SEMA 2011

SEMA (the Specialty Equipment Market Association) held its annual SEMA Show in Las Vegas from November 1st through 4th this year. (1)

In recent posts, we've talked about entrepreneurship in the auto industry and some of the difficulties faced by entrepreneurs trying to enter the market. Effective marketing can be a difficult task for an entrepreneur in any industry, but especially one dominated by several well known brands. One traditional method to spread the word about a new product or business is to buy space at a trade show. SEMA Show is an annual show that features small specialty car makers, parts makers, custom tuning shops, and other companies focussed on highly specialized cars rather than equipment for the mass market. Unlike most auto industry trade shows which focus on major corporations, small companies and individuals present their products with GM or Toyota. (2)


Phoenix-based Local Motors has created buzz at SEMA events since the 2008 show. (3) Local Motors is company with a unique product called the Rally Fighter that fits a very specific need: A purpose built vehicle for the Baja 1000 race and similar events. (4) It also has a very unique value proposition: The vehicle is designed and built by a method called crowd-sourcing, which means potential customers from around the world contributed which components should be used and selected a design from several entries during a design contest. The company also sells their build experience: included in the price of the vehicle, the owner builds the vehicle and learns how to drive it (5).


While major companies tend to make major announcements at more mainstream shows like the upcoming Tokyo Auto Show, small companies like Local Motors are able to connect directly to those interested in their product by going to targeted shows like SEMA.


(1) http://www.autoblog.com/sema/
(2) http://www.autoblog.com/2011/11/02/chevrolet-camaro-concepts-storm-the-general-motors-booth/
(3) http://blog.local-motors.com/2008/11/reflections-on-sema.html
(4) http://jalopnik.com/5398864/local-motors-rally-fighter-the-first+ever-creative-commons-car
(5) http://www.rallyfighter.com/buy-a-rally-fighter
(image) https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaX6PCoRWtsV_-sbvVSoBHDE4q6ObJ7eVU9kEFXZihnMoFKy9Tx3WZ9ma2NoTDNpGKGksSitOjS-rWQASVFXrvMDRqS6C4sHmGdL8L_7GcfpkPJ_PgFXKA9j9bhmSFo9LQqk4BOuB8-5yN/s1600/1841.parker.race.still.jpg

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Influential leaders of Toyota

Toyota is known for keeping the family tradition when changing an important post in the company. Since 1937, when the company was founded by Kiichiro Toyoda, we see that the main positions in the company has been passed down from generation to generation.

I would like to mention the name of Shoichiro Toyoda, who was President (1982-1992) and also Chairman of TMC (1992-1999). Many people consider him a genuinely global manager, mainly because he approved and furthered the expansion of Toyota's production system into the United States, and he approved the development of the Lexus and the Prius hybrid (1). After these merits, when he opened the door for Toyota all over the world, he was considered Japan's leading voice on international cooperation and globalization in the early 2000s (1). 

Now we can notice an interesting case dealing with the 2009–2011 Toyota vehicle recalls.

Safety defects occured in the company's car and have been linked to the deaths of 39 Americans. Also, several vehicles experienced unintended acceleration. Currently, the President and CEO of Toyota Motor Corporation, Akio Toyoda, expressed his apology for the deaths of people and proclaimed that he, more than anyone, wish for their customers' cars to be safe. On the other hand he also mentioned: "I myself, as well as Toyota, am not perfect" (2). We'll see how the negotiations turn out in the U.S. Congress.

Sources:
(1) http://www.referenceforbusiness.com/biography/S-Z/Toyoda-Shoichiro-1925.html

(2) http://abcnews.go.com/Blotter/toyota-ceo-akio-toyodas-testimony-congress/story?id=9924855#.Tr1TD3KoFqI 
Image: http://images.businessweek.com/ss/07/02/0222_toyota/source/2.htm

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Entrepreneurs in auto service industry

In recent posts, we were mainly devoted to automobile companies, their profits, supply and demand, international attitudes, promotion and popularity of the brand, etc. However, it is important to mention that it is not just about to selling or buying cars, it´s also about how to keep it in shape . I found some interesting stories of entrepreneurs who started their small business in the last century and who are progressing in its development so far.

