The U.S. Automotive Manufacturing Industry Essay

Introduction

The automotive manufacturing industry in the United States has been going through a major transition following the emergence of electric and hybrid cars. Sales by fuel type show that petrol-powered cars are the most sold at 47.5%, followed by diesel cars at 28%. Hybrid cars come third at 11.9%, electric cars at 10.5%, and those that use alternative fuels at 2.1% (The European Automobile Manufacturers’ Association, 2021).

The statistics show that 75.5% of cars manufactured in the country are gasoline-powered vehicles. However, cars using clean energy are rapidly gaining popularity. The growth of these new cars is propelled by the constantly increasing cost of gasoline and the need to protect the environment from massive pollution and climate change. The number of clean energy cars will soon surpass that of gasoline cars.

Current Automotive Industry Trends: Trends Toward Different Types of Motors

The statistics show that in 2015, almost 100% of cars being manufactured and sold in the United States were ICE cars. For over 100 years, the world has relied fully on gasoline to power cars. However, the trend started changing in 2015 when EV cars started gaining popularity. By 2022, the percentage of ICE cars had dropped from almost 100% to 75% (Evarts, 2019). It is expected that EVs will continue to become more popular in the industry in the years to come. By 2035, the projections show that the percentage of EV cars will be equal to that of ICE cars. By 2040, the majority of vehicles will either be hybrid or electric vehicles.

Trends in Customer Demands

It was also necessary to assess the current automotive industry trends in terms of customers’ preferences. Statistics shown in the figure above show that silver cars are the most popular, at 25% of all the cars made (Roberts, 2022). Black comes second, at 23% of the cars, while white is the third most popular color. Other common colors include grey, blue, red, and beige. Yellow and green are the least popular colors (Graham, 2021). Extra features that customers consider are height control, availability of sunroof, rear and side-view cameras, and heated seats among others.

Trends in the Body Types of Vehicles Sold

When assessing the current automotive industry trends, the researcher considered it appropriate to determine the level of popularity in terms of the body types of the cars sold. According to (), the popularity of the body type of a car is defined by factors such as the functionality of the car, accessibility of specific areas, comfort in the car, and carrying capacity among other factors. As shown in the statistics above, almost half of the vehicles sold in the United States (49.5%) are multipurpose vehicles (MPVs) or sport utility vehicles (SUVs) (JATO Dynamics Limited, 2020). Trucks and vans such as the Ford Ranger also remain very popular because they can be used for various functions. The statistics show that sedans are also popular, especially the Toyota models.

Expected Growth Areas

The automotive industry has gone through a massive transformation in the last two decades. According to Pigato et al. (2020), about a decade ago, almost all the cars were gasoline-powered. However, that has been changing thanks to companies such as Tesla which has remained committed to the manufacture of electric cars. The volatile international price of gasoline has seen the demand for electric and hybrid cars increase considerably. The fact that these cars are also friendly to the environment has increased their popularity in the country and around the world. Tesla’s sales have increased significantly over the last three years. New competitors are also emerging in the electric car industry. Tesla has introduced electric trucks that are expected to cover long ranges before the need for them to be recharged. The trend shows that competition in the electric car industry is likely to get stiffer.

Sales by Type of Products

The future of electric vehicles in the United States and the global market is bright. As shown in the figure above, in 2015, only 0.65% of the total cars sold in the United States were electric vehicles (McDonald, 2020). However, that is no longer the case as the demand for these products continues to increase. By 2017, over 1% of the vehicles sold in the country were EVs. The number has been growing and by the end of 2021, almost 4% of the cars sold were electric cars. If this trend is maintained, then in less than 10 years, the majority of cars in the country will be electric-powered. The amount of cars manufactured often depends on the demand. As the cost of gasoline continues to increase, it is likely that the demand for EVs will increase more rapidly than had been anticipated.

The growing trend towards hybrid and electric cars is caused by various factors. According to Covarrubias and Ramírez (2020), one of the reasons why customer demand for electric cars is growing is the low cost of maintenance. While gasoline cars require regular servicing that involves changing the oil, air filter, and spark plugs, electric cars do not require such regular services. It means that the cost of maintaining an electric car is significantly lower than that of traditional cars. Tesla also explained that during the breaking process, kinetic energy is used to further charge the car batteries, which reduces the wear and tear of the breaks. It means that the braking system of these cars lasts for a significantly long time. It has also been explained that the cost of running an electric car is low, especially at this time when the price of oil is on the rise. Customers are also becoming conscious about the environment and are more attracted to cars with the least amount of pollution.

