7:30 AM
Collin H
General Motors again took the top spot in the automobile industry as the number one global auto company, in terms of autos sold. In 2009, Toyota stripped GM of the title it previously held for years (1). Toyota took the number two spot in the wake of its recalling of 8.1 million cars and its slashing of production due to the March earthquake in Japan. However, it wasn't just the misfortune of another firm that put GM on the top.
One of the driving forces behind GM's position is its sales in emerging markets, specifically those in China. General Motors alone sold 1.27 million autos in the China in the first half of 2011. Bolstering sales in China is GM's Buick brand, one that was nearly on the chopping block due to lagging sales in the U.S. In 2009, GM sold four times as many Buicks in China than they did in the U.S. In fact, the Buick brand and its developments within the industry helped GM convince the federal government that with the bailout funds they received the company could eventually turn a corner (2). China now stands as the premier market for the Buick brand. Buick models and new technology within current models often appear in China before they appear in the U.S. market (3). Expanding the Buick brand in China and its other brands in emerging markets have helped put GM on top.
While GM leads in sales worldwide, there is a different leader in terms of brand equity. Toyota, despite its hardships that caused it to drop to number two in terms of sales, holds the highest brand value of any global auto maker. The BrandZ Top 100 Most Valuable Global Brands study ranked car makers by combining financial reports with consumer opinions. BMW previously had the most valuable car brand in 2010. Toyota's brand value in 2011 is estimated at $24.2 million (4). General Motors was not within the world's 10 most valuable car brands, according to the BrandZ study (5).
Sources
(1) http://www.dailyfinance.com/2011/08/05/gm-reclaims-crown-as-no-1-global-car-company/
(2) http://www.msnbc.msn.com/id/37361381/ns/business-autos/t/buick-may-owe-its-survival-china/#.TpzarGb_kcg
(3) http://content.usatoday.com/communities/driveon/post/2011/05/gm-sells-3-millionth-buick-in-china/1
(4) http://www.egmcartech.com/2011/05/09/toyota-overtakes-bmw-as-most-valuable-global-car-brand-in-2011-brandz-ranking/
(5) http://www.millwardbrown.com/BrandZ/Default/Categories/cars.aspx
(Image) http://www.automotorblog.com/gm-china-stands-to-sell-more-than-gm-usa/
3:10 AM
Collin H
Gone are the days when auto makers can rely on marketing or strong fads to get cars off the lot. During the recession and in its wake, car buyers are making rational, price-based decisions that are influenced largely by gas prices. Auto makers have slimmed back their product lines in the interest of fuel efficient cars. Interestingly enough, consumers did not wipe out supply of hybrid cars during the recession. In April 2009, sales of Toyota's hybrid, Prius, fell 61.5 percent (1). But by February 2010, sales of all Toyota's hybrids rose 50 percent compared with sales from the previous year (2). This signals that gas prices alone do not determine buying trends in the industry. Consumer confidence in the overall economy greatly influences buying patterns for large purchases such as autos.
Sales are also influenced by which areas of the economy show more growth. If the home market rises, demand for construction and other services like landscaping also rises. This in turn gives construction, landscaping, and other firms more buying power in terms of commercial vehicles and light trucks. In February 2010, sales of light trucks were higher than sales of consumer autos. Consumer autos held in the edge, however, in the same period of 2009.
Consumer trends can be tough to predict within the auto industry. Auto makers face the challenge of having to know what buying trends will exist in two to five years. New autos that meet market trends and demands cannot be produced overnight. Time, the economy, and gas prices will determine the future rules of the road in terms of buying trends.
Sources
(1) http://www.autotropolis.com/krome-on-cars/auto-sales-figures-and-consumer-behavior.html
(2) http://www.csmonitor.com/Business/2011/0301/Auto-sales-rise-but-gas-prices-may-test-Detroit-recovery
(3) http://gas2.org/2008/06/25/are-automakers-to-blame-for-consumer-car-buying-trends-auto-alliance-weighs-in/
(4) http://gasbuddy.com/gb_retail_price_chart.aspx
(Image) http://blogs.internetautoguide.com/6301538/auto-news/how-to-buy-a-car-in-todays-economy/index.html
7:00 AM
Collin H
Every industry has seen its scandals, and with those scandals comes an obligation for companies to do what is ethical. Many times, companies fall down on this in order to salvage their public image and bottom line. The auto industry is no stranger to ethical dilemmas that have plagued America's corporate landscape.