One of these companies is Ziebart International Corporation that is the worldwide leader in vehicle appearance and protection services (1).The company was found in 1954 by Kurt Ziebart, a German mechanic, who developed a process to stop corrosion and opened the first Ziebart store in Detroit (2). The company began franchising in 1963 and has grown to a network of approximately 400 locations in 30 countries (1). The main reason of their success is probably the fact that they focuse on three main sources of profit: professional detailing, window tint and protection.

 

Another successful entrepreneurship we can see in the founding of Big O Tires. A franchise is now based in Englewood, Colo and was established in 1962 by a group of independent tire dealers. "Each Big O center offers a variety of auto repair services, including brake, alignment and front-end repair, as well as tire and ride control products" (3). Like earlier mentioned company, Big O Tires has grown into one of America's largest retail tire franchisors, which is based in 21 states (4).

To become a  prosperous founder of a company, an entrepreneur must show discipline and calmness when the business fails. He must also be prepared for the tolerance of risks and show great attention to details. As an entrepreneur doesn´t have a boss to keep him at work when necessary, he must find his own balance (5).

Sources

(1) http://www.ziebartinternational.com/about/

(2) http://www.entrepreneur.com/slideshow/198048#2

(3) http://www.entrepreneur.com/slideshow/198048#10

(4) http://www.bigotires.com/About-Big-O-Tires

(5) http://www.lifehack.org/articles/management/5-key-characteristics-of-a-successful-entrepreneur.html

(Image) http://technorati.com/business/article/characteristics-of-successful-entrepreneurs/

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Entrepreneurship and its Affect on Market

A high school friend worked for entrepreneur Michael Hinderliter for about 2 years. My friend's job was to prepare and serve bubble tea for the Chill Bubble Tea franchise, but he came into contact with the owner because they shared a common interest: custom car parts. The entrepreneur also ran a car parts importing business. He started by importing crates of the parts he wanted for his car and selling off the parts he did not need on the internet and eventually became the sole US importer for an international suspension manufacturer (1).


It is not easy to enter the auto manufacturing industry; the barriers to entry are very high (1). Tesla Motors is one example of a successful auto manufacturing business, but they are the minority: Their electric car sector has countless examples of failed start-ups. The affect their success has had on the auto market is also very limited: they expect to sale only 20,000 by 2013 worldwide (2).


Opportunities to enter the auto manufacturing business are therefore severely limited. Despite this, there are opportunities for entrepreneurship within this industry. There are opportunities for new firms manufacturing and importing after-market performance parts, like in the case of Hinderliter. Often these new parts will fill different niche markets in the aftermarket parts sector.


There are also opportunities for entrepreneurs to enter the auto industry by participating in its distribution chain. Most auto manufacturers sell new cars exclusively through franchised dealerships (4). Because cars are among the few products still only available through a physical retail location, entrepreneurs can affect regional markets dramatically by bringing new manufacturers to an area. Because car prices are often negotiated at the dealer, the price for a new car can change dramatically if there are more dealers in an area selling cars in the same segment or even of the same model.


Sources
(1) Michael Hinderliter, personal communication (2011)
(2) http://mises.org/freemarket_detail.aspx?control=384
(3) http://money.cnn.com/2011/06/21/autos/tesla_roadster_selling_out/index.htm
(4) http://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.24.3.233
(image) http://upload.wikimedia.org/wikipedia/commons/thumb/9/98/Lexus_Car_dealership_%28setagaya_tokyo%29.JPG/800px-Lexus_Car_dealership_%28setagaya_tokyo%29.JPG

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Toyota's Profits Dip, Earthquake to Blame

Toyota has seen a significant drop in profits in its most recent quarterly report for FY2012 Q1 (1). This drop was expected due to the Japanese earthquake. Toyota's net income dropped from over 210,582 million yen to 2,859 yen, a 207,732 million yen decrease. Toyota is has been worldwide leader in and is often the leader in profits by net income (2). While Toyota's costs decreased in all areas since the this time last year, it's sales have dropped even more and it operated at a loss. These numbers show a significant drop in profit for Toyota, but it still had a profitable quarter despite the Japan crisis.


With Toyota in recovery, there has been some question to who will become the sales leader for 2011. General Motors has been suggested as a possibility for the number one position (3). It's earnings have increased this year from 2,110 million dollars US to 2,579 millions dollars US (4), supporting this prediction.


