Automotive Industry Analysis

Introduction

The Automotive Industry is made up of a wide range of organizations and companies that design, develop, market, manufacture, and sell motor vehicles. However, this Industry does not include the organizations responsible for maintaining automobiles, such as repair shops and other automobile-related services (Mahut & Eynard, 2017). The Automotive Industry is subdivided into two: the car parts manufacturers and also the car manufacturers themselves. Modern vehicles have become complex and call for more electronic parts compared to the past years. For an automotive industry to succeed, the salerooms and the different professionals are to be considered greatly. Some of the available positions in the Automotive Industry are; creative, financial, designers, executives, engineers’ managers, scientific, quality controllers, supervisors, mechanical sales, and assembly (Abduaziz & Varma, 2015). There are only a few manufacturers in the automotive industry because it is very expensive. The world-leading automotive products include Honda, Nissan Motors, Toyota, Hyundai, and Volkswagen. This Industry is oligopolistic as only a few producers in the market producing discerned products. Currently, the Automotive Industry is working to transform into a mobility industry due to the connectivity of people to automobiles.

This document provides an overview of how an executive team manager of a large Automotive Manufacturing can develop markets and extend the product range. This choice aims to add value to the automotive industry using the best management skills and working closely together to achieve excellent results. To fully achieve this target, it is important to address the following areas; innovation, marketing, operations, finance, and Human Resource Management. It is important to understand the Sustainability of the automotive Industry to perfect this transformation. The fact is that the old management styles and models of performing business have worked in the past, and there is no assurance of success in the future. There is a need to use the old business models to create valued products for the future. The concept of simulation summarizes it all. Simulation is the root for the origin of decisions to perfect the performance of the Automotive Industry.

Simulation

Simulation involves coming up with new models designed to solve problems efficiently and safely (Kassen & Pechann, 2021). It provides a critical method to analyze, verify, understand, and communicate ways to solve a problem. Simulation creates a representation experimentally of any system. This method is used to conduct testing and validate models of a vehicle during the prototyping stages to save on time and cost (Altendorter &Hubl, 2013). Automotive engineers are concerned with looking at the projects designed for mobility in the future. It enables them to answer questions related to energy efficiency, vehicle dynamics, driving comfort, flexibility, and power intensity. Simulation helps engineers to comprehend how mechatronic correlation can be described understandably. Answering these questions is impossible through measured data and therefore calling for the need for simulation. There is a global call for Sustainability in development: assurance that development meets our needs as society members and that the ability of future generations is not compromised (Hirz & Gulanova, 2017). As far as this is concerned, there is a need for Automotive Industries to produce vehicles with reduced emissions. Therefore, there is a need to rethink the redesigning of automobiles to reduce their emissions.

Strategy

A strategy is a long-term plan that comprises the goals and objectives, products and services, the customers, and the market. A good strategy aligns itself with the business objectives and is essential in business decisions. A well-contained business strategy comprises the SWOT and PESTLE analysis and the goals of the company (Achinas et al., 2017). Now to make improvements to the Automotive Industry as an executive manager, this analysis is very vital. No improvements without the strategy analysis. Other key parts in the strategic analysis are the competition and economies of scale. In this case, SWOT analysis is essential in determining the Strengths, Weaknesses, Opportunities, and threats (Valentin, 2001). It can help the Automotive Executive Manager uncover opportunities and cut off the threats affecting this Industry. Recently, SWOT analysis has been done for the Automotive Industry.

Automotive Industry has shown diverse strengths, according to research. Globally, this Industry has been discovered to contribute to the rising quality of life through safety, mobility, and comfort. It has led to the development of the economy through the creation of employment and creating skills. This Industry has led to innovation and advancement. The company is working to utilize renewable sources of energy and has greatly advanced in technology. The Automotive Industry has varied its products, improved the safety of its products, lowered their costs, and producing products with high emission standards. There is a growth in the market for these industries. The market has now been extended to Asia. Its market is concentrated in America and the European Countries. The production of more luxurious vehicles is also a positive move by the automotive industry.

