Presentation Auto Industry 2011 FINAL

8/2/2019 Presentation Auto Industry 2011 FINAL

1/41

Auto Car industry

3/13/2012

The A Team:

Thy Phan, Chao-Fang Chen,A. Ilondo, Yuenting Chien

BUS 655Professor: Julius Walacki

Nov 2, 2011

1


2/41

MICROECONOMICS

3/13/2012 2

The motor vehicle is the second most important possessionof a great majority of Americans. It plays such a large role inthe lives of citizens and the economy in general.

To describes the economic contributions of the autoindustry to the U.S. economy, it will be to a multitude ofU.S. industries such as retail, manufacturing and servicesectors, and to individual Americans.

Howver, The Big Three, when used in relation to

the industry are General Motors, Ford, and Chrysler arefacing a multitude of severe challenges


3/41

CHALLENGES

Employment

ENVIRONMENTAL

TECHNICAL

GOVERNMENTBAILOUTS

Unemployment rate is rising

Funding for research and

development

Sharp decrease in demand forcars

Governmental measures aretrying to boost the demand forcars in the short run and toincrease investments in R&D forenvironmental and economicreasons

3/13/2012 3


4/41

OVERVIEW

Past and Current elements in car industry in

the United States:

1. In 2009, 5,456,246 passengers cars were sold in the U.S

3/13/2012 4


5/41

Past and Current elements in car

industry in the United States:

2. Prices of Steel, Iron and Natural gas has increase from 2010 to

2011

3/13/2012 5


6/41



3. CPI change

3/13/2012 6


7/41



4. GDP

3/13/2012 7


8/41

EMPLOYMENT

Employment is always a major factor when measuring thesignificance of any economic activity. It is estimated that each directauto job supports at least another 5 indirect jobs in the community,resulting in more than 50 million jobs owed to the auto industry.Many people are employed in related manufacturing and services.Autos are built using the goods of many industries, including steel,iron, aluminum, glass, plastics, glass, carpeting, textiles, computerchips, rubber and more. If auto manufacturing were a country, itwould be the sixth largest economy.

Current problems:

Recent unemployment Financial crisis

Government Bailouts

3/13/2012 8


9/41

EMPLOYMENT

Employment in the auto industry (people who have jobs in auto industry canbe affected)

Used Vehicle dealers (cars and trucks)

Used Vehicle Operations and Off-Warranty Service Employees

Automotive Repair (body, paint, and general repair) Automotive parts and accessories

Tire Dealers

Gasoline Stations with Convenience Store

Oil and Gas Field Machinery manufacturing

Petroleum Refining

Passenger Car Rentals

Automobile Parking

Highway and street construction workers

3/13/2012 9


10/41

EMPLOYMENT

3/13/2012 10

In 2011 only 8,249 thousand jobs in manufacturing are available for hire


11/41

UNEMPLOYMENT

The unemployment rate is also a strong indicator of national well-being.

Members of Congress have expressed concerns about lost jobs in the

automotive sector especially in the traditional auto states of Michigan,

Indiana, and Ohio, where job loss has been most intense and has affected all

sectors that comprise the auto industry.In Obamas administration an advisers argue that had the president willl invest

more than $60 billion into General Motors and Chrysler and more than a

million jobs would have been lost. Instead, they say, 334,000 jobs disappeared

from June 2008 to June 2009, a period that ends shortly after the bailout began

and 55,000 new workers have been hired since 2009

3/13/2012 11


12/41

Environmental Issues

3/13/2012 12

Shortage of raw materials

High price of fuel and gas increased energy

cost Serious Global warming

a progressive de-carbonization of the

economy and a better fuel efficiency.


13/41


14/41

Global Anthropogenic

Greenhouse Gas Emissions

3/13/2012

Reference: US Environmental Protection Agency - http://www.epa.gov/

14


15/41

New innovation - Alternative auto &

Alternative energy

Diverse automobiles that run on alternative fuels clean diesel, biodiesel, ethanol, hydrogen,compressed natural gas or that run on hybridtechnology using both conventional combustion

engines and electric engines to reduce CO2emission.

Automakers (TOYOTA, GM, HONDA etc.)also developing diverse electrical car

such as: pure electrical, hybrid electrical,electrical with plugging or with battery,electrical with solar power energy

3/13/2012 15


16/41

New innovation - Alternative

auto & Alternative energy

3/13/2012

Reference: TOYOTA annual report http://www.toyota-

global.com/sustainability/sustainability_report/pdf_file_download/05/pdf/report2005.pdf

16


17/41

Shortage of raw materials

Iron ore is a crucial material for producing

steel, it is the most important material for the

auto industry. The automobile industry is veryconcerned by the increase in the price of iron

ore, and it will greatly impact the

automotive industry.

3/13/2012 17


18/41

Prices of Raw material -Iron ore

3/13/2012

Reference: http://www.mongabay.com/commodities/price-charts/iron-ore-price.html

18


19/41


20/41

TECHNICAL CHALLENGES

The target of auto makers is to manufacture

cars with new and higher technology.

They also need automakers to step up the

pace of innovation in energy efficiency arenas.

3/13/2012 20


21/41

The issues

Inefficient technology

High labors cost and material

Capital and bailout

Use of green technology

3/13/2012 21


22/41

Inefficient technology and high

prices

3/13/2012 22


23/41

High labors cost and material

3/13/2012 23


24/41

Capital and bailout

3/13/2012 24


25/41

Use green technology

3/13/2012 25


26/41

Use green technology

3/13/2012 26


27/41

The problems that GM, TOYOTA

and USs auto industry facing

3/13/2012 27


28/41

The problems that GM, TOYOTA

and USs auto industry facing

3/13/2012 28


29/41

The big growth of low cost cars market

3/13/2012 29


30/41

The big growth of cheap cars

market

3/13/2012 30

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2003 2004 2005 2006 2007 2008

Revenue

Revenue


31/41

Government Bailouts

What is Bailout?

Example-

General Motors Corporation

and Chrysler LLC

In 2008, Congress pass a

$630 billion dollars bill

In 2009, the government

spent nearly $25 billiondollars of bailout bill to

help the Big 3

$17.4 billionfor GeneralMotors and

Chrysler.

$6 billion forGMAC.

$1.5 billionfor Chrysler

Financial.


32/41

1. Bankruptcy

2. Restore U.S. auto industry

There are two main reasons for the U.S

government to bailout the auto

industry:


33/41

1.Bankruptcy

General Motors face the worst situation in 2009


34/41

Poor

Sales

1.Bankruptcy


35/41

Revenue of the Top Six Automakers

Compared to U.S. New Auto Sales


36/41

The Importance of the Automotive

manufacturing

Average Percentage of State GDP in AutomotiveManufacturing, 1998 to 2008


37/41

The Declining of the Automotive

Manufacturing Industry

Automotive Manufacturing in the Midwest and

Other States, 1998-2008


38/41

Automotive Manufacturing GDP in the Midwest

and Other States, 1998-2008

The Declining of Automotive Manufacturing

Industry


39/41

2.Restore U.S. auto industry

Since 2008 -> U.S auto sales dropped 37%Auto industrybankruptcy

People lost jobs

Economic becometurmoil

Governmentbailout

Restore U.S autoindustry


40/41

Conclusion and Recommendation

The following recommendations need to take place in order for

auto manufacturer revive their market power:

1) Use a better measure of technology implementation2) Have funding such as government bailouts

3) Some quantitative measure of outsourcing for employment

4) Alternative materials such as aluminum, hybrid car, act..

3/13/2012 40


41/41

Thanks for paying attention

/ /

Documents

Presentation Auto Industry 2011 FINAL