Automotive industry in the United States – statistics & facts

 

the automotive industry





the automotive industry



At just under 6.6 million kilometers in 2020 (approximately 4.1 million miles), the United States boasted the most extended road network worldwide. These long distances are an incentive toward mass motorization: As of 2022, over 76 percent of the U.S. population reported having access to their own car, with an additional 19 percent having access to a company or family car. The high motor vehicle demand in the country fuels an active automotive industry. With over 1.5 trillion U.S. dollars in revenue from road vehicle and parts retail trade, the sector has swiftly recovered from the COVID-19 pandemic. However, the global automotive chip shortage is a challenge to the automotive industry, and the monthly inventory-to-sales ratio has been nosediving since April 2020.

A market rooted in light trucks and U.S. automakers





the automotive industry




Amid the semiconductor shortage, light trucks remain the most popular vehicle type in the country. U.S. light truck sales amounted to under 11.6 million units in 2021, rebounding by around five percent compared to 2020. Meanwhile, the number of cars sold in the U.S. has been decreasing from a staggering 11.4 million units in 1973 to a little over 3.3 million units in 2021, as U.S. consumer demand has been shifting to larger vehicles over the past few decades.

General Motors, Chrysler LLC, and Ford Motor are the key American automakers, although Chrysler LLC is a fully-owned subsidiary of the Europe-based Stellaris. In addition to these carmakers, Tesla’s market share is rising due to the increasing acceptance of electric vehicles. General Motors is the vehicle manufacturer with the highest market share, followed by Toyota and Ford.

War and profitability challenge the automotive industry










Fuel prices in the U.S. have been increasing throughout the pandemic as well as during Russia’s invasion of Ukraine, with diesel prices soaring over five U.S. dollars per gallon by March 10, 2022. The U.S. has increased its national petrol production through hydraulic fracking to ease dependence on Russian crude oil exports; however, market uncertainty has led to inflation despite the U.S.’s increased self-reliance.

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In parallel, the new energy vehicle market has also gained popularity. Around 607,600 plug-in electric light vehicles were sold in the U.S. in 2021—almost double the sales in 2020. The Tesla Model S was the best-selling passenger car in the first quarter of 2022, followed by the Model 3. Tesla recorded a market capitalization of over one trillion U.S. dollars in April 2022, ranking among the world’s largest companies. Boosted by Tesla’s success, the U.S. electric vehicle industry attracted startup companies like Rivian, Lucid Motor, and Canoo. Despite the boom in the market, these startups have challenges ahead; Rivian, which started its vehicle deliveries in 2021, recorded a net loss of close to 4.7 billion U.S. dollars in 2021.

The modern automotive industry

The modern automotive industry is huge. In the United States, it is the largest single manufacturing enterprise in terms of the total value of products, value added by manufacturers, and the number of wage earners employed. One of every six American businesses is dependent on the manufacture, distribution, servicing, or use of motor vehicles; sales and receipts of automotive firms represent more than one-fifth of the country’s wholesale business and more than one-fourth of its retail trade. For other countries, these proportions are somewhat smaller, but Japan, South Korea, and the countries of western Europe have been rapidly approaching the level in the United States.

Automotive Industry: Definition, History, Pricing & More

Consolidation- the automotive industry





the automotive industry



The trend toward consolidation in the industry has already been traced. In each of the major producing countries, the output of motor vehicles is in the hands of a few very large firms, and small independent producers have virtually disappeared. The fundamental cause of this trend is mass production, which requires a heavy investment in equipment and tooling and is, therefore, feasible only for a large organization. Once the technique is instituted, the resulting economies of scale give the large firm a commanding advantage, provided of course that the market can absorb the number of vehicles that must be built to justify the investment. Although the precise numbers required are difficult to determine, the best calculations, considering both the assembly operation and the stamping of body panels, place the optimum output at between 200,000 and 400,000 cars per year for a single plant. Increasingly stringent and costly regulations aimed at correcting environmental damage due to the rising number of vehicles on the road also have been a factor in the move toward consolidation.

The structural organization of these giant enterprises, despite the individual variation, resembles the pattern first adopted by General Motors in the 1920s. There is a central organization with an executive committee responsible for overall policy and planning. The operating divisions are semiautonomous, each reporting directly to the central authority but responsible for its own internal management. In some situations, the operating divisions even compete with each other. The Ford Motor Company was consciously reorganized on the GM pattern after World War II; other American automotive firms have similar structures.

In addition, the largest producers decentralize their manufacturing operations by means of regional assembly plants. These permit the central factory to ship frames and components rather than complete automobiles to the areas served by the assembly plants, effecting substantial savings in transportation costs. This system was developed for the Ford company in 1911.

Some alteration of that principle took place in the 1980s and ’90s as Japanese firms built new plants around the world and American and European manufacturers adopted, to varying degrees, the Japanese “just-in-time” inventory method. Rather than stockpiling a large number of parts at the assembly plant or shipping all the parts from central locations, automakers have yielded the manufacture of many noncritical components (such as seats and wheel assemblies) to independent suppliers to make the pieces at small facilities close to the assembly plants. The components are often assembled into larger groups of parts or modules (a complete instrument panel, for example) and sent to the assembly plant in the exact sequence and at the exact time needed.

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Diversity of products









The automotive industry’s immense resources in production facilities and technical and managerial skills have been devoted predominantly to the building of motor vehicles, but there has been a consistent and strong incentive to extend into related products and occasionally into operations whose relationship to automobiles is remote. The Ford Motor Company, for example, once manufactured tractors and made the famous Ford Trimotor all-metal transport airplane in the late 1920s and early ’30s. GM manufactured refrigerators and diesel-powered railway locomotives. By the end of the 20th century, however, Ford and GM had divested themselves of most of their nonautomotive operations and had spun off the majority of their automotive component-making divisions into separate stock companies—Delphi Automotive Systems in the case of General Motors and Visteon Automotive in the case of Ford.

In Europe, but to a lesser extent, automakers also divested noncore operations, while depressed economic conditions in Japan forced auto companies there to begin divorcing themselves from nonautomotive and components companies in which they had long-held interests. By the late 1990s, the trend was toward more international consolidation of core automotive operations.

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New car development- the automotive industry









The process of putting a new car on the market has become largely standardized. If a completely new model is contemplated, the first step is a market survey. Since there may be an interval of five years between this survey and the appearance of the new car in the dealers’ showrooms, there is a distinct element of risk, as illustrated by the Ford Motor Company’s Edsel of the late 1950s. (Market research had indicated a demand for a car in a relatively high price range, but, by the time the Edsel appeared, both public taste and economic conditions had changed.) Conferences then follow for engineers, stylists, and executives to agree on the basic design. The next stage is a mock-up of the car, on which revisions and refinements can be worked out.

Because of the increasingly competitive and international nature of the industry, manufacturers have employed various means to shorten the time from conception to production to less than three years in many cases. This has been done at GM, for example, by incorporating vehicle engineers, designers, manufacturing engineers, and marketing managers into a single team responsible for the design, engineering, and marketing launch of the new model. Automakers also involve component manufacturers in the design process to eliminate costly time-consuming reengineering later. Often the component maker is given full responsibility for the design and engineering of a part as well as for its manufacture.

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