Automotive Industry/ Economic Theory - 2114 Words

Automotive Industry ECONOMIC THEORY Automotive Industry In the automotive industry there are many factors and policies that affect the automotive industry and its performance. The following topics and their impacts on the automotive industry are as follows: • Supply and Demand (Sales) • North American Free Trade Agreement (NAFTA) • External Affects • Labor Supply and Demand • Federal Policies • Economic Influence Supply And Demand High competition from foreign car imports causing US manufactures to seek deals with lower cost overseas companies. This movement is in effort to reduce manufacturing costs of domestic vehicles in order to stay competitive with foreign manufactures. By reducing manufacturing costs, domestic manufactures are†¦show more content†¦Car makers today are forced to find better and cheaper ways to produce vehicles to persuade consumers in their direction. It is this increased competition that allows consumers to select vehicles that are of higher quality and at lower prices. Increasing global competition is changing the environment facing most companies today. As trade barriers fall and transaction costs decline, new global competitors are entering previously more isolated domestic markets. In response to this intensified competitive pressure, local companies are pushed to enhance performance by innovating and adopting process and product improvements. (MCKINSEY GLOBAL INSTITUTE [MC KINSEYGLOBALINSTITUTE], 2005, pg. 1) The effect this has on the economy is that with vehicles being priced to persuade buyers, more money is being poured into the economy from vehicles sales. Another benefit is that of increased safety standards for todays vehicles. Vehicles today are much safer then they were 10 years ago, with this increase in safety standards consumers are much safer on the roads. Negative Externalities Probably one of the biggest negative externalities of the automotive industry on society today is that of vehicle emissions. Gasoline powered vehicles account for 95% of light-duty vehicle sales. Gasoline-powered vehicles emit carbon monoxide, nitrogen oxides, and hydrocarbons, otherwise referred to asShow MoreRelatedEssay about The Australian Automotive Manufacturing Industry 1069 Words   |  5 PagesThe Australian automotive manufacturing industry has experienced substantial structural change (â€Å"Productivity Commission†, 2014). This has been in response to changing market and competitive conditions overseas and in Australia, and reduced levels of assistance from governments (â€Å"Productivity Commission†, 2014). Following similar decisions by Holden and Ford, these factors have led to Toyota’s decision to abandon manufacturing in Australia by 2017. AMWU National Vehicles Secretary Dave Smith saidRead More2. Literature Review. 2.1 Introduction. 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