(1) http://www.toyota-global.com/investors/financial_result/2012/
(2) http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/simpleSearchRun.do?ControlName=CompaniesSimpleSearch
(3) http://www.netadvantage.standardandpoors.com.proxyau.wrlc.org/NASApp/NetAdvantage/showIndustrySurvey.do?code=aup
(4) http://finance.yahoo.com/q/is?s=GM
(image) http://pressroom.toyota.com/images/toyota/photo//2008_10_09_Venza_41-prv.jpg

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Ford Up in Revenue, Down in Earnings

        Ford Motor Co. has seen a sudden 2% drop in earnings, even though its revenue has increased by 14% (1). Revenue is the value of what a firm received for goods sold, services performed, and other additional payments received.  If their revenue escalated by such a large amount than why is Ford seeing a drop in earnings?

            This question is answered by simple accounting equations such as net income or net loss. Subtracting the total cost of goods sold and operating expenses from the total revenue gathered throughout the quarter calculate these losses or gains. What Ford endured was a sudden increase in the cost for commodities, materials, warranty and freight costs (1). This cost increased by more than $1 billion in comparison to the previous quarter (1). Ford Chief Financial Officer Lewis Both said “the commodity costs caused Ford to lower its estimate for automotive operating margins to 5.7% from 6.5% for the full year” (1).

           To account for this decrease, Ford is also planning on lowering its capital spending to $4.6 billion down to $5-$5.5 billion (1). Mr. Booth said that Ford will restore the dividend, which has been gone since 2006, “as soon as our balance sheet can stand it” (1). Ford will continue to lower its company’s debt, which sits at $12.7 billion but was once at $33 billion in 2009 and is expecting industry sales to be higher than its previous quarters this year (1).

Sources

(1)http://online.wsj.com/article/SB10001424052970203687504576654740804146776.html#articleTabs%3Darticle

(Image) http://smallbiztrends.com/wp-content/uploads/2009/09/reduce-boost-graph.jpg

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"U.S. and China Play Chicken Over Accounting"

In recent weeks we have noticed that the finance relationship between two global rivals, USA and China, are sharpened. The main reason is the audit reports for Longtop Financial Technologies; the electronics firm that was kicked off the New York Stock Exchange in August. One of the worst-possible case outcomes is that China companies could be completely shut out of U.S. capital markets. Moreover, future accounting data on American multinationals operating in China could also be deemed untrustworthy (1).

"It's really a Cuban missile crisis that we are looking at right now," says Paul Gillis, an expert in trans-national accounting who spends most of his time in China. The U.S. Securities and Exchange Commission (SEC) which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry along with the Justice Department are investigating possible investor fraud by Longtop. Although the SEC has asked China for vital documents, China has refused to provide for violation of the prohibition to provide requested documents directly abroad. This shows that China is not yet ready to work with actors such as the SEC or the PCAOB (Public Company Accounting The Oversight Board) (1). 

Although the U.S. regulators have displayed remarkable patience in dealing with foreign nations, especially China, there was no meaningful movement in negotiations with this country in recent years. Because China needs access to the US capital and China does not want to be a global financial outlier, the PCAOB predicts one or two joint inspections of China-based auditors this month (1). But according to the last information, the planned visit to Washington by their Chinese counterparts to continue the talks has been postponed (2).

Source

(1) http://online.barrons.com/article/SB50001424052748704429004576600932739440342.html?reflink=wsj_redirect

(2) http://online.wsj.com/article/SB10001424052970204524604576609183570744552.html?mod=WSJ_Accounting_leftHeadlines

Image http://djaloezakie.blogspot.com/2010/10/american-vs-china.html

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GM Leader in Global Sales, Lags in Global Brand Equity

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/

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Outsourcing in the Auto Industry

Many if not all major Auto manufacturers outsource or have outsourced during their company history (1). For those familiar with the industry, it can be difficult to to imagine the industry without outsourcing.


A recent trend for both US companies and US divisions of companies based overseas is to open domestic factories (2, 3, 4). In some cases this is done to cut costs. This recent trend of "insourcing" is also used as a selling point for automakers that are opening new US plants (5, 6).


