Automotive industry

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Industrial robots welding a car body in an assembly line.

The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles. In 2007, more than 73 million motor vehicles, including cars and commercial vehicles were produced worldwide.^[1]

In 2007, a total of 71.9 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in USA and Canada, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. ^[2] The markets in North America and Japan were stagnant, while those in South America and Asia grew strongly. Of the major markets, Russia, Brazil, India and China saw the most rapid growth.

About 250 million vehicles are in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. The numbers are increasing rapidly, especially in China and India.^[3]

In 2008, with rapidly rising oil prices, industries such as the automotive industry, are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external competition from the public transport sector, as consumers re-evaluate their private vehicle usage.^[4]

[edit] Crisis in the auto industry

Main article: Automotive industry crisis of 2008

The automotive industry crisis of 2008 occurred mainly as a result of the global financial crisis and the related credit crunch. In Canada and the United States, other contributing factors were pricing pressures on raw materials and substantially more expensive automobile fuels which, in particular, caused customers to turn away from large vehicles such as SUVs. In certain countries, particularly the United States, the industry has also suffered from relatively cheap imports available from countries such as Japan and Europe. As of November 2008, the Big Three manufacturers, (General Motors, Ford and Chrysler), indicated that unless additional funding could be obtained over the short to medium term, there would be real dangers of bankruptcy.

[edit] History

[edit] Britain

Main article: British motor industry

The British motor industry has always been export oriented. Today it employs about 850,000 people and produces about 1.5 million cars and 216,000 commercial vehicles per year, 75% of which are exported.^[5] The top five UK car producers are Nissan, Toyota, Honda, MINI and Land Rover.^[6]

[edit] 1896-1945

Hindered by the Red Flag Act (legislation designed to severely restrict the use of mechanically propelled vehicles on the public highway) the auto industry developed late in Britain. Following a law change in 1896, the Daimler Motor Company became the first British company created for the production of automobiles, and by 1900 there were more than fifty, and by 1905 more than two-hundred and twenty British companies concentrating on automobile production, with only America and France having a higher annual automobile production.^[7] The stress was on high quality hand-made craftsmanship, regardless of high cost.

Ford opened a UK plant as early as 1911 and briefly had 40% of the British market. General Motors entered in 1925 by buying Vauxhall Motors.

By the end of the 1920s, the Morris Motor Company (founded by William Morris) and the Austin Motor Company (founded by Herbert Austin) dominated the domestic market, taking a 60% share between them. Morris modeled his methods after Henry Ford, and sought high volume production of inexpensive cars geared to the urban middle class. In 1931 Ford opened the largest auto plant in Europe at Dagenham, near London. In 1932 Britain became Europe's largest auto producer ahead of France. Rootes by this time had acquired Hillman and Humber and later in the 1930s added Talbot and the Sunbeam Car Company. At the end of the 1930s the leading producers were Morris, Austin, Ford, the Standard Motor Company, Rootes and Vauxhall.

[edit] Social impact

The 1920s were the great decade of expansion; private cars in use grew from 315,000 in 1922 to 1,042,000 in 1930, along with 334,000 trucks and 700,000 motorcycles. The gentry who bought cars before 1939 found driving was easy on rural Britain’s smooth road surfaces in its generally mild weather. The rural roads were famously narrow and winding, so cars were small with stiff springs for good handling characteristics on them. High taxes on gasoline and crowded streets encouraged smaller, fuel-efficient cars in the cities, where traffic lights came into use in the 1930s. Most cities replaced their trams with trolley-buses between 1926 and 1939. In London the first double-decker buses appeared in 1923.^[8]

[edit] 1945-2005

During the war all production was concentrated on war materials. After 1945 Britain became the world's largest automobile exporter, providing 52% of the world's exported vehicles in 1950. In 1953 Morris merged with Austin to form the British Motor Corporation (BMC), becoming the UK's largest producer. BMC specialized in small, economy sedans and sports cars, with 4 cylinder engines.

By the late 1950s, West German automobile manufacturers were benefiting from the Economic miracle and rapidly gained market share, followed soon by the French and Italian producers, and the UK lost most of its continental market through neglect and stagnation. At the end of the 1950s, the Rootes group acquired Singer. In 1966 BMC merged with Jaguar Cars and Pressed Steel to form British Motor Holdings, which then merged, in 1968, with the Leyland Motor Corporation, which had by then acquired the Rover Company and the Triumph Motor Company, to form the British Leyland Motor Corporation (BLMC) as Europe's fourth largest automaker.^[9] Chrysler UK finished acquiring the Rootes group in 1967, a process it had started in 1964.

