Automotive in News

The automotive industry is the industry involved in the design, development, manufacture, marketing, and sale of 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 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; the 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]

The "Big Three" (General Motors, Ford and Chrysler) have done poorly in recent years. They have lost most of the market to imports and "transplants" (cars made in U.S. factories owned by foreign makes). The first signs came when Volkswagen and Honda started importing cheap, well-made cars in the 1960s. Detroit convinced Congress to impose quotas, and the foreign companies responded by opening their own plants in the U.S.

The "transplants" were built in the South and are non-union. Facing steady financial losses, The Big Three have closed many factories and drastically cut employment, especially in Michigan. The most expensive part of closing a plant is the union contract which require them to "buy out" union workers, at a typical cost of $100,000 to $150,000 each. Health care and pension costs add $1500 to the cost of each vehicle made by the Big Three, and their wage levels are much higher than the transplants. Average annual wages for production workers at the Big Three were $67,480 in 2007, and $81,940 for skilled workers. GM spun off many of its employees in certain divisions into independent companies, including American Axle in 1995 and Delphi in 1999. Ford spun off Visteon in 2000. The spin-offs and other parts makers have shared Detroit's downturns, as have the U.S. owned plants in Canada. All together the parts makers employ 416,000 people in the U.S. and Canada.

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