Volkswagen, specifically, made news in 2008 when it announced plans to open a new, state-of-the-art US facility in Chattanooga, Tennessee (7). It opened the plant in May of this year (8) and has been able to cut labor costs (2). It has also designed a vehicle specifically for the US market that is being manufactured specifically at the Chattanooga plant (9).


Sources:
1. http://it.toolbox.com/blogs/sourceoff-blog/big-three-automakers-outsourcing-to-mexico-39465
2. http://online.wsj.com/article/SB10001424052748704083904576335501132396440.html
3. http://www.kmmgusa.com/
4. http://www.reuters.com/article/2010/03/07/us-toyota-idUSTRE6260DA20100307
5. http://www.youtube.com/watch?v=j264EVvD4gI
6. http://www.youtube.com/watch?v=clwZqni4a9U
7. http://www.autoblog.com/2008/07/15/volkswagen-announces-plans-for-factory-in-chattanooga-tenn/
8. http://www.timesfreepress.com/news/2011/may/24/live-grand-opening-chattanoogas-volkswagen-plant/
9. http://www.autoblog.com/2011/01/09/2012-volkswagen-passat-chattanooga-vw/
image: http://greennews4u.com/wp-content/uploads/2011/05/VW-Plant-Chattanooga.jpg

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Global Companies

To be considered as a multinational corporation, company has to show some physical presence in different nations. There are many companies, such as Toyota, Ford and Global Motors which operate in different countries all around the world (North and Latin America, Europe/Africa, Oceania & Middle East, Asia) (1) + (2). One of the advantages of being in global market is not only establishing foreign subsidiaries in host countries, but it´s also creating new jobs for people in the host countries. A perfect example is Japanese Toyota which has a seat in Japan but also form much oportunities for unemployed people in the USA by launching their subsidiaries. 

 

The success of automotive companies in different countries depends on many factors. Companies must adapt to socio-cultural, economic, legal and environmental forces. The most important is probably sociocultural adaptation. As the Toyota´s summary about the overseas model line up shows, Toyota´s model Land Cruiser Prado is almost unknown in North America but it´s very well produced overseas in Europe. On the other hand, the other model Camry is exactly the opposite (3). Companies has to find the primary needs and interests of people. 

Next, the key success of any company is to find the best time to export or import, depending on the exchange rate. The high value of the dollar is good for domestic traders and vice versa.

Sources:

(1) http://www.toyota-global.com/company/profile/overview/in_the_world/

(2) http://www.gm.com/toolbar/allGMSites.html

(3) http://www.toyota-global.com/company/profile/overview/in_the_world/pdf/regional_sales_en_V2.pdf

Image:http://www.shutterstock.com/pic-59286079/stock-photo-best-internet-concept-of-global-business-from-concepts-series.html

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Economy, Gas Affect Consumer Buying Trends

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

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How do companies differentiate themselves from one another?

Companies differentiate themselves by having different mission statements as well as different models. Each company wants to be the most successful and respected car company in various part of the world, but only some of them actually uses efficient strategies to help the buyers buy. The main distinction is in promoting the product. Whereas one of the last Toyota Venza commercials pointed out the difference between virtual and real life, the last promoting commercial of Chevy Silverado (part of General Motors industry) showed the single parts of the car (1), (2). People are interested in different kinds of cars and different kinds of commercials, but there should be something interesting, unusual and fresh in commercials, therefore from my point of view the first commercial is definitely better.   

Although most cars have the same overall purpose, they vary in different models, accessories and efficiency as well as in placing the product. People in the different parts of the world prefer various types of cars. The last news of Toyota company announced starting export from their foreign subsidiary in India to South Africa in March 2012 (3). On the other hand, General Motors focuses on producing Chevrolet Colorado Pickups in Thailand (4).

All car companies have one thing in common. They´re instantly trying to act "green" to our environment. Car designers and engineers work to find the most sensitive ways to improve the impact of products during their entire lifecycle.