By 1970 Japanese firms identified the British market as the first major European market to attack because of the relative weakness of the domestic car industry.^[10]

Stiff competition from Japanese and German cars, a reputation for shoddy workmanship and a breakdown in labor relations brought the British companies to near bankruptcy by 1975. The UK government effectively nationalized the bankrupt BLMC in 1975, rationalising the company into British Leyland, which produced 40% of the cars sold in Britain. The government provided £11 billion (in terms of 2008 £, or $16.5 billion in 2008 $) in bailouts. Wildcat strikes consumed more than 32 million worker-hours in 1977. Management cut employment in half, from 200,000 to 105,000 to cut expenses. In 1977 Chrysler sold its European interests to Peugeot, with Chrysler UK being renamed Peugeot Talbot.

After a decline in the UK market's significance for multinational automakers, Japanese manufacturers hoping to get around EEC trade restrictions established manufacturing plants in the UK. Nissan, Toyota and Honda all manufacture passenger cars in UK factories, primarily for car markets in Europe, Africa and the Middle East.

After a series of divestitures, British Leyland was renamed the Rover Group, which was eventually acquired by BMW, then split up into various divisions that were sold separately. MG Rover finally went bankrupt in 2005, ending the era of mass production by UK-owned automobile manufacturers. The remnants were bought by the Chinese government-owned manufacturers, SAIC and NAC, which later merged. Former British Leyland car brands include Jaguar and Land Rover, now owned by Tata Motors, MINI, owned by BMW and MG owned by SAIC/NAC. Only 22,000 workers remain employed at successor firms.^[11]

[edit] Germany

Main article: Automobile industry in Germany

Daimler-Benz is the industry's oldest firm, building automobiles since the late 1880s; its current structure dates from 1926. In 1998 it bought the American automobile manufacturer Chrysler, then sold out in 2007 at a heavy loss as it never managed it to achieved long term profitability.

In the popular market, Opel and Volkswagen are most famous. Opel was a bicycle company that started making cars in 1898; General Motors bought it out in 1929, but the Nazi government took control and GM wrote off its entire investment. In 1948 GM returned and restored the Opel brand.

Volkswagen is dominant in the popular market; it purchased Audi in 1964. VW's most famous car was the small, beetle-shaped economical "people's car" with a rear-mounted, air-cooled engine. It was designed in the 1930s by Ferdinand Porsche upon orders from Adolf Hitler, who was himself a car enthusiast. However production models appeared only after the war; until then only rich Germans had automobiles. By 1950 Volkswagen was the largest German automobile producer.^[12]

Germany is famous for its upscale sedans. They feature well-designed suspension systems that provide both a soft ride and good handling characteristics. Many manufacturers limit their automobiles electronically to driving speeds of 250 km/h (155 mph) for safety reasons.

Daimler-Benz produces the upscale Mercedes-Benz, long a famous name in racing. BMW (founded 1916) and Porsche are major factors in the luxury market.^[13] Porsche formed his own company, which today produces expensive, high-quality sports cars.^[14]. In 2008 the Porsche company sought control of the much larger Volkswagen company; Porsche cornered the market for Volkswagen stock and made profits of tens of billions of Euros, while apparently gaining control of the bigger company.

[edit] Japan

Main article: Japanese automobile industry

Japan, with its large population squeezed into very high density cities with good public transit, has limited roadways that carry very heavy traffic. Hence most automobiles are small in terms of size and weight. From a humble beginning, Japan is now the biggest auto manufacturing country in the world. Nissan began making trucks in 1914, and sold cars under the Datsun brand until it switched to Nissan in the 1980s. It opened its first U.S. plant in Tennessee in the early 1980s and a U.K. plant in 1986. It is 44% owned by Renault of France. Its luxury models carry the brand Infiniti. Honda, which began with motorcycles, emerged after World War II. Its luxury vehicles are sold under the Acura brand. Toyota began making cars in the 1930s and is now the world's largest producer. Its luxury models carry the Lexus brand. Toyota is famous for its innovative, quality-conscious management style, and its hybrid gas-electric vehicles, especially the Prius, which was launched in 1997. Other major companies include Subaru, Mitsubishi, Mazda, Suzuki, and Isuzu. Japan became the world's leading auto maker in 1980, the first year since 1905 that the United States had been outproduced by any other nation.

