Table of contentsIntroductionThe automobile industrySensitivity of the automobile industry to the American economic cycleStructure and performance of the automobile industryThreat of new entrantsThreat of substitutesThreat of rivalryBargaining power of customersBargaining power SuppliersGM Business StrategyConclusionReferencesIntroductionThe automobile industry consists of many companies that design, produce, sell and market automobile vehicles. This sector is one of the largest revenue generators in the world, with total revenues of around $4 trillion. The main products in this industry include passenger vehicles, light trucks (which include vans, SUVs, and pickup trucks), and commercial vehicles. Over the years, companies from China, Korea, the United States, India, and Germany, among others, have increased vehicle production to meet the demands of a growing market. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an Original Essay One such company is General Motors (GM), which was established in 1908 and is now ranked among the leading vehicle manufacturers, designers and designers. sellers around the world. GM is currently ranked among the top revenue generators in the United States. It has 173,000 employees and generated revenue of $147.049 billion and net profit of $8.014 billion in 2018. The company manufactures its products in 37 countries, with brands including Cadillac, Buick, Chevrolet and GMC. GM also makes hybrid electric vehicles, extended range electric vehicles, flexible fuel vehicles and hydrotec military vehicles. This broad product offering has allowed GM to become a world-renowned vehicle manufacturer and seller and thus secure its position in the automotive market. The automotive industry Companies in this sector manufacture, design and sell their automotive products on a global scale. However, the automobile industry does not include organizations such as gas stations and vehicle repair shops, which are responsible for vehicle maintenance. The industry was established in the 1860s, with the United States leading in production. The demand for vehicles has been increasing since 1929, when there were approximately 32,028,500 vehicles worldwide, most of which were produced in the United States, but by 2010 that number had reached 1 billion vehicles. The United States led other countries in production for many decades, but over time, countries like China and Japan overtook the United States and sold more vehicles than before. Additionally, there are many more vehicle models in the United States than in previous decades. Most people in developed economies use vehicles as their primary mode of transportation and hence the demand for vehicles is high. However, a report by McKinsey & Company (2013) found that profits and vehicle sales would increase by 50% and there would be increasing demand for vehicles in the BRIC (Brazil, Russia, India and China) markets. Conversely, the industry has slowed in developing countries, and this trend may continue for the foreseeable future. It is therefore important for industry organizations to realize that challenges related to changing consumer trends, divergent markets, digital demands, cost pressures due to platform sharing and regulatory pressures will significantly influence the industry . The main onescar manufacturers in the sector, based on their production are Toyota, Volkswagen Group, Hyundai, GM, Ford, Nissan and Honda. Many manufacturers in the automobile industry typically form partnerships in order to improve their economies of scale, increase brand recognition, and increase profits and revenues. For example, Daimler AG has a stake in Mitsubishi Fuso Truck as well as the Renault-Nissan Alliance, while GM has a stake in the SAIC Group and GM Korea. This has enabled the industry to produce diverse and unique vehicles, satisfying varied consumer demands.The automobile industry and the American economic cycle Even though the automobile industry contributes significantly to the GDP growth rate in the cycle American economy due to its links with other sectors of the economy, it represents only a very small fraction of total GDP (OECD, 2009). The business cycle and this industry work in unison, but the impact of the cycle is greater in the auto industry. Therefore, the industry is more volatile than other manufacturing industries in general, as it is highly dependent on the business cycle. Thus, the automobile industry has been significantly affected by recessions which have reduced the purchasing power of consumers. However, a positive change in market conditions should also improve car sales. During the financial crisis of 2008 to 2010, many American, European and Asian automobile manufacturers were affected. Furthermore, the increase in fuel prices due to the 2003-2008 energy crisis, weak real estate market and tight credit conditions further weakened the sector (Das, 2008). As a result, sales of SUVs and pickup trucks have declined at U.S. companies such as GM, Ford, and Chrysler (the big three) due to the high fuel consumption of their vehicles as consumers shift to using vehicles hybrids and other fuel-efficient vehicles. This led to reduced sales, and in 2008 the credit crisis worsened