting back to their pre-crisis standards. Detroit Three are likely to benefit most, due to traditionally strong presence in the market, improved efficiency of large vehicles and planned overhauls in the pickups and SUVà ¢Ã¢â€š ¬Ã¢â€ž ¢s line-up. US car producers will face an urgent need to increase their production capacity in 2014-2016, as nearly all car plants are operating in full speed. However, there are mixed opinions concerning further expansion of production volumes. European car makers, such as BMW, Mercedes-Benz and Volkswagen feel optimistic and plan new investments in US. Meanwhile Detroit Three so far feel reluctant to invest in new production plants. Chrysler, GM and Ford had serious overcapacity problems during economic downturn and now see automation as a solution to increase capacity than physical expansion of production plants.[11] As a result of new investments from European car makers, US South is expected to strengthen its role as car manufacturing hub over the next five years. For example, BMW announced that it will invest US$1 billion over the next two years in expansion of Spartanburg factory in South Carolina, targeting annual vehicle production of 450,000 units by 2016. BMW sees growing demand for its SUVà ¢Ã¢â€š ¬Ã¢â€ž ¢s in the US market and plans to start production of X7 model in the expanded production plant. Volkswagen is also considering investment in its Tennesseeà ¢Ã¢â€š ¬Ã¢â€ž ¢s plant, in order to build a new SUV in 2016[12]. Due to new fuel economy and emission standards, fuel efficiency is expected to remain a priority over the next five years. New fuel economy and carbon emission standards for 2017-2025 will double fuel economy of cars and reduce oil consumption by two million barrels per day. It is anticipated that US car producers will continue investing to car models featuring hybrid-electric drivetrains, smaller forced-induction engines and more advanced transmissions. New fuel economy standards are likely to stimulate demand for electric vehicles and California has good potential to strengthen its position as one of the worldà ¢Ã¢â€š ¬Ã¢â€ž ¢s leading hubs of electric cars. The state has one of the strictest car emission standards in the US that forces car producers to introduce more efficient electric cars for Californian market. Additionally, the presence of Silicon Valley and good access to capital markets creates preferable conditions for development of electric car technologies in California. [1] https://www.reuters.com/article/2014/01/03/us-germany-cars-idUSBREA020DL20140103 [2] https://www.telegraph.co.uk/finance/newsbysector/transport/10547996/French-car-market-in-2013-should-be-forgotten.html [3] https://americanmanufacturing.org/blog/us-auto-assembly-plants-are-booming-lets-hope-parts-manufacturers-are-good-times [4] https://www.reuters.com/article/2013/12/11/us-australia-gm-idUSBRE9BA03920131211 [5] https://www.toyota-global.com/investors/ir_library/annual/pdf/2013/p27_31.pdf [6] https://www.marketwatch.com/story/what-the-fiatchrysler-merger-means-for-drivers-2014-01-02 [7] https://world.honda.com/investors/library/annual_report/2013/honda2013ar-all-e.pdf [8] ibid [9] https://www.kpmg.com/Global/en/IssuesAndInsights/ArticlesPublications/Documents/global-automotive-retail-market-study-part1.pdf [10] https://wardsauto.com/sales-amp-marketing/auto-analyst-forecasts-18-million-north-american-lv-sales-2019 [11] https://online.wsj.com/new s/articles/SB10001424052702304549504579318952857858762 [12] https://www.freep.com/article/20140112/BUSINESS03/301120161/Volkswagen-Detroit-auto-show-NAIAS [JL1]Manau sita pastraipa trinti, o duomenis sudeti I lentele, gal dar pridedant kokius modelius gamina; Kartais gali buti idomu klientams kokios gamyklos ka gamina; Pvz Fordo gamykla gamina pikapus kurie turi aliuminio vaziuoklej, tai jei esi aliuminio tiekejas ta gamykla turbut butent domintu