AutoNation having a problem with its inventory because of…
- Detroit's century-old business model, which dates to Henry Ford's mass production of millions of largely identical Model T's. Rather than build cars to suit customer tastes, U.S. auto makers churn out what makes sense for their plants, and then use incentives and rebates to lure buyers. The thirst for revenue to pay for mounting health-care and pension costs has further encouraged companies to keep plants running regardless of demand.
- Dealers often have a surplus of new cars sitting in their lots for months at a time that no one wants to buy it.
Why is this also a problem for auto manufacturers such as GM, Ford, and Chrysler?
Their manufacturing processes are not set up to quickly change production models and have been geared toward optimizing the efficiency of the production plant.
Still, selling cars isn't the same as selling televisions or toothpaste. For one thing, it takes up to three years for a car company to design and build a new vehicle. Consumer tastes can shift almost overnight as gasoline prices rise or fall, or as one automotive fashion fad gives way to another.
How is this problem impacting the business performance of AutoNation and of the auto manufacturers?
The problem impacting business performance of AutoNation and of the auto manufacturers by the following…
- Losing market share to the Japanese and Koreans
- auto manufacturers are scrambling to revamp their product lineups
- The enlarged inventory and slow turnaround hurt dealers because they must borrow money to pay for the cars the manufacturers ship
What pieces of data do AutoNation need to determine what cars to stock in each of its dealerships?
The following pieces of data AutoNation need to determine…
- Preferences of car buyers (Fuel efficient small car or top-of-the-line interiors with V8 engines)
- Most popular configurations (Such as Ford F Series for year 2006)
How can it obtain these data?
The data can be obtained by using sophisticated analytic software. AutoNation uses proprietary analytic software as well as assistance from DME. The chain has divided customers into 62 groups that receive mailings that have been customized for each group with relevant sales pitches and service specials.
What is AutoNation’s solution to its problem? What obstacles must autonation overcome to implement its solution? How effective will the solution be?
AutoNation’s pressured the Ford, GM and Chrysler to cut back on production and focus on building cars that customers actually want. Besides they attempted to integrate customer data with auto manufacturing processes. The work started when the company put forth a major effort to consolidate the customer lists from its hundreds of dealerships.
The following obstacles needed overcome to implement its solution…
- big and rising costs for union health care and pensions
- Operations and those of their suppliers -- many of whom are also ailing -- tend to be older and less flexible than those of Japan's Toyota and Honda Motor Co
At present it can’t be said how effective will the solution be because after implementation it requires time and several studies.
You May Also Find These Documents Helpful
-
Since the beginning of the last century, automobile companies have fought for control of a quickly expanding market in the newly created automobile industry. Hundreds of companies attempted to secure their place in market but ultimately, only three companies remain today (Wright, 2012). The decisions, mergers, and products those three companies made is ultimately what kept them going. Starting a business and ensuring its success are two different things entirely. A successful business will recognize the need to adapt to the various pressures exerted on it from other forces.…
- 1892 Words
- 8 Pages
Powerful Essays -
the case according to an article by Joseph B. White. Based on his analysis, automobiles that use…
- 701 Words
- 3 Pages
Good Essays -
| * Consumers demand for these vehicles remained unclear * Product of capacity of manufacturers was limited which affected their supply * U.S. economic growth in 2011 was sluggish * Competition is projected to increase dramatically * Automobile…
- 923 Words
- 4 Pages
Satisfactory Essays -
The case on the global automobile industry demonstrated by lowering cost through innovative production without sacrificing quality is the defining characteristic in a successful company. I found this case interesting because it characterized a successful automobile producer as one that will cut cost in an innovative approach to deal with a market that is constantly changing. The innovation in producing automobiles started with Ford through mass production and continued all the way to today with companies promoting major suppliers to move closer to assembly plants to cut cost. Since the beginning of the automobile industry the company that was able to lower their cost was the company that would lead the way. However, giving up quality is not a viable option. Lower quality automobiles lead to the down turn in the American automobile market share. In my Porter’s 5 Forces analysis I will identify key competitive forces in the automobile industry.…
- 1239 Words
- 5 Pages
Better Essays -
In 2005 the US automakers were incurring huge losses due to spiraling fuel costs and economic slowdown across the globe. Adding to the losses were rising prices of components and reversals of vehicles for product complaints. By the end of the first quarter of year 2006 the balance sheets of the three giants were deep in red and strategies for saving the corporations from Chapter 7 of the US Codes were broadly discussed. Major chunks of the businesses were being sold and massive lay-offs accompanied with shut downs were a common phenomena globally.…
- 5631 Words
- 23 Pages
Powerful Essays -
The 2008 financial crisis began in the American subprime mortgage crisis, eventually evolved into a global financial crisis. Most countries because of the impact of the financial crisis, leading to a sharp slowdown in consumer’s vehicle demand. Also, because of the financial crisis, the global motor vehicle industry experienced a full-scale market competition. Some small car companies to be phased out, which do not has the competitive. Therefore, the automotive industry experienced a process of merger or reorganization, from scattered to centralize. Various international companies actively adjust marketing strategy and direction; more comply with the modernization of the economy and the demand for various kinds of small and super precise motor products. Automotive industry globalization has become a reality, because the car gradually spread in the world, and everyone have different requirements on the car’s performance and price, so the import and export trade of automotive products also had a high proportion in the vehicle market.…
