Automotive Industry

Changes In Global Business Assignment

Brief History

The automotive industry entered Canada through the U.S. The big car manufacturers of the states were imported to Canada duty-free through the auto pact. This agreement allowed any car owned by a U.S company to import to Canada without any tariffs. In the 1970s however, a gasoline shortage caused prices to rise, which lead to an increased demand for smaller, more fuel efficient cars. The big three companies (Ford, Chrysler and General Motors) finally had a reason to be competitive. Their fuel consumption figures were far below other imports so more consumers began to move to imports. Eventually the realization came that imports were not only more efficient, but safer and better built as a whole. With the increase in imports, Japanese car manufacturers complained about the huge tariffs they paid even if their cars were manufactured in North America simply because there was no American ownership. This caused the Auto Pact to discontinue. As for the impact of international business on the industry, the industry only began as a result of international trade as no Canadian owned cars have ever existed. The industry exists here, and is sustained by international business.

Technological Changes In The Industry

Gadgetry

The automotive industry has been evolving over the past few years due to the rapid changes in technology affecting the industry. Many of these technological advancements are as a result of other shifts in trends, or mindsets but are often completely independent of environmental concerns, or health issues. For example, in the past, car manufacturers would stand out using a good build of the car itself. Nowadays that isn’t really enough so what do car manufacturers do today? With the countless little gadgets that technology provides, car manufacturers have found the way to being unique. Car manufacturers today can be seen producing 7 different shades of ambient lighting in their cars, or cars that act as a wifi hotspot, or cars with a 10 function massage chair, or cars with a night-vision feature. These little features seem unnecessary to many, but it allows cars to stand out by providing little things that may not even be used, but act simply as a cool feature to have. These features have provided the basis for some car models’ success entirely on their own.

Electric Motors

Electric motors are another technological advancement which have impacted the industry hugley. The fastest lap time on the Nurburgring currently is the porsche 918, whose 612 hp 4.6L V8 is complemented by a 275 hp electric motor. A whole new submarket of hybrid hypercar has been invented and has taken the world of automotive performance to another level.

New Processes

Marketing

The automotive industry is changing right in front of us and the last few years has seen the greatest change to the industry yet. The method of making a connection with the customer has changed drastically. The internet is the main reason for this change. A huge number of buyers will look up a car before going into the dealership so what may have been the best dealership in the past may not even get a customer into the dealership if the website isn’t appealing enough. Beyond just the look of the website, a recent option to build your vehicle online plays perhaps the biggest role for serious customers. Many online websites do not give an adequate view of the car being built, showcasing the car built online instantly attracts customers as they appreciate what has been built and they will go into the dealership because they have a good image of what they will get. If what they built online is not appealing, they won’t expect much from what they are going to buy so they won’t bother going to the dealership. For the customers who aren’t serious enough to build a car, but are online window-shopping, the outlook of the website, just on a superficial level is enough to make or break their perception about a company. That image is what will decide where they do end up going once they actually decide to buy a car. Entirely different from the past, the marketing game nowadays starts long before the customer enters the dealership.

Distribution

New processes in the aspect of distribution plays a big role in the automotive industry today. Many higher-end car manufacturers deliver cars to the customer rather than having customers pick them up from the dealership. Examples are Ferrari, Lamborghini, Audi (for certain cars) and many others. This exclusivity factor adds hugely to the experience of buying the car and allows car companies to set up fewer plants as they will be shipping cars anyway. This exclusivity also pulls in customers in an odd way. One of the key factors of buying an expensive is the rarity of the vehicle, so adding to that feeling is an almost effortless way for the dealer to add to this feeling.

Inventory Control

Lastly, Inventory control has become huge in the automotive industry. With the transition to a new generation of cars (hybrid technology, electric boost motors etc), many older era cars are being phased out with a bang. Countless ‘Final Editions’ of many different cars have been produced with a numbering on each car. Examples of this are endless, from the Lamborghini Veneno, the Mercedes SLS AMG Final Edition and the list goes on. This instantly drives up prices and allows these cars to be auctioned off by the dealer. This idea was unheard in the past, auctions were only for re-sellers then but this inventory control allows manufacturers themselves to auction cars for exponentially higher than what they could sell the car for off auction. A Lamborghini auctioned for 2+ million dollars? A ridiculous reality.

New Trends And Attitudes

Environmental Concern

Concern for the environment is a game changing attitude-shift as it has brought out whole new markets which, 50 years ago were considered ludicrous. The simplest example of this can be the sub-market of electric cars. Tesla motors is a multi-billion dollar company and its sales are based on the idea that cars can be driveable while protecting the environment from the ill-effects of gasoline powered cars. In the past, ideas of even hybrids were disregarded but now full electric cars, zero emission cars, and even hybrid technologies are on the rise again. This shift is taking place on all levels,even hybrid-hypercars are taking part in saving the environment. Based on this, it is easy to say that the shift in focus to saving the environment has had a huge impact on the automotive industry as a whole.

Health Concerns

Watching old movies gives all of us the semi-true impression that the 1960s were incomplete without cigarettes. Today however, laws are being put into place to actively restrict the impact that smoking can have on health. This new attitude towards smoking has made ‘smoke-free’ cars more valued on the classified market. Car companies saw this opportunity and have decided to step up to this challenge for their customers and have fitted their cars with air purifiers so customers can enjoy smoking without ruining the resale value of the car.


Emission testing has taken a huge leap on our list of priorities in recent years as a result of the health concerns related to it. All cars now post their emission ratings as a regular statistic next to horsepower and torque figures. In the past, nobody had time to care very much about these figures. Governments now impose very strict regulations for the emission levels of different vehicles. An example which attests to the seriousness of the issue is the Volkswagen scandal. They were fined huge sums of money for cheating through tests meant to regulate the emissions of the vehicles. The size of the fine really attests to how seriously this issue is taken by governments in today’s health oriented world.


For the purpose of foresight, even with the new hybrid and electric cars slowly emerging in the market, health concerns are already being voiced. The concern now is of the effect of electromagnetic radiation effect occupants of the vehicle. This obviously applies to pregnant women and young children first as they are most susceptible to it. No moves have been made to address the issue as of yet, but with the number of electric/hybrid vehicles in the market increasing, the voice articulating this issue will only keep growing.

Social Attitudes

As social trends go, there are a number of trends that we can all see quite clearly in the direction car manufacturers take when selling their vehicles. This being said, all the methods point to establishing brand name. The social attitude that has become prevalent towards cars is that they are a representation of who you are as a person. The same way many critics discuss the consumerist culture we see today, they could quite accurately apply this culture to the automotive market. Cars with an established brand focus most on reminding people of the brand rather than discussing features, or stats that actually make their cars great. The easiest example is BMW. They talk a great deal about the ‘ultimate driving experience’ but never explain it, they simply state its existence next to a BMW badge. Car makers that don’t have an established brand name advertise in the form of comparisons. They continually highlight features that highlight their superiority compared to other brands. ‘Largest rim size in class’ doesn’t tell me that the Subaru Impreza has a large rim size, but that its rim size is larger than the other competitors. Is it necessarily a good thing? Who knows. What matters is that they are superior to more established competition such as Toyota, Honda and Mitsubishi. When discussing the closure of Scion, one of the keys to the downfall of Scion was the idea even new car buyers were not concerned for an exciting car, but more concerned for a ‘trustworthy and respected brand name’. This culture shift has changed the way cars are advertised, and produced as they have to do what competition does better rather than opening up new avenues of making a great vehicle.