One ethical dilemma that faces car makers every day is safety versus cost. Auto companies are always developing newer cars, which raises an important question: in designing a new car, what will the balance between safety and cost be? Certainly, there is a demand for inexpensive cars in America and around the world. But there's also an increasing demand for safe cars. A car cannot be one hundred percent safe if cost-cutting measures in its design and production are taken. Auto makers have an obligation to find the perfect balance between low-cost and safe in order to protect lives.
Another dilemma facing the auto industry is that of outsourcing the production of certain components. Toyota faced whirling backlash in 2010 for its recall of over 2.3 million cars to fix faulty gas pedals that were reportedly causing rapid and unexpected acceleration. Looking at the incident today, Toyota made a bad, perhaps unethical decision to outsource the production of the gas pedals. Had Toyota known at any time during its relationship with CTS, the producer of the pedals, that shortcuts were taken in order to meet a certain price or quantity they set, then Toyota undoubtedly made an unethical decision. Auto makers sometimes take risks that could result in ethical dilemmas when outsourcing production of certain components for their cars.
Sources
(1) http://www.usatoday.com/money/autos/2009-05-19-auto-safety-small-cars_N.htm
(2) http://www.thetruthaboutcars.com/2010/02/why-toyota-must-replace-flawed-cts-gas-pedal-with-superior-denso-pedal/
(Image) http://www.fortworthinjuryattorneyblog.com/toyota_recall_090930_mn.jpg
9:18 PM
Collin H
The United Auto Workers, a union which represents more than 39,000 auto workers in North America (1), is reworking labor contracts with Ford, General Motors, and Chrysler. A tentative agreement reached with GM on Friday will help shape similar agreements with Ford and Chrysler. GM was chosen as "the lead company" because the UAW felt GM was most likely to meet the UAW's terms (2).
The agreement with GM will not become an official contract until all 45,800 UAW workers at GM vote to ratify it. The agreement secures several items on the UAW's wish list that were not included in previous contracts. This contract is also the first new contract to be reached since GM recieved a federal bailout. The new terms include raising wages $2 to $3 for entry level workers and reopening a plant in Tennessee which has been left in the dark as a part of GM's restructuring plan. GM also included terms in the agreement that link employee bonus checks to vehicle quality (3).
An agreement with Chrysler has yet to be reached, partially caused to disagreements and accusations between Chrysler's CEO and the UAW president. Negotiations will resume this week. Ford has been waiting to see the terms of the GM and UAW agreement before it finalizes its own agreement.
While GM promised to restore previously lost jobs in its agreement, Ford may not be able to commit to similar action. GM has a larger workforce within North America and its factories have been operating at a higher capacity than Ford's factories.
The problem with Chrysler's agreement may be matching a raise by Ford in entry level workers' salaries. Chrysler has more entry level workers than Ford, making it more costly for Chrysler to raise that group's wages.
Sources
(1) http://www.uaw.org/node/39
(2) http://online.wsj.com/article/SB10001424053111904194604576579123890851828.html?mod=WSJ_auto_LeadStoryCollection
(3) http://online.wsj.com/article/SB10001424053111903927204576574693025239016.html?mod=WSJ_auto_IndustryCollection
(Image) http://www.sodahead.com/united-states/should-politicians-wear-their-sponsors-patches/question-
3:42 PM
Collin H
Welcome to Workings of the Auto Industry! In this blog, we'll explore what drives the auto industry. The auto industry is one of the most important and largest industries in the global economy. Last year, over 77 million vehicles were produced around the globe! (1) Throughout this blog, you'll be able to explore everything from government recalls and regulations to manufacturing and marketing. Get on the right track to learning about the auto industry!
General Motors again took the top spot in the automobile industry as the number one global auto company, in terms of autos sold. In 2009, Toyota stripped GM of the title it previously held for years (1). Toyota took the number two spot in the wake of its recalling of 8.1 million cars and its slashing of production due to the March earthquake in Japan. However, it wasn't just the misfortune of another firm that put GM on the top. 
