rise of foreign competition in the automotive industry - powerpoint brief

8/14/2019 Rise of Foreign Competition in the Automotive Industry - PowerPoint Brief

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The Rise Of Foreign Automotive

Competition In The American Market

Peter Castoldi | FYS_1101



Introduction: A Brief Overview

• This presentation is designed to display an overview of the entirety

of the American automotive industry through the exploration of

numerous topics:

• A brief background of the “Automotive Titans” – The men who started

it all;

• The beginnings and evolutions of the troubles within the industry,

including OPEC;

• America’s response to such a crisis in the periods of the 1970s -1980s,

and in the 1990s-2000s, and;

• A look into a new threat: HEVs (Hybrid Electric Vehicles) , their impact

on modern motoring, and their effect on American jobs



The Dawn Of The Automobile

• While there were many prototypes constructed before – with some

being manufactured using steam engines and others with more

advanced forms of the early example of the combustion engine –

only two men really jumpstarted the automotive industry

• Henry Leland

• Henry Ford

• Both played important roles in radically changing American society

through the use of new engineering and manufacturing techniques



Henry Leland – (1843-1932)

• Dubbed a “Forgotten Titan” of the

automotive industry for his

achievements with, and

involvement in, the Olds and

Cadillac Motor Company

• He used his knowledge of

interchangeable parts, and his

skill of manufacturing, to the

emerging motor industry in 1870

• His improvement upon the Olds

engine

• Leland fully entered the

automotive business in 1902

when he helped to form a luxury

car maker, currently known as

Cadillac



The Quadricycle



The Evolution Of Competition

• Skipping ahead to more “modern” days of motoring, American

automotive manufacturers started to face some serious issues both

from within our own nation and from across the globe

• During the October 1973 Arab-Israeli War, the Arab members of the

Organization of Petroleum Exporting Countries (OPEC) announced

an embargo against the United States in response to our nation’s

decision to re-supply the Israeli military during the war

• This set off an upward spiral of oil prices: The price of oil per-barrel

doubled, then quadrupled, leading to increased costs for consumers

• American automakers were significantly impacted



The Evolution Of Competition: Continued

• During the time of the Crisis, the mainstream automobiles were

long-wheelbase vehicles boasting large V-8 engines and multiple-

tonnage curb weights

• Fuel economy, on average, was no greater than a combined 15 MPG

• This is where the Japanese imports played a role in “switching up”

vehicle sales in the United States

• They introduced smaller, high-mileage vehicles such as the Corolla,

Civic, the Datsun B210 and 510, and the Subaru Leone. Hatchback and

Coupe variants were also introduced

• Before long, American manufacturers were quickly experiencing a

drop in vehicle sales



Japanese Imports

1978 Toyota Corolla 1978 Honda Civic 1979 Datsun B210

1974 Datsun 510 1979 Subaru Leone



The American Response: 1970s-1980s

• By 1969, imports had increased their share of the American automotive market

• Feeling the need to respond to the issue of declining sales, Americanautomotive manufacturers started to introduce their variations of a small,economical car

• Such examples included: The Ford Pinto and Maverick; Chevrolet Vega; AMC Gremlin,

Hornet, and Pacer; and Chrysler began importing versions of their vehicles fromMitsubishi Motors

• To cope with fuel economy problems, in 1975, under the Energy Policy andConservation Act –the federal government initiated new fuel efficiencystandards

• For passenger cars, the then-current standard was 18 MPG and the Act increased thisto an average of 27.5 MPG by 1985

• Unfortunately, while the new fuel economy standards were headed in the rightdirections, the new vehicles being produced/imported by “The Big Three”weren’t

• Quality remained an issue for American cars – The Pinto was a prime example



Snapshot: New Passenger Car Sales

(Above): New passenger car sales, measures in thousands of units.

Source: http://www.bts.gov/publications/national_transportation_statistics/html/table_01_16.html

In 5 Years:

Domestic car

sales were

down by 66 000

Import car sales

increased by

292 000



American Production

1978 Ford Pinto 1977 Ford Maverick 1976 Chevrolet Vega

1972 AMC Gremlin 1976 AMC Hornet 1975 AMC Pacer



The American Response: 1990s-2000s

• It was only until now that American automotive manufacturers were

starting to recover their losses from the previous decades

• Due to the differentiating fuel economy standards between

passenger cars and larger trucks/SUV’s, both domestic and

Japanese imports were selling thousands of pickup trucks and large

body-on-frame SUV’s

• Though, a new threat would soon emerge: one that would forever

change the goals of automakers across the globe ….



Hybrid Electric Vehicles (HEVs)

• This “new threat?” Vehicles powered by something other than

gasoline. This is the birth of the hybrid

• Hybrids, by definition, are vehicles that use two or more power

sources to move the vehicle. One of the most common is a gas-

electric hybrid

• The most popular? The Toyota Prius

• Once again, American automotive manufacturers faced a new form

of competition – one that is still very relevant in today’s society

•

In essence, it changed the course of what companies andconsumers have thought about the future of the automobile

• Corporations developing new technologies require more employees, as

well: further shaping the automotive job market



(Above): Cumulative HEV sales between 1999-2011 show the Prius family

as a clear winner



Gasoline No More?

• As previously mentioned, the launch of the Prius came with huge salessuccess and the upbringing of many new hybrid vehicles andtechnologies

• Many believe that the future of vehicles relies on little to no reliance onfuel, and more reliance on things like electricity or hydrogen

• This has mainly stemmed from recently-rising fuel prices andenvironmental concerns, like global warming

• Companies – like Toyota – invest millions of dollars (Toyota does this ona daily basis) to improve upon their hybrid technologies

• Domestics are also entering into the market with recently-added 2013

models of the Ford C-Max (a hybrid) and the Fusion ENERGI (a fully-electric vehicle)

• Fully-electric sports cars are also being released, such as the popular TeslaModel S Roadster (it is sold out in the United States)



What Does This Mean For Jobs?

• Many believe that the shift in automotive technologies, and the rise

of foreign competition, is killing American jobs

• However, Wall Street Journal author Shirouzu Norihiko believes

otherwise; her opinion is stated in the article titled Foreign Car

Makers Grab U.S. Resources: Automotive Engineers

• It states that a growing presence of foreign automakers and suppliers

in the United States is “a good thing from an individual engineer’s point

of view” because it offers more options for American engineers at a

time when opportunities at “The Big Three” are lacking

•

This is true for jobs both inside and outside the United States

• A prime example is Toyota: nearly 40% of Toyota’s 20,000 engineers in

Japan are contractors from agencies and “guest engineers” from

suppliers

rise of foreign competition in the automotive industry - powerpoint brief

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