I. Industry Analysis
Industry: Global Automotive Company in the United States
1. Definition
The global automotive industry involves the design, manufacturing and sales of vehicles
and their components. The industry has been around for over 100 years and is a very large
and important industry around the world. The automotive industry is one of the largest
employers throughout the world. It employs thousands of skilled and unskilled laborers.
According to the Bureau of Labor Statistics, in the United States alone motor vehicles and
parts manufacturing employed over 838 thousand employees at the beginning of 2014.
(BLS)
Source: Bureau of Labor Statistics
Some of the major costs in the automotive industry are labor, materials and advertising.
There are also two different sectors in the automotive industry. There is the automaker
sector which makes up the largest part of the industry and generates the majority of the
industries revenue but then there is auto parts sector which makes and sells the parts to an
automobile such as the air filters, oil filters, wiper blades, and replacement lights. The auto
parts sector is also very profitable.
2. Main Activities
The main activities of the automotive industry are designing and manufacturing vehicles.
The automotive industry also markets and sells vehicles. The industry is not just limited to
activities necessary to sell vehicles, they also manufacture vehicle parts. The vehicle parts
sector is also rather profitable for the industry. There are several things that the industry
does not do including maintenance on the vehicles, making tires, and providing fuel.
3. Industry at a Glance
1.1 Key Statistics Snapshot
Industry Statistics
Market Capitalization: 415B
Price / Earnings: 17.0
Price / Book: 1.8
Net Profit Margin (mrq): 4.4%
Price To Free Cash Flow (mrq): -10.8
Return on Equity: 11.6%
Total Debt / Equity: 111.6
Dividend Yield: 2.2%
Source: Yahoo Finance
1.2 Industry Structure
Source: Auto Recycling
Revenue Volatility – High
Capital Intensity – High
Industry Assistance – Medium
Regulation Level – High
Technology Change – High
Barriers to Entry – High
Industry Globalization – High
1.3 Industry Market Share
The following pie graph shows the auto manufacturing market share in the U.S. by
company. The chart below that shows the market share change from 2011-2012.
Source: Good Car Bad Car
Source: Business Insider
1.4 Products and Services Segmentation
In the automotive industry the segmentation of products is generally cars and light duty
trucks. The car segment is further broken down into small, midsize, large, and luxury cars.
The light duty truck segment is further broken down into pickups, crossovers, minivans,
and small, midsize, large and luxury SUVs.
