Automotive Trend – in spite of tough times will survive but look may change by Tony Green

I have been working in the automotive industry for the last nine months in my new sales position. I had no previous exposure to the industry; therefore, I experienced a large learning curve. My unenviable task is to try and penetrate into the Big Three Automotive OEM’s and their Tier One suppliers with my companies products. It is obvious times are tough but I believe in the long term the American automotive industry can and will survive.


My reasoning for this is as basic as the geography of America. In many portions of the country public transportation does not exist. People will be required to get around as the average American drives 40-50 miles daily. As a consequence there still will be a need for automobiles since a typical automobile lasts 5-10 years in most circumstances.


Since American cars will exist in some capacity it is clear as a result of the lack of competitiveness in the global arena changes are on the horizon for the America automotive industry.


The largest factor I foresee driving change is the increase on foreign influence. Lately the sales of the Japanese just overtook for market share for the Big Three within the United States. Also, the European automotive manufacturer’s accounts for less than 10% of the U.S. market with mostly in higher end luxury vehicles. Recent news stories seem to indicate they are looking to increase their share in spite of the fact that past attempts proved unsuccessful. In light of the weakness of the American automotive industry one could not blame them. Many operate large factories within the United States already. The workforce that has been displaced due to layoffs should provide plenty of trained personnel to staff these new foreign plants. Further foreign influence will be noted as China and India are designing and manufacturing cars which will be available will be within the next few years.



The other large trend in automotive will be the increase in alternative vehicles– Plug-In, Electric, and Flex Fuel and Fuel Cell by the America public. Diesel powered automobiles, which run cleaner than gasoline powered vehicle, can make inroads especially if the price of diesel approaches gasoline pricing. The cost is presently 10-20% higher in most places.



Furthermore the largest car companies may be replaced by many smaller ones which work in well defined niches. One example is Tesla Motors who manufacture electric cars and drive-trains. In spite of the troubled times their backlog is still a year long.



The final trend for the future proposes all of the companies which manufacture automobiles for American customers have their supply chains for parts and vendors based in the U.S. This will result in non American companies becoming household names in the United States. A pair of examples of this genre includes BYD based out of China and Tata Motors based out of India.
In conclusion, the American automotive industry will stay in existence with a very different look. The question is will we recognize it? I admit that is a lot to think about. Shall we go for a drive (in an American car) to clear your head?