The Automotive Industry is also faced with weaknesses. These weaknesses are of greater concern in the improvement of this Industry. The weaknesses prevent the company’s success to some extent. The dependent growth rate is one of the weaknesses of this Industry. For instance, fuel-related prices are regulated by the government, the registration period validity is also a problem, and the problems of the entrance of new vehicles. The bargaining power is greatly affecting the industries’ performance due to competition between different companies. Due to increasing domestic reasons like the non-abidance to the rules by the government, many vehicles have ended up been recalled. As a manager, there is a need to focus on these weaknesses to move the Industry to the next level.

There are opportunities available for the automotive industry, which are also important in developing the Industry. The formation of alliances is one of the opportunities available. This is a result of many similar companies coming up. Combining these companies will enable them to get benefits as a result of a reduction in competition. The Industry should change lifestyle and the customer groups because there has been a global economic development. More and more customers are emerging globally as many people are now concerned about their safety and comfort. The market for automobiles has expanded in many countries. Technological advancement is now calling for efficiency. Vehicles with fuel and cost efficiency are likely to arise in the future. The use of renewable sources will also be of benefit to automobile customers. Therefore, this is an opportunity for Automotive Industries to enhance efficiency in their production. This Industry should aim to make profits because they purchase vehicle parts from other manufacturers and suppliers. They should rethink a way of making this idea and make it an investment soon.

The automotive has been recently facing many threats. Analyzing these threats will enable the company to survive this situation (Ranibri et al., 2019). There has been intense competition in the market as more companies are investing in automobiles. More players in the market have led to the sharing of fortunes, making marketing competitive. The world economy is slow due to some factors like unemployment. Diseases like the COVID 19 have also affected the economy. This is a threat to the Automotive Industry as mobility is minimized. The fuel price is a big factor for the customers. It is very important in the market of automobiles. The volatility in prices for fuels has greatly affected this Industry. The bitter truth is that the regulation of these prices is in the hand of the government.

This figure represents the SWOT analysis for the Automotive Industry ((Davis, 2021). From the analysis, this Industry is indeed capable of succeeding over the other companies. The Industry should concentrate on popularizing itself globally, researching renewable sources, and creating consumer confidence, therefore building effective trust for the company.

The PESTLE analysis is also of importance in choosing the best ways to improve the Automotive Industry. This analysis gives an overview of the political, economic, social, technological, legal, and environmental factors affecting the Industry. The Automotive Industry is affected globally by political factors (Farooq, 2019). The common one is the imminent panorama of a no-deal Brexit, such as the association of the Automobile manufacturers with high operation costs and uncertain market. With this in mind, as a manager, there is a need to address this confrontation and perfect the European mainland markets.

Environmental legislation has also had a great impact on the automotive industry. This has made many firms sluggish in entering the automobile industry. Based on a study, South America and Asia have shown a significant rise in the sales made in the previous year. Keeping this in mind, then as a manager, there is a need to make sure that these places showing a positive increase in sales have a continued share of the automobiles to ensure that the company reaps from these areas. The economic issues have also affected the automobile industry. Trade wars have harmed the automotive Industry. US and China particularly have had trade wars in the past years, leading to market decline in these areas. The encouraging news to a manager is that with the levels of income in South America and Africa rising, the market has grown. So as a manager, there is a need to focus on supplying more in these countries since the demand is high.

Socially, the ownership of a vehicle is still a mark of social standing. Currently, due to a reduction in travel costs and zero maintenance, many people have shifted to renting and ride-sharing of vehicles. Therefore, as a manager of the Automotive Industry, there is a need to advocate for more public service-designed vehicles to attract this new trend. Technologically, there is a need to produce vehicles that are of the latest shifts that are more comfortable than the previous.

