Analysis: Global Auto Industry

Global Auto Industry The main problem of the global auto industry is the declining market in developed nations. Increased competition between domestic auto companies and foreign auto companies has caused an oversaturation of the market with minimal potential buyers. Before the recession, banks were giving out loans to people who could not afford them. Once the housing bubble burst, crumbling markets around the world, banks were forced to become more selective about potential borrowers. The economic crash didn’t just affect the housing market but also the auto market as many people purchase cars through loans. With abundant supplies of automobiles sitting at dealerships, inventories skyrocketed. Even people that paid with cash were more hesitant to buy automobiles as the economy turned more and more unstable. American car companies were especially hit hard as the domestic market, which is also the world’s largest auto market, had been declining for a while being replaced by better quality and cheaper foreign cars. The drastic increases in oil prices over the last few years has only aided in the steady decline of consumers. Even though US auto companies still hold the highest percentage market share in SUV and trucks, gas prices had made that an incredibly costly niche as many have switch to more environmental and economical means of transportation which coincidentally is a specialty of foreign companies like Toyota. Even though the recession and oil prices took the biggest toll on the auto industry as whole, we can’t ignore such factors as labor costs and the costs associated with constant updating. It is no secret that the US maintains one of the highest costs of labor in the world mostly because of our cost of living and benefits we provide to the working world. Labor costs were and still are a big factor in the bailout and bankruptcy of GM. GM is responsible for providing costly benefits to retirees that outnumber their current workforce. The costs