[edit] South Korea

Main article: Korean automobile industry

The South Korean automobile industry is today the fifth largest in the world in terms of production volume and the sixth largest in terms of export volume. While 50 years ago, its initial operations were merely the assembling of parts imported from Japan and the United States, South Korea is today among the most advanced automobile-producing countries in the world. The Hyundai Kia Automotive Group is today the second largest automaker in Asia only after Toyota and one of the top five automakers in the world.^[15] South Korean car marques have grown to compete with top established European brands and Hyundai operates the world's largest integrated manufacturing facility in Ulsan, capable of producing 1.6 million units every year. Annual domestic output exceeded one million units in 1988. In the 1990s, the industry manufactured numerous in-house models, demonstrating not only its capabilities in terms of design, performance, and technology, but also signalling its coming of age thanks to the heavy investment to infrastructure in the country over the decades, and new car preferred market trends. South Korea overtook France in 2005 as one of the top five automotive manufacturing nations in the world.

[edit] World motor vehicle production

See also: List of countries by motor vehicle production

[edit] Top vehicle manufacturing groups (by volume)

The table below shows the world's largest motor vehicle manufacturing groups, along with the marques produced by each one. The table is ranked by the latest production figures from OICA 2007^[16] for the parent group, and then alphabetically by marque.

Marque	Ownership	Markets
1. Toyota Motor Corporation ( Japan)
Daihatsu *	Subsidiary	Global, except North America and Australia
Hino *	Subsidiary	Asia Pacific, Canada, South America
Lexus	Division	Global, apart from South America with the exception of Chile and Argentina.
Scion	Division	United States, Canada
Toyota	Division	Global
2. General Motors Corporation ( United States)
Buick	Division	United States, Canada, China, Israel, Taiwan
Cadillac	Division	Global
Chevrolet	Division	Global, with the exception of Australia
Daewoo	Subsidiary	Asia, Europe, South America, South Africa
GMC	Division	North America, Middle East
Holden	Subsidiary	Australia, New Zealand, Middle East
Hummer	Division	Global
Opel	Division	Continental Europe, Ireland, South Africa, Japan
Pontiac	Division	United States and Canada
Saab	Subsidiary	Global
Saturn	Division	United States, Canada, Japan, Republic of China
Vauxhall	Subsidiary	United Kingdom
3. Volkswagen Group (Volkswagen AG) ( Germany)
Audi	Subsidiary	Global
Bentley	Subsidiary	Global
Bugatti	Subsidiary	Global
Lamborghini	Subsidiary	Global
Scania	Subsidiary	Global
SEAT

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v • d • e « previous year Top 20 motor vehicle producing countries 2007
Motor vehicle production (1000 units)
Country	1000			2000						3000					4000	5000		6000	7000			8000	9000	10000	11000	12000
Japan																					11596
United States																					10781
PR China																					8882
Germany																				6213 (includes GM Belgium)
South Korea																	4086
France															3019
Brazil															2971
Spain														2890
Canada													2578
India												2307
Mexico											2095
UK									1750
Russia								1660
Italy							1284
Thailand						1238
Turkey					1099
Iran				997
Czech Rep.			939
Belgium		844
Poland		785
Reference: "World Motor Vehicle Production by Country: 2006–2007". OICA. Retrieved on 2008-03-18.

v • d • e « previous year Top motor vehicle manufacturing companies by volume 2007
Total motor vehicle production (1000 units)
Group	1000								2000				3000					4000			5000	6000	7000			8000		9000	10000
Toyota^*																												9497754
GM																														9349818
Volkswagen																									6346222
Ford																								6247506
Honda																				3911814
PSA																			3457385
Nissan																			3431398
Fiat																	2679451
Renault																	2669040
Hyundai																	2617725
Suzuki																2596316
Chrysler																2538624
Daimler														2096977
BMW												1541503
Mitsubishi											1411975
Kia											1369330
Mazda										1286730
AvtoVAZ								735897
FAW								690712
Tata Motors							588158
Fuji							585028
Chana						543787
Isuzu						532013
Beijing						454272
Dongfeng					437035
Chery					427882
SAIC				313002
Brilliance				293588
GAZ			248839
Volvo (trucks)			236024
Harbin Hafei			231488
Geely			216774
JAC			209880
Mahindra			168556
Paccar		126960
Great Wall		122605
Changhe		112083
Porsche		107170
BYD		100376
China National		100202
MAN		98441
Navistar		86758
Fujian		84138
UAZ		72162
Shannxi Auto		68160
Kaima		65790
Key	Cars														Light Commercial Vehicles							Heavy Commercial Vehicles					Heavy Buses
Total global production: 72178476
Reference: "World motor vehicle production by manufacturer: World ranking of manufacturers 2007". OICA (July 2008).
^*Toyota total includes Daihatsu production figures, which OICA list separately. Daihatsu is a Toyota Motor Corporation subsidiary.

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