PROBLEMS ENCOUNTERED IN THE MARKETS FOR AUTOMOBILE

Problems Encountered In the Markets for Automobile



Problems Encountered In the Markets for Automobile

Introduction

The auto industry is a major contributor towards the economy of all the major manufacturing countries worldwide. It not only provides countless job opportunities but also has the economic impact. The global automotive industry is highly diverse and comprises of various product segments like engine parts, drive transmission and steering parts, suspension & braking parts, electrical parts and other auto components.

It is no secret that the UK government's car scrappage scheme has led to an enormous increase in business in the UK car market, but is this sustainable and is this rise masking other issues in the wider economy?

UK Government

The fact that the UK government recently extended the car scrappage scheme, and would seem highly likely to extended again as we approach the election, should not go unnoticed by those looking at the UK economy. There is now a feeling that the momentum caused by the UK government's car scrappage scheme may well push the UK economy back into growth in the third quarter of 2009. However, what will happen when the UK car scrappage scheme finally ends in 2010?

There is deep concern that the UK government, which has received more in increased VAT payments that it has actually invested in the car scrappage scheme, is not willing or not able to invest significant funds in the long-term. Despite the fact the authorities have made it known there is £2.5 billion to spend on the UK car industry, only a tiny portion of this has been allocated so far. Whether the UK government is keeping its powder dry as we approach the election, with more potential "bribes" to be announced, or is in fact unable to fund significant investment, very much remains to be seen.

Autos industry covers a vast array of vehicles like luxury cars, passenger cars, specialist vehicles, motorcycles, scooters, mopeds, and off-road vehicles manufacturers & dealers of automobile components and accessories, car-care products, environment and safety equipment, garage and service equipment, moulds and dyes, oils & lubricants, petrol vending machines, tires, batteries and auto electrical, upholsteries and much more. The automobile has enabled people to travel and transport goods farther and faster and has opened wider market areas for business and commerce. The auto industry has also reduced the overall cost of transportation by utilizing methods such as making several products at once, rather than one at a time, selling products nationally rather than locally and globalization of production. In the early days of its inception, this invention had to face many problems. There was no real established industry and the manufacturing processes involved were slow. With the automakers and auto buyers' base expanding globally, auto making became the world's largest manufacturing activity. Now this industry is making approximately 58 million new vehicles each year all across the globe.

The Automotive Industry Crisis of 2008-2009

The automotive industry crisis of 2008-2009 was a part of a global financial ...