Auto Industry
The auto industry is in the maturity stage where competition and price cutting is fierce. The US auto market remains flat and companies are struggling to make vehicles reliable and efficient at a reduced price. Supplements for vehicles such as oil and auto parts are increasing in price putting pressure on profit margins. Prices of oil and steel are changing the type of vehicles demanded and the way they are designed. These components are responsible for many of the problems that the industry faces today.
Oil Prices
Oil prices have risen in the Middle East due to demand and difficult oil refineries. Oil is used both to make gasoline and in tire production. Gasoline prices in the US have increased dramatically during the last few years reaching averages over $3.00 a gallon. The auto industry has to meet new demands for more fuel efficient conscious consumers. The big three motor manufactures GM, Ford and Chrysler combined have over a 90 percent share of the heavy-duty truck market in the US. The heavy-duty truck segment is known for its inefficient fuel consumption but until recently gas prices in the US been relatively cheap compared to the rest of the world. Foreign competitors such as Toyota and Nissan are stealing market share because they offer heavy-duty trucks with better fuel economies.
Steel Prices
Another major supplement to the auto industry is the steel. China has increased the demand for steel and increased the price. The steel industry is also consolidating into larger companies that limit the bargaining power of auto makers resulting in more price increases. Steel prices are important to the auto maker's decisions on th ...