Legal factors also influence the performance of the Automotive Industry. The Industry has to consider the regulations governing the production of automobiles continuously. It is a relief to the Automobile Industry as many developing countries have passed laws and copyrights enhancing regulations and tax benefits, making it easier to deliver newer models to the customers. With the growing concern for automobiles’ emissions, there is a need for the automobile industry management to move towards electric cars and hybrid cars that are considered friendly to the environment and satisfactory.

Operations

There is a need for effective operations in the management of Automotive Industries. Effective operations ensure that wise decisions are made to ensure that products are produced according to specifications, minimum cost of production, and the amounts produced as scheduled (Lewis & Slack, 2014). The automotive industry operates based on production lines, also known as an assembly. Ransom Eli invented it. Workers are entitled to the production of just one part of the whole product. The working is only on one part day after day until the whole product is produced. Automotive production lines are said to have revolutionized the automotive Industry (Wu & Du, 2019). The problem associated with this method is that it consumes a lot of time, and for one to become a skilled craftsperson, many years of training may be required. There is a problem encountered in making the workers happy as their work may seem repetitive and boring. There is no feeling of ownership of a product. As a manager, there is a need to focus on the key important areas to perfect its operations. There are four key areas of concern in the launch of new vehicles, such as the launch of electric cars (Jacada & Lin, 2016). The workforce is the first key factor to consider in launching a new brand of vehicle. As a manager, it’s mandatory to enrich the workers with the required knowledge in tools and the procedures and processes expected. The knowledge can result from modern technologies. The employee’s awareness will ensure maximum productivity and high-quality products.

A launch of new automobiles should also consider safety. The address on safety is engrossed in three key areas that are behavioral, technical, and procedural Park & Paiva, 2018). As an effective automotive industry manager, I should focus on ensuring the equipment’s effectiveness and ensuring vehicles’ production with safety controllers. Consideration of the equipment present is very vital. Equipment available should be able to make the new products, or if that is not the case, they should be developed to fit the requirements or new ones produced (Caglar & Gencesman, 2016). Production schedules mostly vary as far as the products are different. Therefore, new production processes should be given to the members to ensure that production is efficient.

Innovation

Every company is entitled to develop a series of innovations that can enable it to compete with its competition perfectly. Innovation is defined as ‘ideas, objects, and methods perceived to be new by consumers and users’… (Rodgers, 2003). Innovation hubs the whole process of success by a company. It is a tool for defense in the competitive business world. For better innovations, understanding the market trends is very vital. The innovation must be market-oriented with the provision of better-quality products than before. Innovation makes it possible for firms to create breakthroughs, attract more customers, make their products prominent, beat competition, and improve their shares in the market. The innovative process is compared to a lifecycle. Over a long period, we experience the diffusion of products in the market. The automobile industry has been coming up with innovations since its invention. Innovation is not only based on the products but also the process. The consumer’s reactions to the innovation depend on the level of innovativeness. Some countries like India are still immature in understanding the automobile industry, and therefore it is high time for the automobile industry to create awareness there to win more and more customers.

For a new manager to come up with new innovations for the automotive Industry, there is a need to follow up on this industry’s innovations since it was formed. The most important part of the concern is getting informed on how different customers received different innovations in different countries. With the idea of the customers’ reactions to their innovations, the move to new innovations will be made easy as the manager can get the trend of their products.

Since the the1900s, the automotive industry has been working to provide effective services to its customers (Antoniolli et al.,2017). The journey kicked off with the use of the steam engine. The very first reliable steam engine was developed in 1775 by James Watt. This followed the production of the internal combustion engine, which made the cars cheap. These engines worked on the feedback system whereby each cycle initiated the next, and therefore the cars had to rotate the engine so that their power will run. This process was, however, unpredictable as engines would experience kickback. Hence the automotive Industry had to invent more convenient, predictable, and less tiresome starting engines. The electric starter was developed to curb this problem in England by1896. However, the hand cranks supply was also dominant to help start the car if the battery failed. The 1920s still used the hand cranks. The diesel engine was then developed, which had high thermal efficiency. Rudolf, the inventor of the diesel engine, decided to develop a new engine after being almost killed by a steam engine fueled with ammonia. Ignition, in this case, is based on the mechanical compression of the air-filled combustion chamber to inject the automized diesel ignites.

