12,930 research outputs found
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The U.S. Motor Vehicle Industry: Confronting a New Dynamic in the Global Economy
[Excerpt] This report provides an in-depth analysis of the 2009 crisis in the U.S. auto industry and its prospects for regaining domestic and global competitiveness. It also analyzes business and policy issues arising from the unprecedented restructurings that occurred within the industry. The starting point for this analysis is June-July 2009, with General Motors Company (GM or new GM) and Chrysler Group LLC (or new Chrysler) incorporated as new companies, having selectively acquired many, but not all, assets from their predecessor companies.
The year 2009 was marked by recession and a crisis in global credit markets; the bankruptcy of General Motors Corporation and Chrysler LLC; the incorporation of successor companies under the auspices of the U.S. Treasury; hundreds of parts supplier bankruptcies; plant closings and worker buyouts; the cash-for-clunkers program; and increasing production and sales at yearâs end. This report also examines the relative successes of the Ford Motor Company and the increasing presence of foreign-owned original equipment manufacturers (OEMs), foreign-owned parts manufacturers, competition from imported vehicles, and a serious buildup of global overcapacity that potentially threatens the recovery of the major U.S. domestic producers. This report, which establishes a context for examining the industry and analyzes a unique but highly specific period in the U.S. automobile industryâs history, will not be updated
The link between gasoline prices and vehicle sales:economic theory trumps conventional Detroit wisdom
This paper examines the link between fuel prices and sales of cars and trucks. U.S. automakers have long denied that such a link exists. One source of this false belief is an obsession with the crude count of units sold, equating Hummers with Minis. Another source is the conventional âwisdomâ that Americans are unwilling to pay for fuel economy. The paper presents theoretical reasons and market evidence that refute Detroitâs conventional wisdom. American manufacturersâ reaction to rising fuel prices over the last few years revealed the shortcomings of the U.S. automakersâ recent product and powertrain strategies. The effect of rising fuel prices has, in effect, been offset by reducing prices of vehicles in inverse proportion to fuel economy. Thus, unit sales of large SUVs could be maintained, but their revenue (and profit) fell because vehicle prices were cut, directly or indirectly. The paper concludes with a few practical guidelines that business economists should use to prevent their companies from experiencing the recent massive losses experienced by the U.S. automobile industry.automotive industry; fuel prices; vehicle sales; American automakers
U.S. Motor Vehicle Industry Restructuring and Dealership Terminations
[Exerpt] As Chrysler and General Motors (GM) moved toward and into bankruptcy, they sought and received permission from the U.S. Bankruptcy Court to terminate about 2,000 contracts with auto dealers. Many of the dealers want their contracts reinstated and have sought relief from Congress to accomplish that goal. This report examines the changed economic landscape facing the auto sector, automaker arguments in favor of dealer reductions, and dealer counterpoints. It also highlights recent legislation introduced to address dealers\u27 concerns.
Chrysler and GM have emerged from bankruptcy as significantly smaller companies, reflecting the end of a multiyear restructuring process for both companies. Chrysler is now controlled by the Italian carmaker, Fiat, while GM\u27s current majority owner is the U.S. Government. GM, which in 2008 operated 47 assembly, powertrain, and stamping facilities, is to operate 34 plants by the end of 2010 and 33 by 2012. The number of hourly employees will have declined from 78,000 onDecember 31, 2007 to 62,200 at end-2008, to an estimated 40,000 in 2010. By way of contrast, GM had 304,000 hourly workers in 1991. GM also discontinued one brand (Pontiac) and is to sell Hummer, Saab, and Saturn, and some percentage of its GM Europe operations, Opel and Vauxhall. The new Chrysler reduced its number of production facilities from 25 to 17 as part of its restructuring. The company employed 45,000 hourly U.S. employees in January 2008 and 27,000 in February 2009. For the first time, GM and Chrysler are not owned by private investors; rather, the UAW\u27s retiree health trust, the U.S. Treasury, and the Canadian government have taken ownership stakes in both companies.
The auto dealership network, a critical intermediary between automakers and final consumers, has not escaped this turmoil. Auto dealers are independent businesses with contracts with the automakers Most of the approximately 20,000 U.S. auto dealers are family-owned and have been in business in their hometowns for decades. As with all stakeholders in GM and Chrysler, the dealer owners are faced with stark choices as the automakers downsize and seek a more competitive business model. As part of their restructuring, Chrysler cut 789 dealers immediately and GM is to eliminate more than 1,300 when the dealer\u27s contracts expire in October 2010.