- 1142 Words
- 5 Pages
Satisfactory Essays -
References: Chappell, Lindsey, (1989) "Sales Climate Chills Mall Fever" Automotive News, August 7, p. 1. Defrancesco, Brian (1990) "Bucks From the Future," Ward 's Auto Dealer, March, pp. 20-27. Ferron, J., and Jake Kelderman, Betting on the Franchise, 1984, NADA. Jackson, Charles, (1990) "Local Black Dealers Are Here to Survive," The Cincinnati Enquirer, November 27, section D p.1. Maynard, Roberta, (1990) "No Train, No Gain," Automotive Executive, April p. 25. NADA (1990) "Project 2000 Redux, part 1," Automotive Executive, March pp. 32-41. NADA (1990) "Project 2000 Redux, part 2," Automotive Executive, April, pp. 35-41. NADA Data Book, (1989) pp. 1, 3, 4, 7, 9, 11, 12. NADA (1981), Cash Management, p. 3 NADA, Job Descriptions Robert Morris Associates, (1989) Sorge, Marjorie, (1990) "Honda Will Be Hot, Economy Will Drag," Ward 's Auto Dealer, March, pp. 41-43. Spinella, Art (1988) "Sinkhole," Ward 's Auto Dealer, November, pp. 27-33. Timmons, Jeffery A., (1985) New Venture Creation, Irwin Homewood, ILL. 60430 BIBLIOGRAPHY Chappell, Lindsay, (1990) "Dealers Sing the Blues," Automotive News, February 5, p. 1. Stertz, Bradley A., (1989) "Car Dealers Face Shakeout as Sales Sag," Wall Street Journal, June 7, p. b1(w). Thomas, Charles M., (1990) "DEALERS: Fewer outlets, CSI, Computers, Tonkin," Automotive News, January 1, p. 11.…
- 4353 Words
- 18 Pages
Powerful Essays -
AutoEdge in which is taking a major and/or big risk changing moving the company to south Korea in which would affect the cost of leadership. In which would be a down fall for corresponding to the quality in which could suffer a major lost and would potential led to a recall on several and millions of automobiles. (M.U.S.E, 2014) Another weakness would be not being able to function in an oligopoly in which the company would not be able to fluctuate with pricing in which then would be limited for the company. AutoEdge has a relatively inelasticity of the products that they have and the company prices will be dictated as well the company will be monitored by the competitors pricing for the company to be able to compete and/or competitive. If AutoEdge prices was to increase and not be able to match the competitors pricing the organization would potential lost their market share. And finally the weakness of a company would be uncertainty that a company is able to rebuild the company’s brand as well as grow a market share. In which would give the competition an advantage to be able to improve their company market share in which would be due to poor performance of a company as well as recall and any fines that the company may have occurred over the years in which they will continue to have to be able to grow the market share. It can only be estimated how long the process could possible take as well as the cost of what it would be for the company to consider a rebranding plan for the company.(Hill,…
- 818 Words
- 4 Pages
Satisfactory Essays -
There are several things involved when buying a car. You would like to have a car you can enjoy and have for a long time. Even if it is not exactly what you want it the quality that counts. There is no reason to have a car and want to sell it in a couple of months. There are three steps in buying a car which are searching, driving, and purchasing.…
- 507 Words
- 3 Pages
Good Essays -
Ford running into these problems for the most part is simply having to do with the lack of money and quality of machinery being put into, for a car to…
- 891 Words
- 4 Pages
Good Essays -
There are numerous external factors that impact the auto industry and whether or not product marketing will be successful. Luckily, businesses can take action to make sure they are as pro-active as possible to ensure success. Unfortunately, despite planning, research, and the pro-active measures some things will also be out of one’s control and require adaptability if nothing else. With that being said, perhaps the biggest hindrances to the automobile industry are the political factors. Trade restrictions, tax policies, employment regulations, and consumer protection legislation, fair and safe markets, political influences on business infrastructure can all vary substantially from one country to the next (Finch, 2012). This is…
- 1790 Words
- 8 Pages
Powerful Essays -
In the long run, what do most automobile manufacturers do to avoid this large exhange rate…
- 296 Words
- 2 Pages
Satisfactory Essays -
Car loan default is generally not good for either the borrower or the lender. As soon as a loan has been identified as default, the lender can pursue car repossession and charge off. The lender will typically take back the vehicle, may take with repossession, resell it, and charge the borrower for the balance. The lender may take this unpaid amount, place it in collections, and consider it a charge off the tax purposes. That means it is an amount of money that the lender expects to lose. Because the negative impact of a dealership closure is network wide, how manufacturers respond today is now more important than ever. This paper outlines the relationship of consumer’s financial distress against their specific impact on the automotive industry such as delayed research and development, and bankruptcy of common dealership.…
- 3695 Words
- 15 Pages
Powerful Essays -
- If we increase production, we will have the problems with the morale of workforce. Workers think this will have a bad effect on the quality of the cars. Dealing with the subcontractors will bring down company’s reputation and client’s loyalty.…
- 327 Words
- 2 Pages
Satisfactory Essays -
A cause-and-effect analysis was conducted on the external forces that caused the company to be pressured and choose its illicit strategy. The main causes to the problem of pressures from external forces were: technology, the industry forces, the emission standards and regulations, and the controls and monitoring. The automotive industry is going through a transformational era. There is a course of smaller automobile companies being acquired or merged by bigger companies. The industry is highly competitive; companies need to stay innovated and introduce new cutting edge products to stay competitive. Another factor that has had great effect on the automobile industry is the great pressure to create environmentally…
- 746 Words
- 3 Pages
Good Essays