The hard times of the automotive industry

The hard times of the automotive industry

Managing an industry or more specifically a company that operates in an industry is a must to gain profits over the products. Profits keep the companys expenses going on while leaving enough on the table to meet future demands. Until and if the company does not get profits on its products it can not invest in further efforts and would probably start falling backwards. The road to growth and expansion would be stony and impossible to pass through the company. Therefore the end result would be that the company would discontinue its activities or be sold to someone who could better utilize the company.

Winners begin to bring products that prove to be valuable to customers. The value of a product is determined by the customers attitude to a product. A product such as the customer is willing to spend their money believing it will solve its problem or would be helpful to solve the problem. When a customer considers that a product is beneficial to him he wants to pay more than the cost of manufacturing or producing the product at regular intervals. However the value does not count directly as profit for the company that manufactures the product. The excess of the value of the cost of manufacturing the product is divided among consumers and manufacturers of industrys driving forces or competition in industry.

In the absence of an alternative to the product a manufacturer may harvest in higher value than the product is worth. Snack bars on highways charge more for their products than they could charge in a city filled with snack bars. As there is no other snack bar or hotel for miles on the way the snack bar located in any of the highways can charge its customers as much as desired without fear of losing him to a competitor. In the absence of competitors manufacturers may erase more profits where competition would lower prices to a value that would not be profitable for manufacturers.

When the manufacturers earn an excess its not a profit. When an industry faces severe competition the overflow of the products on the market influential trade unions the money generated against a product is distributed among all shareholders. The amount of profit that can be achieved by a manufacturer depends on the three driving forces in the market.

The value of the product in the eyes of the consumer.

Greatness or competition in the industry.

Limit to where the negotiations between manufacturers suppliers can rest with consumers.

Demand and competition in the automotive industry

With a loss of a total of $ 14.7 billion in 2008 Ford succeeded in scoring a total of $ 6.6 billion in 2010 with a prospect to do even more next year Booth 2011. The year 2007 and 2008 had been the worst for the economy all over the world due to the sudden economic crisis. The automotive industry was seriously injured and Ford had been a massive victim of the impact. Due to the high unemployment rate in these two years demand for cars was crashed because customers were unable to pay for the expensive cars. Many companies big and small had to announce a complete shutdown because they could not bear to keep the wheels rolling longer because there were no buyers in the markets.

Automotive life cycle

Today the automotive industry is facing a whole new life cycle than before. Products are manufactured that keep industry requirements in sight. The four phases of the automotive industry are the introduction of the car the cars growth maturity and depreciation. When a new model is manufactured it is presented to consumers using various ad technicians. When customers come in the reviews help both positive and negative to mature.

More positive reviews mean that the car has become a hit and would make a good sale. The maturity of the product is determined by a constant demand for the model it may be as long as this year as for Toyotas Corolla and Honda Civic which is carried for a very long time. After a while demand for a new car or technology is being raised the depreciation phase begins and manufacturers need to look for something new to keep customers loyal to their fleet.

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