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A Comprehensive Review Of Economic Indicators And The Auto Industry

5498 words - 22 pages

The goal of this paper is to provide a comprehensive discussion of six economic indicators and their impact on the automobile industry. The indicators to be reviewed are personal income, unemployment, retail sales, auto sales, the inflation rate, and Gross Domestic Product. A brief history of the auto industry, an industry overview, and a SWOTT analysis will be presented. In addition, each indicator will be defined along with the current status of each. Forecasts of each indicator will also be given. Lastly, strategic initiatives will be afforded based on how the forecasts will impact the auto industry.Industry OverviewHistoryAround the world, more than 100 years ago, numerous men were working on motorized vehicles, unbeknownst to each other. When Nikolous Otto patented the four-stroke gasoline engine in 1876, the automotive industry began. This type of engine is still used today. The United States industry, which began in 1896, gave the automobile a Midwestern American flavor (Wright, 1996). The majority of men building cars in that era were from rural backgrounds including Henry Ford, Ransom Olds, and David Dunbar Buick (Wright, 1996). While the first production car built in the United States was produced in Massachusetts, the men creating it were from Illinois (Wright, 1996). The world has changed drastically since that time as the automobile has allowed us to go where we want when we want. Not only has the automobile expanded our geographic boundaries, it has created industries where there were none such as auto parts, gasoline, fast-food restaurants, drive-in movies, and even drive-in funeral homes (Wright, 1996).Auto Industry OverviewToday, people purchase cars to define who they are. There is an emotional relationship with our vehicles that we do not have with any other type of machinery and the three surviving American auto companies, Ford Motor Co., General Motors, and Chrysler Corp., could not be happier about it (Wright, 1996). Automakers are some of the biggest consumers of steel, aluminum, copper, and plastic. They also use most of the lead and rubber in the United States (Wright, 1996). Approximately one in six Americans participates in the building, selling or maintenance of automobiles and the Census Bureau claims that dealerships make up 28.5% of all the retail business in the United States (Wright, 1996).SWOTT AnalysisAn analysis of the automobile industry reveals the following strengths, weaknesses, opportunities, threats, and trends. The strengths of the industry include the size of the industry itself, as well as the diverse range of products and the global exposure of the automobile. Weaknesses include product recalls, minimal presence in the hybrid car market, and soaring gas prices. There are opportunities available to automakers such as alternative fuel vehicles, high volume low cost products, and new product development. While there are opportunities, there are also threats such as increasing steel prices, competitive...

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