BUS 225 Milestone One Executive Summary November 14

BUS 225 Milestone One Template Executive Summary November 14, 2021

Describe the problem: Industry problems are a commonality in the modern business world as organizations work to remain as competitive as possible to wither off competition from industry rivals. The U.S automotive industry is no exception, and this originates from the changing industry environment. The industry has experienced an upsurge in electric cars that subject companies manufacturing non-electric cares to intense competition. Self-driving cars are also new challenges for the companies because this is almost the ultimate dream for all purchasers of automobiles. Organizations that base their operations on a singular product are now compelled to invest in emerging technologies.

The principal objective of this study is to conduct a systematic analysis on the U.S automotive industry with a specification on different diversification avenues that can be exploited for greater profitability. Utilization of both quantitative and qualitative data is important in this review because it shall help in the understanding of empirical aspects about the automotive industry transformations. It shall also address different prospects including the origin of the trends and customer feelings through the analysis of the qualitative data.

Paper For Above instruction

Introduction

The automotive industry in the United States is undergoing significant transformation driven by technological advancements, changing consumer preferences, and evolving environmental regulations. These shifts pose both challenges and opportunities for manufacturers, prompting strategic adaptations to remain competitive in a dynamic global marketplace. This paper offers a comprehensive analysis of the current state of the U.S automotive industry, explores emerging trends, and evaluates diversification strategies to enhance profitability amidst evolving industry conditions.

The Current State of the U.S Automotive Industry

The U.S automotive sector has experienced a decline in profitability and growth over recent years. Statistical data from 2015 to 2020 indicate an annual industry decline of approximately 12.6%, with profits shrinking by 36.2%. The COVID-19 pandemic exacerbated these downward trends, causing a 38% drop in industry revenue in 2020 compared to the previous year. Despite these challenges, the U.S. maintains a substantial market share, accounting for roughly 13.1% of the global automotive manufacturing sector (Auto Industry Reports, 2021). These figures highlight the necessity for manufacturers to diversify their offerings and adapt to changing market demands.

Emerging Market Trends and Consumer Preferences

Shifting consumer behaviors significantly influence automotive market trends. A notable trend is the increasing reliance on online platforms during the car-purchasing process, with approximately 59% of consumers dedicating time to online research (Statista, 2021). Potential buyers tend to explore multiple options before making final decisions; about 60% express willingness to consider various models and features before purchase. Color preferences also reveal market trends, with black (22.25%), white (19.34%), gray (17.63%), silver (14.64%), and blue (9.62%) dominating new vehicle sales (NADA, 2021). Furthermore, SUVs continue their dominance in the U.S. market, comprising nearly half (49.5%) of total vehicle sales in 2019 (Fuerst & Marshall, 2019). These insights suggest that manufacturers should prioritize offering vehicles aligned with consumer preferences and digital engagement tools.

Technological Innovation and Industry Evolution

The advent of electric vehicles (EVs) and autonomous driving technology has revolutionized the automotive landscape. Traditional automakers are investing heavily in electric propulsion systems and self-driving capabilities to stay ahead of emerging competitors and satisfy consumer demand for sustainable and smart transportation options. Market analysis indicates that EV sales in the U.S. increased by over 30% from 2018 to 2020, with expectations of continued exponential growth (U.S. Department of Energy, 2021). Likewise, self-driving vehicle development presents a strategic avenue for future growth, requiring significant R&D investment but promising substantial industry disruption (McKinsey & Company, 2021).

The Rise of Diesel Engines in Commercial and Industrial Sectors

Parallel to the passenger vehicle market, diesel-powered vehicles remain vital in commercial, agricultural, and construction sectors. Diesel engines' high energy density, fuel efficiency, and durability make them advantageous for heavy-duty applications such as trucks, trains, military vehicles, and farm equipment (EPA, 2020). The shift towards environmentally friendly fuels has led to increased popularity of biodiesel and cleaner diesel technologies, which minimize environmental impact while providing operational efficiencies (Renewable Energy Group, 2021). This market segment offers promising diversification opportunities for manufacturers who can develop innovative diesel solutions tailored for these sectors.

Market Trends in Diesel Engine Adoption

Recent trends indicate a growing preference for diesel engines, especially in farming, construction, and industrial applications. The last quarter of 2020 and early 2021 saw diesel fuel sales topping alternative fuels, driven by consumers and businesses seeking energy-efficient and environmentally sustainable options. The adoption of biodiesel and certified diesel engines aligns with increasing environmental regulations and consumer awareness regarding pollution reduction (Diesel Technology Forum, 2021). Furthermore, the market for light-duty diesel vehicles remains underdeveloped, representing an opportunity for manufacturers to expand into more segments by offering smaller diesel-powered models.

Porter’s Five Forces Analysis of Diesel Industry

Applying Porter's Five Forces framework reveals promising prospects in the diesel engine market. The threat of new entrants is minimal due to significant capital requirements and technological expertise necessary for diesel engine manufacturing. Established automakers and industrial equipment firms dominate, with limited competition in the niche segments of small and light-duty diesel vehicles. Supplier power remains moderate, influenced by fluctuations in crude oil prices affecting diesel costs. Customer bargaining power varies with economic conditions; in prosperous periods, demand for efficient diesel vehicles increases, while economic downturns diminish purchasing power (Porter, 1980).

Comparison of Industry Dynamics

Comparing the traditional automotive sector with the diesel engine market reveals complementary opportunities. While electric and autonomous vehicles gain prominence, diesel engines continue to serve essential roles in commercial and industrial applications. The risk of substitution exists, primarily from electric powertrains; however, diesel’s advantages in energy density and durability sustain its relevance (World Energy Council, 2020). The diversification into diesel-driven heavy-duty and industrial equipment represents a strategic avenue to mitigate risks associated with passenger vehicle market fluctuations and technological shifts.

Conclusion

The U.S automotive industry faces profound transformation driven by technological innovation, changing consumer preferences, and environmental concerns. While electric and autonomous vehicles dominate strategic conversations, diesel engines and related technologies maintain their significance, especially in commercial and industrial applications. Manufacturers should leverage diversification strategies that include electric, autonomous, and diesel-powered solutions to meet evolving demands and mitigate industry risks. Continuous investment in innovation, digital engagement, and sustainable fuels will be fundamental for maintaining competitiveness and profitability in this dynamic landscape.

References

• Auto Industry Reports. (2021). U.S. Automotive Industry Overview. Retrieved from https://www.autoindustryreports.com
• Diesel Technology Forum. (2021). Diesel Market Trends and Environmental Impact. https://www.dieseltechforum.org
• EPA. (2020). Emissions Standards for Heavy-Duty Engines and Vehicles. Environmental Protection Agency. https://www.epa.gov
• Fuerst, P., & Marshall, M. (2019). U.S. Vehicle Market Trends. Journal of Automotive Research, 58(4), 225-240.
• McKinsey & Company. (2021). The Future of Autonomous Vehicles. McKinsey Industry Insights. https://www.mckinsey.com
• National Automobile Dealers Association (NADA). (2021). Vehicle Color Preferences and Sales Data. https://www.nada.org
• Renewable Energy Group. (2021). Benefits of Biodiesel in Commercial Transport. https://www.regi.com
• Statista. (2021). Consumer Behavior in Automotive Purchases. https://www.statista.com
• U.S. Department of Energy. (2021). Electric Vehicle Market Growth. https://www.energy.gov
• World Energy Council. (2020). Global Energy Perspectives: The Role of Diesel. https://www.worldenergy.org