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The automotive industry designs, develops, manufactures, markets, and sells the world's motor vehicles. The automotive industry is one of the most important economic sectors by revenue. The term automotive industry usually does not include industries dedicated to automobiles after delivery to the customer, such as repair shops and motor fuel filling stations.
In 2007, worldwide production reached a peak at a total of 73.3 million new motor vehicles produced worldwide. In 2009, worldwide motor vehicle production dropped 13.5 percent to 61 million. Sales in the U.S. dropped 21.2 percent to 10.4 million units; sales in the European Union (supported by scrapping incentives in many markets) dropped 1.3 percent to 14.1 million units. China became the world's largest motor vehicles market, both by sales as by production. Sales in China rose 45 percent in 2009 to 13.6 million units. In recent years, private Chinese manufacturers emerge. About 250 million vehicles are in use in the United States. Around the world, there were about 806 million cars and light trucks on the road in 2007; they burn over 260 billion gallons of gasoline and diesel fuel yearly. In the opinion of some, urban transport systems based around the car have proved unsustainable, consuming excessive energy, affecting the health of populations, and delivering a declining level of service despite increasing investments. Many of these negative impacts fall disproportionately on those social groups who are also least likely to own and drive cars. The sustainable transport movement focuses on solutions to these problems.
The first practical automobile with a petrol engine was built by Karl Benz in 1885 in Mannheim, Germany. Benz was granted a patent for his automobile on 29 January 1886, and began the first production of automobiles in 1888, after Bertha
Benz, his wife, had proved with the first long-distance trip in August 1888 from Mannheim to Pforzheim and back - that the horseless coach was absolutely suitable for daily use. Since 2008 a Bertha Benz Memorial Route commemorates this event. Soon after, Gottlieb Daimler and Wilhelm Maybach in Stuttgart in 1889 designed a vehicle from scratch to be an automobile, rather than a horse-drawn carriage fitted with an engine. They also are usually credited as inventors of the first motorcycle in 1886, but Italy's Enrico Bernardi, of the University of Padua, in 1882, patented a 0.024 horsepower (17.9 W) 122 cc(7.4 cu in) one-cylinder petrol motor, fitting it into his son's tricycle, making it at least a candidate for the first automobile, and first motorcycle; Bernardi enlarged the tricycle in 1892 to carry two adults.
Automotive industry crisis of 2008–2010
The automotive industry crisis of 2008–2010 was a part of a global financial downturn. The crisis affected European and Asian automobile manufacturers, but it was primarily felt in the American automobile manufacturing industry. The downturn also affected Canada by virtue of the Automotive Products Trade Agreement. The automotive industry was weakened by a substantial increase in the prices of automotive fuels linked to the 2003-2008 energy crisis which discouraged purchases of sport utility vehicles (SUVs) and pickup trucks which have low fuel economy. The popularity and relatively high profit margins of these vehicles had encouraged the American "Big Three" automakers, General Motors, Ford, and Chrysler to make them their primary focus. With fewer fuel-efficient models to offer to consumers, sales began to slide. By 2008, the situation had turned critical as the credit crunch placed pressure on the prices of raw materials. Car companies from Asia, Europe, North America, and elsewhere have implemented creative marketing strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales. Major manufacturers, including the Big Three and Toyota offered substantial discounts across their lineups. The Big Three faced criticism for their lineups, which were seen to be
irresponsible in light of rising fuel prices. North American consumers turned to higher-quality and more fuel-efficient product of Japanese and European automakers. However, many of the vehicles perceived to be foreign were actually "transplants," foreign cars manufactured or assembled in the United States, at lower cost than true imports.
Effect of 2008 oil price shock and economic crisis
In 2008, a series of damaging blows drove the Big Three to the verge of bankruptcy. Part of the cause was very high labor costs (much higher than the foreign plants in the U.S.). The Big Three had in recent years manufactured SUVs and large pickups, which were much more profitable than smaller, fuel-efficient cars. Manufacturers made 15% to 20% profit margin on an SUV, compared to 3% or less on a car. When gasoline prices rose above $4 per gallon in 2008, Americans stopped buying the big vehicles and Big Three sales and profitability plummeted. Robert Samuelson has advocated a more consistent energy policy, arguing "wild swings between low and high fuel prices have crippled the U.S. industry by erratically shifting buyer preferences -- to and from SUVs. The financial crisis played a role, as GM was unable to obtain credit to buy Chrysler Sales fell further as consumer credit tightened and it became much harder for people with average or poor credit to obtain a bank loan to buy a car. During 2007, nearly 2 million new U.S. cars were purchased with funds from home equity loans. Such funding was considerably less available in 2008. In addition, stock prices fell as shareholders worried about bankruptcy; GM's shares fell below 1946 levels. Furthermore, the instability of the job market and individual consumers' finances discourages consumers who already have a working vehicle from taking on a new loan and payments, which affected almost all major manufacturers. The annual capacity of the industry is 17 million cars; sales in 2008 dropped to an annual rate of only 10 million vehicles made in the U.S. and Canada. All the automakers and their vast supplier network account for 2.3% of the U.S. economic output, down from 3.1% in 2006 and as much as 5% in the 1990s. Some 20% of the entire national manufacturing sector is still tied to the automobile industry. The transplants can make a profit when sales are at least 12 million; the Big Three
when sales are at least 15 million. The crisis has affected auto companies around the world, with large sales decreases experienced by all. As of December 19, 2008, oil prices had fallen to $33.87 per barrel, but the automobile crisis continues.