The anti-lock brakes invented in 1908 have saved many lives. This method is greatly related to the modern system whereby the wheels do not lock during braking. The previous could lock after breaking, which was a source of accidents for many vehicles. Automotive transmission is also one of the great innovations made by the automotive industries, which involves self-shifting transmissions, unlike the previous cars where the changing of gears was done manually (Bernhart &Winterhoff, 2016). This made driving easier as the driver could only control few elements during driving. Power-assisted steering innovation in 1926 helped drivers steer their cars with ease as less effort was required. Electric car engines innovation cannot be exempted. They have made the starting of cars easy and convenient. The catalytic converter invention in the 1970s has improved the air quality. This makes sure that the toxic gases and other pollutants are converted into less harmful forms. The exhaust gases are passed into the converter, where the conversion into less hazardous forms is done. The seat belt invention has saved many lives. The current one is the three-point belt innovation which spreads collisions over the pelvis, shoulders, and chest. The incorporation of the hybrid drivetrain has dramatically improved fuel efficiency. The smart key has served the customers better as it has ensured that ignition is effortless (Hidayat et al., 2019). The traditional metal key is becoming history in the automobile industry. Smart keys allow engines to start with just a press of a button. Some even start with the approaching of the owner. The blind spot mirror, an invention of the automotive industry, has eased spotting between drivers. It is usually attached to the wing mirrors, which helps the driver see what is around them from view.

The above graph shows the value added by the automotive Industry. Each year the automotive Industry works to add value to its products through innovations. The list of automotive innovations is long. With the knowledge of these in mind as a manager, coming up with innovations is easy. This is because the areas that require more innovations are identified, and necessary actions are taken.

The innovation of self-driving vehicles or autonomous vehicles should be considered to reduce the accidents caused by driver’s negligence or fatigue. These vehicles also reduce the traffic on roads. Electric vehicles should be the roots of innovations in the automobile industry. Vehicles that utilize renewable energy sources should greatly be invented to reduce the pollution of the environment from vehicles’ emissions.

Marketing

Marketing comprises all the activities that a company undertakes to promote the buying and selling of commodities and services. Some of the activities involved in marketing include; advertising, delivering goods o customers, and selling these products. A manager should be aware of the market strategies used by this company, where the market is concentrated, and where the market of its products is low. Marketing knowledge is essential for managers to work with the other company members to make plans on new marketing strategies.

The automotive sector partly applies the 4P marketing theory to sell its products. The 4P marketing theory combines all the four basic strategies: price, product, promotion, and place. This strategy guides the automobile companies to succeed in this era of popular marketing, precision, and marketing which is individualized. Currently, this strategy is inseparable from the internet or technology application. Using the internet to facilitate the 4P strategy has decreased costs of popularizing and opening wide markets for their products. The price strategy plays an important role in marketing through identifying which areas to use certain prices and why. The promotion mode is currently done mostly through the internet. Exchanges and displays are done through online automobile websites. The automobile industry promotes cars design, services-related articles, and their way of marketing to build the customer’s confidence. They display hot events to the customers and therefore arousing interest in them. The place strategy is designed to inform the customers on where they can find the automobiles. Finally, the product strategy advertises the products sold by the company. The information about the products offered should be properly presented to ensure that the customers like the products. It is important to note that the 4P marketing strategy currently goes hand in hand with the internet.

The automotive Industry adheres to the five marketing concepts. The marketing concepts focus on increasing sales and maximizing profits through ensuring customer satisfaction. The five marketing concepts include the Production concept, product concept, selling concept, marketing concept, and societal marketing concept. In the production concept, the company builds production volume and brings down the production costs since the cost of producing automobiles is high, otherwise discouraging the customers from buying its products. To favor the idea of production concept that the Customers tend to concentrate on the available and affordable products, the automotive industry produces varied automobiles in terms of prices. The product concept is based on considering the customers’ products demands. The selling concept emphasizes the firms selling of large-scale selling and promotion efforts. The aim is to create sales transactions. The marketing concept aims at satisfying the customers’ needs better than the competitors do. The societal marketing concept aims to deliver value to customers to improve the customer’s and society’s well-being. The automotive industry aims at providing safety and comfort to its members. However, the automotive industry’s adherence to these marketing concepts is with certain considerations to ensure the company’s effective operation.

