The Global Automobile Industry MBA592 2016

THE GLOBAL AUTOMOBILE INDUSTRY

BY : KRISTEN ZIGMONT

MBA 592

DR. JENNIFER EDMONDS

12/3/2016

AGENDA

• The Auto Industry

• Who Are The Major Players

• What Are The Effects NAFTA Has On The Economy

• Union Organizations Around The World

• The Rewards From The UAW

• Safety Concerns Within The Global Automobile Industries

• Conclusion: Opportunities & Challenges Per region

THE AUTOMOBILE INDUSTRY

• The automobile industry first began in 1769 when Nicholas J

Cugnot built the first Steam/Self propelled road vehicle

(military tractor) in France

• 1832 Robert Anderson built the electric carriage made in

Scotland

• 1885 Karl Freidrich Benz Built the first gasoline vehicle powered

by internal combustion engine, 3 wheeled , 4 cycle (cylinder)

engine and chassis form a single unit from Germany

THE AUTOMOBILE INDUSTRY CONT…

• 1886 Gottlieb Wilhelm Daimler and Wilhelm Maybach created

the 1st Gasoline 4 wheeled four stroke engine- known as the

Cannstatt-Daimler- Germany

• 1893 Charles Edgar Duryea and brother Frank Duryea made

the Gasoline 1st successful gas powered car 4hp, 2 stroke

motor and began the 1st American car manufacturing co.

VEHICLES IN THE 1800’S

VEHICLES OF THE 1800’S CONT…

BACK GROUND ON THE AUTOMOBILES

• From the unique Postwar in America, to the noticeable change

in cars in the late 50’s and early 60’s it wasn’t until the 70’s

that there was a threat in the foreign car industry.

• 70’s seem to be trying to make up for lost time and it the

industry was very unpredictable to say the least. Detroit was

afraid to change so they stuck to what they new best, keeping

reliable profits.

• They soon started to build too many cars that nobody wanted

which began to hurt them. US was producing from a vanishing

market.


• Accessories each year were sold more then the last yr.

• US produced 9 times the amount of cars than Japan

• In 1980 Japan became the world production leader and still holds that today,

compared to today where most Americans feel that Imported cars from

Germany and France are better quality.

• They apply pressure on suppliers and dealers they cut corners to have

effectiveness with cost.

• Detroit changed the publics perception of their products so that people

would continue to buy sedans and other models.


• Blueprint for the modern Automobile was mainly perfected by

France and Germany

• When Gemany introduced the VW Beetle and this struck the 1st

postwar American Market. In 1974 following the Beetle was the

Rabbit and was the big rage for that time. This was a replicate

of the car in the Italian market.

• Shortly after events in the Middle East are what soon gave Japan

the status of being a major player in the industry.

BACK GROUND ON THE AUTOMOBILE

• GM’s flexibility of parts, quality became somewhat of the past. They soon adopted style changes (reshape the grill, retooling the industry so they didn’t have to justify the sales needed which was 200,000 vehicles needed to be sold at a minimum.

• Used better suppliers, Corners were not cut as much to keep the quality of what consumers were used to.

• Toyota, Nissan and the rest resized and expanded the market that Detroit abanded.

• Necessities soon became an advantage

• Key to survival was the turn around time on parts and accessories. How fast can parts be received and be installed to deliver a new vehicle to customers

THE EFFECT NAFTA HAS ON GLOBALIZATION

• Companies and employees and are being helped by NAFTA and are benefiting by from the lower Tariff rates changed to their exports to Canada and Mexico.

• Many Tariff on exports to Canada were already low due to the 1989 Canada-US Free Trade Agreement (CUFTA), NAFTA has had the added benefit nearly eliminating the once- common trade frictions among North American countries.

• Ford, GM, and their employees are all benefiting from the cuts generated by NAFTA.

• Mexican tariffs on cars and light trucks originating in U.S. or Canada were reduced from 20% to 10% by Jan. 1, 1994.


• Passenger car tariff was reduced by 1.2 % in 1995 and

continued to be reduced until it was eliminated in 2003.

• Mexican Tariffs on heavy trucks was reduced by 2.5% per yr.,

beginning in 1995 until it was finally eliminated on Jan. 1,

1998.

• Mexican tariffs on heavy trucks (weighing over 8,864 kg) Cabs,

chassis, truck tractors, bus and specialty vehicles were cut from

20% to 18% by Jan. 1, 1994.


• These Tariff cuts made them have to assemble vehicles in

Mexico in order to sell there and now all auto producers were

subject to a “Trade Balancing System” (export more then they

import).

• Ford is now forced to buy much more parts from Mexican

suppliers and often didn’t meet the high quality & price

standards

• Less than maximum efficiency and exports to Mexico. Ford

consolidated all production Of the Mercury Cougar at the U.S.