While dealer reductions of this magnitude would not have been possible in the normal course of business, the bankruptcy court approved both the Chrysler and GM requests to terminate dealerships as part of larger processes that have allowed a new GM and a new Chrysler to emerge from bankruptcy with many fewer assets and no liabilities. Of the roughly 2,000 dealers affected by these changes, many oppose the changes and have taken their battle against GM and Chrysler to Congress. Congressional hearings have been held and a number of bills to restore the dealer terminations have been introduced. On July 16, 2009, the House passed the Financial Services and General Government Appropriations Act, 2010 (H.R. 3170), which includes a committee-approved amendment offered by Representative LaTourette that would require automobile companies that receive federal funds and are partially owned by the federal government to reinstate agreements with franchise dealerships that had a valid dealer agreement prior to Chapter 11 proceedings. It would apply only to General Motors and Chrysler and would require them to reinstate the roughly 2,000 dealerships they have dropped or would like to drop as part of their cost cutting, downsizing, and overall restructuring. On July 17 the House Committee on Financial Services voted in support of H.Res. 591, requiring an Administration report on the work of the Auto Task Force, including decisions on dealerships. This report will be updated as necessary
Operations capability, productivity and business performance: the moderating effect of environmental dynamism
Purpose â The purpose of this study is to investigate the relationships between operations capability, productivity and business performance in the context of environmental dynamism. Design/methodology/approach â A proposed conceptual framework grounded in the resourcebased view (RBV) and dynamic capability view (DCV) is analysed using archival data from 193 automakers in the UK.
Findings â The results show that operations capability, as an important dynamic capability, has a significant positive effect on productivity, which in turn leads to improved business performance. The results also suggest that productivity fully mediates the relationship between operations capability and business performance, and that environmental dynamism significantly moderates the relationship between operations capability and productivity.
Practical implications â The research findings provide practical insights that will help managers develop operations capability to gain greater productivity and business performance in a dynamic environment
The Perfect Pitch: Car Commercials in the Environment
Car commercials, like many advertisements, tempt its viewers with comfort, capability, or safety features, as well as being wellâengineered, affordable, attractive, large or compact sized, or fuel efficient. This study examines the pitches in YouTube car commercial video clips from the 1960s until 2014. We coded a total of 263 total car commercials based on pitch, setting, narrator, decade, and country of origin. The analysis revealed that most car commercials were presented in rural settings and capability was pitched most frequently overall. Fuel efficiency was ranked third overall; however, within urban settings, fuel efficiency had the highest frequency. During the 1990s, there was no presence of commercials alluding to fuel efficiency and instead safety was pitched more frequently compared to other decades. We discuss the other pitches that were found to be significantly different between the settings, narrators, decades, and countries of origin. Over time, pitches in car commercials have changed, perhaps because advertising is influenced by consumer demands, interests, and concerns
Beyond the Big Leave: The Future of U.S. Automotive Human Resources
Based on industry interviews and trends analyses, forecasts employment levels and hiring nationwide and in Michigan through 2016, and compiles automakers' input on technical needs, hiring criteria, and suggestions for training and education curricula
R&D Strategies for New Automotive Technologies: Insight from fuel cells
ABSTRACT
This study analyzes how the automobile industry is pursuing the development of fuel
cells as a new propulsion technology for automobiles. Fuel cells represent a
fundamentally different powertrain technology that competes technically with the internal
combustion engine, which has traditionally been a core competence of automobile
manufacturers. The emergence of fuel cells provides a threat to automakers? competence
in internal combustion engines, but also presents an opportunity for establishing a
competitive position and gaining competence in a new technology. The study gives
insights into strategic issues that automakers face through fundamentally new
technologies. The key questions analyzed in this study are how new technology such as
fuel cells can be identified by automakers, how automakers develop and acquire
competence in such a technology that has not been part of the traditional technology
portfolio of automakers, and how automakers can keep control over this new technology
and derive value as it moves closer to commercialization.
Fuel cells were historically first applied in the aerospace industry, and have only been
developed for use in automobiles after a technological breakthrough resulted in
significant increase of power density and cost reduction. Automakers with ties to the
aerospace industry were among the first to recognize the potential of the breakthrough
technology, and such early identification gave these companies a lead in R&D investment
and patenting. This example of technology dynamics of fuel cells supports the
importance of early identification of new technologies and links to related industries as a
source of such technologies for the automobile industry.
The next phase of fuel cell developments is characterized by an attempt of automakers to
acquire competence in fuel cells. Three different organizational approaches are observed
among the automakers: internal development of fuel cells, collaborative research, and a
wait-and-see approach that favors licensing of the technology. The design of
collaborative research alliances, such as the partnership between DaimlerChrysler, Ford
and Ballard, suggests that technology that is new to the automobile industry needs to be
viewed from a systems perspective. While early research activity focused on the fuel cell
only, the establishment of an alliance provided an effective way of combining technical
competence on all components of a fuel cell powertrain system. The research alliance
also broadens the coverage of intellectual property with patents, but this also limits the
control of automakers over the technology.