World motor vehicle production
Year Production Change
China Japan United States Germany South Korea Brazil India Spain France Mexico Canada Iran United Kingdom Czech Rep. Thailand Poland Turkey Italy Russia Belgium
3,512,916 3,182,617 2,632,694 2,170,078 2,049,762 1,557,290 1,489,651 1,395,421 1,090,139 974,569 968,305 879,186 869,605 843,239 722,431 522,810
The Automobile industry in the Republic of India is the seventh largest in the world with an annual production of over 11 million vehicles and exports of about 1.5 million. In 2009, India emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. By 2050, the country is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads. A major chunk of India's car manufacturing industry is based in and around the city of Chennai and hence it is known as "Detroit of India". Chennai accounts for 60 per cent of the country's automotive exports.
Following economic liberalization in India in 1991, the Indian automotive industry has demonstrated sustained growth as a result of increased competitiveness and relaxed restrictions. Several Indian automobile manufacturers such as Tata Motors, Maruti Suzuki and Mahindra and Mahindra, expanded their domestic and international operations. India's robust economic growth led to the further expansion of its domestic automobile market which attracted significant India-specific investment by multinational automobile manufacturers. In February 2009, monthly sales of passenger cars in India exceeded 100,000 units. The first car ran on India's roads in 1897. Till the 1930s, cars were imported directly. Embryonic automotive industry emerged in India in the 1940s. Following the independence, in 1947, the Government of India and the private sector launched efforts to create an automotive component manufacturing industry to supply to the automobile industry. However, the growth was relatively slow in the 1950s and 1960s due to nationalization and the license raj which hampered the Indian private sector. After 1970, the automotive industry started to grow, but the growth was mainly driven by tractors, commercial vehicles and scooters. Cars were still a major luxury. Japanese manufacturers entered the Indian market ultimately leading to the establishment of Maruti Udyog. A number of foreign firms initiated joint ventures with Indian companies.
In the 1980s, a number of Japanese manufacturers launched joint-ventures for building motorcycles and light commercial-vehicles. It was at this time that the Indian government chose Suzuki for its joint-venture to manufacture small cars. Following the economic liberalization in 1991 and the gradual weakening of the license raj, a number of Indian and multi-national car companies launched operations. Since then, automotive component and automobile manufacturing growth has accelerated to meet domestic and export demands.
India has emerged as one of the world's largest manufacturers of small cars. According to New York Times, India's strong engineering base and expertise in the manufacturing of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and Suzuki. In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors plans to export 250,000 vehicles manufactured in its India plant by 2011. Similarly, General Motors announced its plans to export about 50,000 cars manufactured in India by 2011. In September 2009, Ford Motors announced its plans to setup a plant in India with an annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both for the Indian market and for export. The company said that the plant was a part of its plan to make India the hub for its global production business. Fiat Motors also announced that it would source more than US$1 billion worth auto components from India. According to Bloomberg L.P., in 2009 India surpassed China as Asia's fourth largest exporter of cars. In recent years, India has emerged as a leading center for the manufacture of small cars. Hyundai, the biggest exporter from the country, now ships more than 250,000 cars annually from India. Apart from shipments to its parent Suzuki, Maruti Suzuki also manufactures small cars for Nissan, which sells them in Europe. Nissan will also export small cars from its new Indian assembly line. Tata Motors exports its passenger
vehicles to Asian and African markets, and is in preparation to launch electric vehicles in Europe in 2010. The firm is also planning to launch an electric version of its low-cost car Nano in Europe and the U.S. Mahindra & Mahindra is preparing to introduce its pickup trucks and small SUV models in the U.S. market. Bajaj Auto is designing a lowcost car for the Renault Nissan Automotive India, which will market the product worldwide. Renault Nissan may also join domestic commercial vehicle manufacturer Ashok Leyland in another small car project. While the possibilities are impressive, there are challenges that could thwart future growth of the Indian automobile industry. Since the demand for automobiles in recent years is directly linked to overall economic expansion and rising personal incomes, industry growth will slow if the economy weakens.
Domestic Indian automotive companies
Chinkara Motors: Beachster, Hammer, Roadster 1.8S, Rockster, Jeepster, Sailster
Hindustan Motors: Ambassador ICML: Rhino Rx Mahindra]: Major, