The automotive industry

2. Abstract

The automotive industry is made of a wide range of companies and organizations involved in designing, developing, manufacturing, marketing, and selling motor vehicles; it is also one of the world's largest economic sectors by revenue. In addition, the automotive sector relies on increasing consumption worldwide, stimulated by the desire to excel, in which individual classes compete for cultural capital and status. The automotive industry has experienced drastic changes over the last century. As a result, the global automobile industry is an oligopoly in which several noteworthy companies dominate the market, i.e., 14 firms control 62 brands. For instance, in the US, the market is concentrated with just three companies: Ford, General Motors, and Fiat Chrysler Automobiles. The main question is why successful strategies in this industry are so short-lived. The answers can be found between rising costs, Chinese growth, and overcapacity. Still, everything has the same germ, and that is that manufacturers have constantly relied on statistical business models and failed to adapt to a changing environment.

3. Introduction to the auto industry

3.1 Industry definition

The automotive industry is comprised of a wide range of companies and organizations involved in designing, developing, manufacturing, marketing, and selling motor vehicles. It is also one of the world's largest economic sectors by revenue (see, for instance, Law, 2019).

3.2 Industry profile

To further examine the current situation and predict future developments, it is necessary to briefly summarize the development of the automotive industry in the first chapter. Therefore, we will omit Karel Benz's first production vehicle from 1886 and start with the serial production of the Ford T, when the automotive industry began to penetrate more people (Law, 2019).

The automotive sector relies on ever-increasing consumption worldwide, a consumption that is stimulated by the desire to excel, in which individual classes compete for cultural capital and status. This sector thus takes advantage of class differences and highlights them even more. Cars occupied the US market in the late 19th century during the economic crisis and class conflicts they were immediately associated with. And because cars at the beginning of their era were beyond the reach of ordinary people, only the highest class could afford them. It also emphasized not only the technical side of the machines but also aesthetics. Former United States President Woodrow Wilson told the New York Times in 1906 that "nothing spread socialist thinking more than cars," fearing growing class differences and especially the reactions of the less fortunate.

The first cars, with apparent elements exceeding need, brought their owners a specific cultural capital. They were not only means of transport but also a form of work of art. Poorer upper-class members, professionals, and middle-class managers also wanted to increase their cultural capital, lacking the economic resources to settle for cheap imitations sufficient for them to substitute machines up a class. At the beginning of the 20th century, the growing demand for cheaper alternatives for people looking to make their success visible forced car manufacturers to enter this less lucrative market, introduce cheaper models, and look for lower-quality and cheaper solutions.

In 1908, the Ford Motor Company introduced the first car in series production, the Model T, which was available to both the lower upper class and the wealthier of the middle class (Law, 2019). In the United Kingdom, series production was delayed because this production method would reduce the importance of car ownership. Although the difference between a mass-produced car and a luxury car was very significant, the buyer of the T model did not mind, as car ownership was a sufficient substitute for them in its essence.

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