• Prior to NAFTA in 1993, GM exports to Mexico were just about

0

• 1997 they expanded to 60,000 vehicles and today its over

100,000 and assessments have been very positive

• In 1993 Chrystler’s American Motors Vehicles exports went to

Canada and Mexico. In 1998 they soon reached 66% and it

continues to rise (34,830 vehicles). Estimated today at 71%.

• The effects of decreasing trade barriers has allowed

competitors from foreign to the U.S. Markets.

UNION ORGANIZATIONS AROUND THE WORLD

• In the beginning the U.A.W. helps to campaign against foreign

auto but now they work hand in hand with Japanese auto

producers. This can been seen in the Toyota Cali plant.

• In the past they produced more domestically than the domestic

autos are now produced abroad. More and more auto makers

produced U.S. assembly plants which hold about 25% more of

the U S motor vehicle workforce.

THE MAIN CHALLENGE IS THAT THE GLOBAL AUTOMOTIVE

• Europe- is weaker as the region is emerging from a six-year

slump though the UK bucks this trend – here car manufacturing

volumes are on course to break all-time records by 2017.

• Russia-Sales have plunged down by 25% in August 2014.

• Indian-Meanwhile, the market’s performance has been

inconsistent.

• China – Growth in the world’s largest vehicle market – has

slowed, even though investments by most original equipment

manufacturers (OEMs), which are betting big on future demand,

continue to ramp up

SAFETY CONCERNS IN THE AUTO INDUSTRY

• 1800’s it created social and recreational opportunities and

changed Americans landscape

• Soaring rate of traffic deaths and injuries occurred

• 1910’s reckless driving, speeding, collisions and pedestrian

fatalities became new problems and later National Safety

Council complied accident stats which then began to promote

public awareness to safe driving, laws were formed and signals

and fines were soon given out.


• 1930’s they came out with steel bodied cars & hydraulic

breaks,Improvements on roads and railways had major focus on

keeping them maintained

• 1932-1938 GM installed shatterproof windshields, AAA offered

Drivers Training, and the industry sponsored 100,000 mile (first high

speed turnpikes/freeways)

• 1950’s physicians and professors found concern with a person being

crushed if there was a collision and said they needed to be

“packaged” so they soon tried to find a scientific approach to test it

and there after seat belts came out.

TRANSPORTATION FATALITIES REPORT 1915-1925

Rail Road passengers /motorists or Pedestrians

1915-199/6,600 1922-200/15,300

1916- 246/8,200 1923-138/18,400

1917-301/10,200 1924-149/19,400

1918-471/10,700 1925-171/21,900

1919-273/11,200

1920-229/12,500 *This was due to Alcohol,

disobeying traffic

1921-205/13,900 rules and signals.

SAFETY CONCERNS IN THE AUTO INDUSTRY CONT’D.

• 1950’s Dashboards, knobs, Intertube steering wheel, doors, handles, Reflectors , odometers, & Cyberlite deceleration signal

• 1961- Seat belts were a major focus to help prevent injuries or deaths. Test Crashes were used to see the impact on crashes and tried to product better quality materials

• 1980’s M.A.D.D (mother against drunk driving) and National Min. Drinking Act was formed .08% was the limit and an ignition interlock breath analyzer would then prevent the driver from moving if they were over

• 1990 seat belts were becoming more widely excepted and the state legislature & state motor vehicle depts. approved the device for everyone to use. Guardian lock was the manufacture they used.


Increased electronics and software content:

• Cost of electronics and software is <20% of the cost 10 years

ago.

• Electronics systems contribute >90% of innovations and new

features Timeframe for new vehicle launches is 3–4 years, the

cycle for new vehicle software is measured in months.

• Technology is gaining more reliability then before and

operations can be done by calculations written and are easier to

correct if they need to.

CONCLUSION

• In the 1800’s France and Germany had begun the Global Auto

mobile industry. Later Japan joined in to become what then was

a great way to produce parts/and build vehicles.

• Chrysler/Daimler and Ford and WV wanted apart and so they

started to create some competition in the market place, yet the

U.S. soon came ahead due to NAFTA and our agreement with

Mexico and Canada.

CONCLUSION CONT’D.• Although Tariffs were there this help to keep the economy

growing and employee more within the United States.

• Manufacturing plants within the U.S. have to keep up with

trends and continue to be more competitive in order to grow

and make profit.

• What was standard in the 1800’s is not even a thought in our

minds. From Steam engines, power 3 wheel vehicles 4 hp to

today’s V6, and V8 engines with sunroofs, XM radio, Navigation

and leather heated seats. Who knows where we are heading but

things consistently keep improving.

• Is the Electric car going to be the Major Focus for the years to

come?

QUESTIONS

?

Documents

The Global Automobile Industry MBA592 2016