Sources

(1) http://www.youtube.com/watch?v=TUGmcb3mhLM

(2) http://www.youtube.com/watch?v=Re5PPoHQ3gs

(3) http://www2.toyota.co.jp/en/news/11/10/1006_2.html

(4) http://media.gm.com/content/media/us/en/gm/news.detail.html/content/Pages/news/us/en/2011/Oct/1006_colorado_thailand

(Image) http://www.google.com/imgres?q=chevrolet+in+thailand&hl=cs&biw=1280&bih=670&gbv=2&tbm=isch&tbnid=WU_5fO4cvRPyPM:&imgrefurl=http://www.gmthailand.com/index.php/press-center/press-release-view/2009_032/&docid=Dl3BJrbJy9GzYM&w=420&h=279&ei=HV6STubRAajx0gHPvthV&zoom=1&iact=hc&vpx=587&vpy=144&dur=532&hovh=183&hovw=276&tx=88&ty=86&page=3&tbnh=135&tbnw=201&start=30&ndsp=15&ved=1t:429,r:7,s:30

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Hyundai CEO Yang Seung-suk Retires

Yang Seung-suk has retired from his position as CEO of Korean automaker Hyundai Motor Co. Mr. Yang held this position for only three years, but in these years led Hyundai to among the top of its market despite the economic downturn. Hyundai became the 5th largest automaker by units sold. Despite his success, Yang's departure is not unusual: Hyundai generally changes its C-suite every two or three years.


What is unusual about this story is that this is 2nd major executive to leave in the past year. In March, Head of Research and Design Lee Hyun-Soon retired. A major part of Hyundai's success during the recession was manufacturing vehicles whose reliability rivaled those of Honda at significantly lower prices. Hyundai also pushed into the growing Chinese market under Yang. Hyundai's challenges in coming years will be to continue that growth without these 2 key executives.


Articles Mentioned:
http://online.wsj.com/article/SB10001424052970204138204576602682341427992.html?mod=WSJ_auto_LeadStoryCollection
(Image) http://www.motortrend.com/roadtests/coupes/1004_2011_mustang_v6_vs_2010_genesis_coupe_3_8_vs_2010_camaro_rs_vs_2010_challenger_se/photo_71.html#photo 

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Ethical Dilemmas of the Auto Industry

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

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Ford Expecting Significant Growth in Asia Pacific, Africa

Ford's Figo model for India

Ford Motor Company is expecting significant growth in the Asia Pacific and Africa markets in the next decade, from one sixth of their total sales currently to one third by 2020 (1). Its Asia Pacific and Africa region includes emerging markets such as China and India, as well as Australia, South Africa, and Thailand. Many automakers, Ford included, have shifted their focus from the domestic market to these emerging markets since the recent economic downturn.


Ford's strategy for capitalizing on this emerging market includes designing and marketing more products for this region. The popularity cars with diesel engines, historically unpopular in the US, is growing more rapidly in India than in any other market (2). Ford will invest $72 million in a South India plant; the entire investment will go towards production of diesel engines for its Figo hatchback.


(1) http://online.wsj.com/article/SB10001424053111904106704576582193344608536.html?mod=WSJ_auto_IndustryCollection
(2) http://online.wsj.com/article/SB10001424052748703632304575451720343127244.html
(Image) http://www.autotribute.com/wp-content/uploads/2010/01/Ford-Figo.jpg

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Corporate Social Responsibility

Corporate social responsibility is a term that acts as a moral monitor for businesses to keep themselves accountable. It covers the companies conformity to obey the law and high ethical standards that are set by the consumers. Active CSR companies would emphasize its positive involvement with the community, environment, employees, and customers.

Several companies, including Toyota, are promoting their CSR through the research and development of environment-friendly cars. Toyota has stated in their 2011 Corporate Social Responsibility Report that they are “directing their efforts into creating plants which harmonize with nature and coexist with our communities in progressing to reduce CO2  and save energy during production.” (1) Not only is Toyota one of the top leading sellers in the Hybrid car product line, but now they are currently aiming to develop production facilities and machinery that will have less harm to the communities and environments that surround them.