the industry's ability to obtain raw materials at an affordable price. Automakers have therefore implemented creative marketing strategies to retain old customers and gain new ones during the slow period of the business cycle. The Big Three and other manufacturers gave deep discounts on their products, but this did not lead to increased sales. In particular, the Big Three have been accused of selling expensive vehicles at a time when fuel prices were a challenge, forcing consumers to turn to affordable, smaller vehicles from Europe and Japan . As a result, the US government intervened to save the auto industry at a cost of $80.7 billion between 2008 and 2014 (Amadeo, 2019). This helped GM and Ford stay in business and avoid job loss for their workers. The industry believed its losses were caused by external business factors it could not control. This demonstrates that when professional markets suffer, automotive companies also suffer. During the recession, car sales declined in the United States, impacting international and domestic manufacturers. However, GM filed for bankruptcy in June 2009, but quickly emerged the following month. It is evident that the US economy and business cycle largely affects the industry. A reduction in consumer credit during the recession led to a reduction in vehicle sales, as the average consumerwith limited credit was unable to obtain a loan to purchase a vehicle. In 2012, vehicle sales in North America totaled 17 million units, an increase from previous years. years. This is because at this point the effects of the economic recession were muted, so consumers had greater purchasing power. Additionally, instability in the U.S. job market and consumer finances discouraged consumers with a working car from purchasing another at that time, which affected production for most manufacturers . As such, vehicle sales are cyclical as they rise and fall over time. The economic recession was very severe until U.S. vehicle sales fell below the replacement rate of 15 million, but this figure improved to 17 million in 2015. However, there are now concerns that vehicle sales in the world have reached their peak again and could fall in the future. years. The economy is currently strong, but industry analysts are concerned because vehicles are expensive and the industry employs a large number of people (Business Insider, 2019). Thus, the above factors are now considered a recession indicator that the industry can follow to determine its place in the business. Companies in the industry went bankrupt and faced difficulties during the recession, but the Usual slowdowns do not have a significant impact on the sector. The idea that vehicle sales have peaked and can only fall is gaining ground, with analysts saying that car sharing and alternative transportation have reduced the need for individuals to own a car. This means that even in a positive economy, consumers continue to turn to alternative modes of transportation, which will affect the sector. However, the U.S. credit cycle is countercyclical, allowing automakers to make profits globally even in a U.S. recession. Currently, the U.S. auto industry accounts for 28% of total GDP, or $518.1 billion. Vehicle manufacturing in the United States ranks second in the world, due to its annual production of approximately 11.19 million units (Investopedia, 2019). The market therefore rises and falls according to the booms and busts of the US economic cycle. This means that the industry and its consumers do well when the economy is growing and peaking and vice versa. This is mainly because, as with all discretionary habits, organizations and consumers spend more when they have a surplus and vice versa. Structure and performance of the automobile industry Threat of new entrants This threat is very limited because the industry is capital intensive and therefore presents significant barriers to entry and exit. Manufacturers invest significant financial, human and infrastructure resources in the industry, and the legal and compliance costs for the industry are prohibitive. As a result, new companies find it difficult to enter the industry and build customer trust and loyalty, similar to how Mercedes and GM benefit from brand loyalty. Threat of SubstitutesThis threat is moderate for GM because customers may switch to GM's competitors or use alternative means of transportation. . Various manufacturers sell luxury and stylish vehicles, but the threat of substitutes is mitigated here because GM is a well-known brand and customers trust the company's products.So even though companies in the industry pose a threat to each other, their different product offerings allow them to reach and retain customers. Customers will therefore look for manufacturers who sell less expensive, fuel-efficient or durable products. However, surrogate companies are trying to attract customers who are sensitive to vehicle prices. Threat of rivalry There is high competition among companies in the industry as they offer a wide range of products based on the application of technology, pricing strategies, design and style, and branding. picture. All companies have significant investments in innovation, research and development, as well