Summarizing the Collective Data About Both Industries as a Whole

At the moment, the majority of cars sold in the local and international markets are gasoline-powered vehicles. However, the trend is expected to change soon as the tastes and preferences of customers in the industry continue to change. According to Giannopoulos and Munro (2019), players in both industries have acknowledged that electric cars have a huge potential in the market. It explains why many large car manufacturers that have traditionally produced gasoline cars are now introducing hybrid and electric cars into their portfolio. Ford Motors, Toyota, and Mercedes Benz are some of the traditional car manufacturers that are currently producing hybrid cars and investing in electric cars. The current data show that the world will soon edge out gasoline-powered cars, just like steam engines were eliminated on the rail and road tracks.

Decision-Making Models: The Rational Model

When making a decision, it is advisable for one to use a specific model that defines specific steps to be taken. One such model is the rational decision-making model, which identifies 7 steps to be followed (Chi, 2018). The first step is to define the decision situation. It involves understanding the nature of the problem to be solved. The next step is to identify the decision criteria that should be followed. The team will allocate weights to the criteria based on what should be prioritized to help solve the problem. The team will then identify the possible alternatives, which will then be evaluated. The evaluation process will lead to the selection of the best alternatives. The team will then be expected to implement the chosen alternative and assess the outcome.

Intuitive decision is another approach that a leader can use to make critical decisions. As shown in the figure above, it is based on a meditative mind where one relies on personal beliefs and perceptions to make a decision as opposed to some specific rigid patterns (Kriya, 2022). The decision will be based on one’s knowledge of an issue and personal judgment about the best steps to be taken. One’s decision will depend on their experience on a given issue. It requires a relaxed mind for one to make a rational decision. This model should be used by highly experienced leaders whose intuition is based on historical events.

The third decision-making model identified in this study is the recognition primed model. As shown in the figure above, using this model requires a leader to start by experiencing the situation (Williams & Jackson, 2019). The experience will make it possible to understand the nature of the problem and how best it can be managed. The leader will then analyze the situation, taking into consideration specific issues that are affected. These first two steps enable a leader to understand the right approach that should be taken to address the problem. The next step is to implement the decision that is considered most effective in addressing the identified problem. The last stage in this model is the recognition-primed decision model, where the decision made is based on the experience and analysis of the situation.

Conclusion

The rational model was chosen as the most appropriate of the three models analyzed in this study. The model is the most desirable because it is easy to determine why a leader decided to take a specific action. When there were several options to choose from, one can easily understand why one approach was considered more desirable than the rest. The method also eliminates emotions and personal biases from the decision-making processes (Longenecker et al., 2015). One has to have specific criteria to follow when making choices and decisions. It means that personal preferences and dislikes will not influence the decisions and choices of a leader. Sometimes they may be forced to select what they do not prefer as long as the decision will be in the best interest of the company. The model was chosen because it can be replicated easily in different settings and organizations.

References

Chi, C. (2018). Rational decision making: The 7-step process for making logical decisions. Hubspot. Web.

Covarrubias, A., & Ramírez, M. (2020). New frontiers of the automobile industry: exploring geographies technology and institutional challenges. Palgrave Macmillan.

Evarts, E. (2019). Report: EV sales will surpass gas-powered models in 2037. Green Car Report. Web.

Giannopoulos, G. A. & Munro, J. F. (2019). The accelerating transport innovation revolution: A global case study-based assessment of current experience cross-sectorial effects and socioeconomic transformations. Elsevier.

Graham, J. D. (2021). The global rise of the modern plug-in electric vehicle: Public policy innovation and strategy. Edward Elgar Publishing.

JATO Dynamics Limited. (2020). American customers’ tastes continue to shift as sales plateau again in 2019. Media Archive. Web.

Kriya, S. (2022). Intuitive decision-making in business & management. The Art of Living. Web.

Longenecker, C., Sussman, E., Roberto, M., & Hamilton, R. (2015). Critical business skills for success. The Teaching Company, LLC.

McDonald, L. (2020). Forecast: 2021 US EV sales to increase 70% year over year. Clean Technica. Web.

Pigato, M., Black, J., Dussaux, D., Mao, Z., McKenna, M., Rafaty, R., & Touboul, S. (2020). Technology transfer and innovation for low-carbon development. World Bank Group.

Roberts, G. (2022). DuPont announces world’s most popular car colors. The Philadelphia Inquirer. Web.

The European Automobile Manufacturers’ Association. (2021). Fuel types of new cars: electric 10.5%, hybrid 11.9%, petrol 47.5% market share full-year 2020. ACEA. Web.

Williams, A. M. & Jackson, R. C. (2019). Anticipation and decision making in sport. Routledge.