The Problems in Car Industry in the Developed Countries Essay

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Updated: Jan 10th, 2024

The car industry has proven to be an important segment of the economies in the developed and the emerging countries. The different countries involved in car making offer different models which compete in the international markets. In the modern day, manufacturing cars is considered an important milestone in the process of development.

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However, due to the high capital requirements in the production of cars, a large market size is often required for any car maker to break even and become profitable in the already competitive environment. Notably, the industry incorporates wide range of other related industries.

The different car parts are manufactured by different firms and delivered to the central assembly plants which assemble and sells the ready automobiles. This industry is also significantly affected by the occurrences in the oil industry due to the need to use fuel for driving. These being the case, any significant disturbances in the related industry such as oil have the potential to affect the industry.

There are several competitive elements which characterize the industry. The most important is new technological development. Car makers are constantly employing new technologies as a way o maintaining competitiveness as well as meeting the evolving needs of modernization. Secondly, players in the industry focus on establishing strong brands to secure their market.

Also mergers and joint ventures are employed as strategies to rationalize operations and improve on efficiency. More importantly, the industry disregards international boundaries. This is witnessed by the success of Japanese car makers in the American soil (Profile of auto industry, par 2-7).

Over the past few years, the car industry has been faced with unprecedented challenges. The ongoing global financial crisis has dealt a huge blow to the car industry which is highly dependent on the credit funding. Since late in the year 2008, car sales have drastically dropped.

In the year 2008, the estimated number of new car sales was 52 million a significant drop from the 55 million recorded in 2007. More importantly, the crisis led to a major reorganization and the rearrangement of the global car industry.

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Major car makers such as General Motors were in the brink of collapse, while Chrysler actually filed for bankruptcy in mid 2009. In Europe, mergers and acquisition became the only solution to car makers facing major challenges in dealing with the crisis (Automobiles and Trucks Overview, par3-5).

International regulation of the car industry is slowly becoming an important aspect in the industry. More and more countries are adopting regulation on the amount of carbon emissions allowable from vehicles. Concerns for the environment outstrip most other developments in the car industry.

Within the past few years, many car manufacturers have developed very fuel efficient models which have performed extremely well in the market. In addition, the use of alternative fuel has developed a new market in the car industry. Toyota and other Asian car manufacturers have gone commercial with car electric cars which have proven popular even in the western car markets.

The major lesson for car makers as a result of the financial crisis is the importance of improving efficiency in the manufacture of cars. High fuel consuming vehicles with unnecessarily big engines have no place in the modern car market (The car industry, par3).

On top of the environmental concerns as a result of fuel consumption, there are challenges relating o the disposal of old vehicles. Most of them are sold out from the developed nations to the developing nations where they are used and become scrap. There is a need to improve the use of recyclable materials as a further measure to enhance environmental conservation.

In the recent months though, a new challenge concerning quality levels in the world top manufacturer Toyota which is causing anxiety in the car industry and has the potential to change the perception of the industry. Millions of cars have been recalled for improvements. It is yet to be understood what the exact effects will be to the entire industry.

Works Cited

Automobiles and Trucks Overview. Plunkettresearch. 2010. Web.

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Profile of auto industry. Allbusiness. 2007. Web.

. Bbcnews. 2009. Web.

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IvyPanda. 2024. "The Problems in Car Industry in the Developed Countries." January 10, 2024. https://ivypanda.com/essays/car-industry-essay/.

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IvyPanda. "The Problems in Car Industry in the Developed Countries." January 10, 2024. https://ivypanda.com/essays/car-industry-essay/.

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