as brand and sales marketing. Competition means that companies are very aggressive in seeking competitive advantage and greater market share. The industry is mainly oligopolistic because there are around ten manufacturers who control 70% of the market. Rivalry is very strong between the five largest manufacturers, but it could intensify due to globalization which forces companies to enter new developed and developing markets. GM operates in an oligopolistic market structure, with very few manufacturers using a similar structure. As a result, customers easily substitute one product for another, but their purchases are limited to the few firms in the oligopoly. However, any action GM takes (such as launching a new product or reducing price) usually provokes a reaction from other companies. This maintains intense competition between companies, which must predict how their rivals will react. According to the Nash equilibrium, one player's strategy is generally the most efficient response to the strategies of others. For example, GM and Ford have provided discounts on popular SUVs. This gave rise to discount wars, with each company having a unilateral right. They ultimately did not gain a price advantage. Bargaining power of customers This is a significant threat because customers may switch to other companies that sell cheaper products. Today's customers are price sensitive and are able to research information before making a purchase, so they can easily select the best vehicle option (Menon, 2017). However, car manufacturers usually offer customer services as well as discounts to individuals and businesses, which ensures customer loyalty. GM has been embroiled in antitrust lawsuits over the years as the federal government pushed to keep customers safe. For example, the Federal Trade Commission (2016) found GM guilty of deceptive advertising and ordered the company to recall its certified pre-owned vehicles over safety concerns. This empowers customers and ensures that all products purchased are durable and safe for long-term use. Additionally, these metrics enable customers to make better purchasing decisions. In the case of United States v. General Motors Corp (1966), GM, and three Chevrolet dealer associations were found guilty of colluding to restrain trade and eliminate a class of competitors, thereby demonstrating a monopolistic market strategy. Bargaining Power of Suppliers This threat is low because manufacturers can select raw materials from a wide range of suppliers in the market who ultimately sell their materials at affordable prices. Additionally, some companies manufacture their own components, reducingthus the need to use a supplier. As a result, manufacturers are able to demand concessions from suppliers because they have many options. GMGM remains the largest automobile manufacturer in the United States, accounting for 17% of total industry sales. However, at the global market level, GM is not one of the leaders but it holds a 9.5% market share because it is a very competitive and diversified market. As emerging markets continue to grow, GM has the opportunity to establish a presence in these markets and thus increase its market share in both local and global markets. GM's business strategy is based on innovation, safety and quality, delivering value and creating positive impact. difference and customer loyalty. These factors aim to promote sustainability at GM and ensure customer satisfaction through offerings based on renewable technologies, innovation and efficiency measures. The company uses a generic strategy that allows it to gain a competitive advantage in a dynamic industry. GM uses its economies of scale as an advantage and also uses intensive growth strategies. Its cost leadership strategy means that GM is able to sell its products at lower prices than competitors such as Mercedes, which satisfies the majority of consumer needs and gives it a competitive advantage. The company further uses product differentiation by manufacturing energy-efficient vehicles to meet changing consumer needs and demand for fuel-efficient vehicles. This means that GM must ensure that its brand image remains positive and offers user-friendly and innovative features in its products. Additionally, the company has a market penetration strategy that ensures that GM has a large number of dealers across the world, making it easier for customers to access its products. GM also uses vehicle financing and leasing as part of its business model to increase revenue and profits through General Motors Financial Company. Keep in mind: this is just a sample. Get a personalized article from our expert writers now. Get a Custom EssayConclusionGM must therefore ensure that its sales and marketing strategies enable it to increase its market share and maintain its competitive advantage. A careful assessment of its internal and external environment should serve as factors to exploit opportunities and mitigate threats in the automobile industry. Indeed, the industry is expected to continue to grow, but also evolve according to market trends. The market also evolves over time. References Aichner, T. and Coletti, P. (2013). 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