Generally, the automotive industry refers to the production, design, development, marketing, selling, and servicing of motor vehicles. The automotive industry is one of the world's largest industries by revenue. The sector comprises a wide variety of companies.
During the first two decades of the twentieth century, the American automobile industry was dominated by three Detroit-based companies: Ford, General Motors, and Chrysler. These companies accounted for nearly 80 percent of the industry's output.
These firms were the first to develop mass-production techniques. Using this technique, they could assemble motor vehicles with little capital investment and sell the finished car for cash.
The United States subsequently became a global automobile manufacturing leader. Its mechanization of industrial processes, low labor costs, and lack of tariff barriers made it possible for American automobile companies to compete with those in Europe and Japan.
In the early decades of the twentieth century, the United States was a pioneer in mass automobile manufacturing. Its pioneer automobile manufacturer had to determine what to manufacture and solve financial and technical problems.
Electrification of the automotive industry is a trend that is gaining ground as automakers are exploring electrification plans to maintain a competitive edge in a transitioning market. A combination of policy mandates and consumer interest has resulted in Europe reaching an EV share of eight percent. In the United States, the trend has been slow.
While some consumers are still unwilling to purchase a car powered solely by batteries, the demand for EVs continues to increase. In China, the country with the highest rate of EV penetration, consumers will continue to drive more EVs than ever before. By the end of 2020, the number of EVs on the road will have increased to more than 40 percent.
With a wide range of vehicle types, EVs are available for consumers. While some vehicles operate solely on batteries, others utilize an electric motor and an internal combustion engine (ICE). The EV market is booming in several countries, but the United States is still the leader in overall EV sales.
Increasingly, automotive OEMs rely on upstream first-tier suppliers to deliver competitive advantages. A new business model is needed to accommodate these changes. The automotive supply chain is becoming increasingly complex, requiring greater flexibility and adaptability.
Upstream offers a variety of benefits to automotive manufacturers, including improved visibility and tracking of component supply and detecting and mitigating risks during component development and post-production. Upstream provides a robust suite of mobility cybersecurity solutions, including threat intelligence and vulnerability mapping correlated to vehicle models and components.
Upstream also allows auto manufacturers to collaborate with downstream suppliers and logistics providers. OEMs can quickly adjust logistics and freight combinations through a digital supply network, reducing disruptions. Upstream's threat intelligence also enables automakers to determine the root cause of DTCs in vehicles and detect counterfeit products.
During the disruptive period in the automotive industry, manufacturers and suppliers will need to consider how to optimize capital allocation decisions and reshape their businesses to meet changing consumer demand. This will require a strategic response incorporating real-time data processes that accelerate time to market and provide differentiated customer experiences.
To avoid stranded assets, automotive manufacturers and suppliers must balance innovative offerings and existing ICE-related vehicle components. They will also need to focus scarce resources on elements of their businesses that differentiate.
Disruptive innovations typically originate in low-end markets and take hold in existing value networks. These technologies must significantly reduce energy and waste and result in a significant reduction in labor and materials. Usually, the technology has a high degree of performance that outpaces incumbents.
Despite the auto industry's significant role in the economy, its employment impact is far from strong. Although the sector supports nearly eight million jobs in the U.S., many workers have seen their jobs diminished over the years.
Auto manufacturing and assembly plants have been subject to various challenges. Many have lost workers through absenteeism and production line issues. Automakers have tried to remedy this problem by creating safer work environments and improving worker health. The industry is also experiencing strong growth in automation. However, the sector is cyclical, and changes in economic development can affect the cost of raw materials and the total demand for cars.
The automobile industry contributes to the nation's GDP, with total automaker revenues reaching more than $65 billion in 2008. Combined with tax revenues, these revenues have supported many government functions, such as building roads and infrastructure. These investments are crucial to helping job quality.