Toyota has also released statements that mention their contributions to the damaged areas from the 2011 Japanese earthquake and made it a priority on resuming production of supply parts for vehicles in need of repair used in recovery efforts and the disaster area. (1) Toyota Auto Body also donated 100 million yen to disaster relief efforts, and then from the collected contributions donated six vehicles. (1) On top of these offerings, Toyota also sent drinking water, food, and other living necessities to the victims of the disaster-stricken Japanese land. (1) They claim that “Industry is said to be a public institution of our society.” (1) Toyota Auto Body provides a useful service in society, and makes an effort to provide vehicles which meet the average customer’s expectations, as well as those of the elderly, the handicapped, and customers throughout the world “in looking to continue as a corporation needed by society”. (1)


Sources
(1) http://www.toyota-body.co.jp/english/csr/index.html
(Image) https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQfk_uo3pdfAB0OS6B0g-1jiv5x65tK0to65r6tuIo14h9F48U1whHccDih1Cc-1it2gcbqF3NNnU644wXswbVIoxl7HlID94InK-_n6Ko9PNx3S6FP0Ey0kxZnMeYwxaeETxuxfz0_epy/s1600/toyota.jpg

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Mission Statements and Significant Values

Every group, whether it's school, bank or family has its own rules. Rules must be followed and with no rules is hard to find the way to success. Therefore, companies have set their own rules, values and mission statements ​​that seek to accomplish various goals, such as providing high-quality products to their customers, treating employees fairly and being responsible to their communities.

Each company within the auto industry has different values, for example Toyota sees its core values in improving education and supporting parents and children who communicate poorly in society. Toyota cooperates with NCFL and they help to establish family literacy sites in 30 states (1). Their Integrity-based ethics codes work very well because for their employees Toyota mainly means Excellence, Pride and Quality. More than 1 million Hybrids cars sold in the USA last year only prove enviromental care. In cooperation with Audobon they also launched the program called TogetherGreen in 2008 which encourages volunteers and supports creative projects (2). Because safety is probably the primary value for customers Toyota started the free project Toyota Driving Expectations (TDE) for teenagers and their parents to improve their driving skills and prevent car accidents (3). 

Ford developed this statement: "One Ford. One Team. One Plan. One Goal." This can encourage their employees and moreover, attract their potential costumers because these powerful statements can change people´s mind (4).

Volvo has a slightly different vission: "Beautifully simple and simply beautiful." This can attract the consumers who not only  take care about car design, but also appreciate the marvel of what a car actually does (5).

Toyota takes this mission: "To attract and attain customers with high-valued products and services and the most satisfying ownership experience in America." (6) Every company wants to be successful so we must set the highest goal for being a successful and earning company.

(1) http://www.toyota.com/about/our_values/

(2) http://www.toyota.com/about/philanthropy/environment/ 

(3) http://www.toyota.com/about/philanthropy/safety/

(4) http://corporate.ford.com/dynamic/metatags/article-detail/one-ford

(5) http://www.volvocars.com/intl/top/about/values/pages/design.aspx
(6) http://www.toyota.com/help/faqs/company-what_are_toyotas_mission_and_vision_statements.html

Image: http://www.toyotainbusiness.com/fleet_content/environment/green_technology/index.aspx

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Auto Workers Union Revises Contracts with U.S. Auto Makers

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-

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Supply and Demand of the Auto Industry

Like all other industries, the auto industry can be illustrated by basic macroeconomics. If there is a low demand, then the purchase price will decrease. On the contrary, if the demand exceeds the supply of the vehicles on site, then the price can have a sudden increase. The manufacturer controls and oversees the inventory that is shipped out to the dealers (1). The price of cars will also increase in the buyers' incomes enlarge. Automobiles are considered a normal good, therefore if average income rises, so would the demand, supply, and price of cars (2). 

Gasoline, a strong complement of automobiles, will always continue to have a steady effect on the demand curve (2). As the price of gas has risen, the demand for smaller and more fuel efficent cars has increased exponentially. The market for SUV's has decreased, therefore Toyota reacted by raising the price and production of its Pruis hybrid cars (3). In just two years (2005-2007) Toyota doubled its production rate of Prius cars, all because of simple supply and demand economics.

Sources

(1) http://www.carsforgirls.com/index.php/supply-and-demand-or-how-inventories-control-price/

(2) http://cstl-hcb.semo.edu/kerr/backdoor%20to%20economics/chap11.htm

(3) http://are.berkeley.edu/~sberto/AutomobileIndustry.pdf

(Image) http://www.thetruthaboutcars.com/wp-content/uploads/2007/02/x05co_ft049ar222.jpg

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