Electron mobility is an important factor to focus on when discussing marketing strategies. Electron mobility, called E mobility, uses electric-related technologies, communication technologies, information related to vehicles and infrastructures to enhance the electron repulsion of fleets and vehicles Li & Xing, 2017). It is commonly used in Germany. E mobility is currently preferred since it reduces the chances of emission of harmful gases. Electric vehicles do not have a combustion engine which ensures that emissions of greenhouse gases are eliminated. The market for electric vehicles is increasing, and therefore the automotive Industry should focus on producing more electric vehicles than before.

As observed from the graph above, the use of electric vehicles increases year after year in both China and the USA since 2011 ((“graph showing the automotive industry market – Google Search,” 2021). This implies that the companies are now encouraged to produce more electric vehicles.

The Automotive Industry is now covering all parts of the world. China and America are the most leading in automobiles production. However, there Is a need to popularize their products more. As a manager of an automotive company, there is a need for this Industry to increase its market strategies. The Industry should build more trust with customers’ reviews. The company should target the right people in their campaign for automobiles. There is a need to remarket the automobiles by enticing display ads to the customers. The enticements will make them yearn to buy more products from them.

The stock for the vehicles surges annually across the globe. The increase is mainly due to the increase in the market for vehicles. This analysis communicates to the managers to encourage them to produce more and more vehicles yearly.

Finance and Human Resource Management

Finance includes managing money through budgeting, saving, lending, borrowing, forecasting, and investing. Finance management refers to the effective organization, directing, controlling, and strategic planning of finances in a certain organization or institute (Vernimmen et al., 2014). In this case, we are considering finance management in the automotive industry, that is, how finance is effectively managed. Human resource management goes hand in hand with financial management in the automotive industry. Human resource management involves all the processes of employing and training people and compensating them, developing policies related to them, and finally developing strategies for their retention. To be an effective Human Resource Manager, managerial skills are necessary. First of all, one should be a good communicator. He should communicate well with the company members to perfect the company. A good organization for both the employees and the resources is recommended. Emphasis on team building is also important in management. He should be embedded with the leadership skills by listening to the arrears of the company members and essentially of all show his commitment to the company goals.

Management also calls for the ability to deal with changes effectively. In the field of automotive, many changes appear with time. People change in the preference for automobiles, and therefore the manager should be keen to take action with immediate effect to avoid losing the customers. Managers should have domain knowledge on what they are managing. In managing the automotive Industry, you should have enough knowledge of automobiles. As a result of this knowledge, one will use their potential to develop the Industry adequately.

Conclusion

Automotive Industry is very vital in the economy of the whole world. The Industry should have good management to keep development programs on track. With the analysis of the market, innovation, and the operations of this Industry, it is true to conclude that the Industry is not badly off. However, the company needs to come up with more innovations to fit the current world. Even though this Industry is spread adversely through the world, the company needs to popularize its products further to extend the market. Management is very crucial in the success of any company. More prominently, the automotive industry should aim to merge with companies similar to it, making it counter the growing competition with these firms.

References

Abduaziz, O., Cheng, J. K., Tahar, R. M., & Varma, R. (2015). A hybrid simulation model for green logistics assessment in automotive industry. Procedia Engineering, 100, 960-969.