The last part of the report discusses implications for automakers regarding the ability to
control and derive value in the case the technology is successfully commercialized. It is
argued that new suppliers are likely to participate in a future market for fuel cell
powertrains, according to their technical competence and role as early participants in the
development of fuel cell components. Automakers can keep control over the technology
and participate in a potential market for fuel cells by becoming system integrators, and
through continued development of key fuel cell components
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Pending U.S. and EU Free Trade Agreements with South Korea: Possible Implications for Automobile and Other Manufacturing Industries
[Excerpt] South Korea has negotiated free trade agreements (FTAs) with the United States and the European Union (EU), but neither agreement has yet been approved. The U.S. Congress must approve the United States and South Korea free trade agreement (KORUS FTA) and the European Parliament must vote on the European Union and South Korea free trade agreement (KOREU FTA) before the FTAs can take effect. If the FTAs are ratified, it is possible there could be a âfirst moverâ advantage for either the United States or the European Union, depending on which FTA is approved first. Some argue that both agreements have shortcomings and should not be approved.
This report provides U.S. lawmakers with a comparison of the manufacturing components in the KORUS and KOREU FTAs. Congressional interest in an FTA between the European Union and South Korea mostly centers on those U.S. industries competing with European industrial sectors, especially motor vehicles. The two pending FTAs raise questions about what it could mean for U.S. manufacturers if the United States takes longer, or fails altogether, to implement the KORUS FTA, while the European Union and South Korea possibly move ahead to approve and implement their outstanding FTA. In such a case, the possibility exists that the removal of tariff and nontariff barriers between the European Union and South Korean markets could result in U.S. manufacturers losing South Korean market share to European competitors. On balance, most U.S. and European manufacturing sectors, with some auto manufacturers in particular among notable dissenters, argue that the pending FTAs will be beneficial and are largely supportive. On the other side, labor unions in the United States and the European Union are considerably more skeptical, claiming that South Korean companies could be the biggest beneficiaries, since they could gain even greater access to the significantly larger U.S. and EU markets. Labor union leaders say the FTA will result in further job losses as their respective manufacturing workforces compete for market share with competitive South Korean manufacturers in their own domestic markets
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The Rise of Chinaâs Auto Industry and Its Impact on the U.S. Motor Vehicle Industry
[Excerpt] The automobile industry, a key sector in Chinaâs industrialization and modernization efforts, has been developing rapidly since the 1990s. In recent years, China has become the worldâs fastest growing automotive producer. Annual vehicle output has increased from less than 2 million vehicles in the late 1990s to 9.5 million in 2008. In terms of production volume in 2008, China has surpassed Korea, France, Germany, and the United States, trailing only Japan. A disproportionate share of Chinaâs output was heavy vehicles in the 1990s. However, since 2000 Chinaâs growth has been led by an increase in passenger cars, which now account for more than 65% of its vehicle production.
Chinaâs automobile industry has continued to expand despite the global economic downturn. From January to October 2009, more than 10 million vehicles were sold in China. If such growth continues, China is on its way to becoming worldâs largest auto market.
Unlike Korea or Japan, Chinaâs automotive industry has developed extensively through foreign direct investment. This investment has come in the form of alliances and joint ventures between international automobile manufacturers and Chinese partners. The international automobile manufacturers are unlikely to promote Chinese exports that compete with their own products in other markets. As a consequence, the Chinese companies that have expressed a strong interest in exporting cars have not had strong ties to foreign car producers and that, consequently, may struggle to meet safety and emission standards in industrialized countries. However, if independent producers, such as Geely, can achieve much higher standards, they could prove to be a strong international competitor. Fordâs proposed sale of Volvo to Geely may help the Chinese company improve its products.
China exports and imports few motor vehicles. Exports are growing much more rapidly than imports and are mostly light trucks and passenger cars shipped to developing country markets. By contrast, Chinese auto parts exports are already making inroads into the United States and other developed markets. While U.S. motor vehicle trade with China was insignificant in 2008, the United States imported more than 268 billion in 2008, representatives of the Obama administration, as well as many Members of Congress, would like to achieve more balance in U.S.-China trade relations
Differences between supplier development programme of foreign and local Malaysian automotive suppliers
Research into supplier development has raised issues on the buyerâs relationship with the supplier.A buyer with collaborative relationship would have more interest in supplier development.From the viewpoint of the suppliers, buyers who provided assistance could help the suppliers in developing their capability, a situation that might be particularly relevant in developing and emerging countries. The automotive manufacturers have implemented supplier development programmes for their suppliers, both in developed and developing countries.This raises a question on supplier development programmes in developing countries: How do supplier development programmes differ between a local (Malaysian) supplier and a foreign (non-Malaysian) supplier for Malaysian automakers (buyers)? In this research, interviews were conducted at three supplier organisations, of which one was Australian and two were Malaysian, where all three were suppliers for a Malaysian automaker.This study found that the Malaysian and Australian suppliers differed in supplier categories, customisation versus standardised products and buyer involvement.The study suggests that buyer differences with regard to supplier relationship, supplier commitment, type of product and size of supplier organisation play a role in supplier development
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