Davis, A. (2021). Automobile Industry SWOT Analysis 2021. Retrieved 15 August 2021, from https://swothub.com/automobile-industry-swot-analysis/

Google.com. 2021. graph showing the automotive industry market – Google Search. [online] Available at: <https://www.google.com/search?q=graph+showing+the+automotive+industry+market&sxsrf=ALeKk03OP1lGljXqNS_sRh5bQ3-ygLeayQ:1629012881390&tbm=isch&source=iu&ictx=1&fir=1zH73XVOIw97rM%252CoCsJxQ1S5TNAjM%252C_&vet=1&usg=AI4_-kQHyqc3zshHZZSgJ2lztSM2UH4YrQ&sa=X&ved=2ahUKEwiruYTxwbLyAhUH8BoKHdqTDqMQ9QF6BAgLEAE> [Accessed 15 August 2021].

Li, S., Tong, L., Xing, J., & Zhou, Y. (2017). The market for electric vehicles: indirect network effects and policy design. Journal of the Association of Environmental and Resource Economists, 4(1), 89-133.

Mahut, F., Daaboul, J., Bricogne, M., & Eynard, B. (2017). Product-Service Systems for servitization of the automotive industry: a literature review. International Journal of Production Research, 55(7), 2102-2120.

Valentin, E. K. (2001). SWOT analysis from a resource-based view. Journal of marketing theory and practice, 9(2), 54-69.

Vernimmen, P., Quiry, P., Dallocchio, M., Le Fur, Y., & Salvi, A. (2014). Corporate finance: theory and practice. John Wiley & Sons.

Kassen, S., Tammen, H., Zarte, M., & Pechmann, A. (2021). Concept and Case Study for a Generic Simulation as a Digital Shadow to Be Used for Production Optimisation. Processes, 9(8), 1362.

Altendorfer, K., Felberbauer, T., Gruber, D., & Hübl, A. (2013, December). Application of a generic simulation model to optimize production and workforce planning at an automotive supplier. In 2013 Winter Simulations Conference (WSC) (pp. 2689-2697). IEEE.

Hirz, M., Rossbacher, P., & Gulanová, J. (2017). Future trends in CAD–from the perspective of automotive industry. Computer-Aided Design and Applications, 14(6), 734-741.

Lewis, M., & Slack, N. (2014). Operations strategy. Pearson Education.

Wu, L. F., Huang, C., Huang, W. C., & Du, P. L. (2019). Aligning organizational culture and operations strategy to improve innovation outcomes: An integrated perspective in organizational management. Journal of Organizational Change Management.

Jagoda, K., Kiridena, S., & Lin, X. (2016). Alternative operations strategy processes: do they matter?. Production Planning & Control, 27(9), 740-752.

Park, C. L., & Paiva, E. L. (2018). How do national cultures impact the operations strategy process?. International Journal of Operations & Production Management.

Caglar Gencosman, B., Begen, M. A., Ozmutlu, H. C., & Ozturk Yilmaz, I. (2016). Scheduling methods for efficient stamping operations at an automotive company. Production and Operations Management, 25(11), 1902-1918.

Antoniolli, I., Guariente, P., Pereira, T., Ferreira, L. P., & Silva, F. J. G. (2017). Standardization and optimization of an automotive components production line. Procedia Manufacturing, 13, 1120-1127.

Achinas, S., Horjus, J., Achinas, V., & Euverink, G. J. W. (2019). A PESTLE analysis of biofuels energy industry in Europe. Sustainability, 11(21), 5981.

Ranjbari, M., Esfandabadi, Z. S., & Scagnelli, S. D. (2019). Sharing economy risks: Opportunities or Threats for insurance companies? A Case study on the iranian insurance industry. In The Future of Risk Management, Volume II (pp. 343-360). Palgrave Macmillan, Cham.

Bernhart, W., & Winterhoff, M. (2016). Autonomous driving: Disruptive innovation that promises to change the automotive industry as we know it. In Energy Consumption and Autonomous Driving (pp. 3-10). Springer, Cham.

Hidayat, R., Winangun, H. S., Lestari, N. S., & Ramady, G. D. (2019, September). Development of BTS Site Smart Key Based on Internet of Things. In 2019 International Seminar on Application for Technology of Information and Communication (iSemantic) (pp. 507-512). IEEE.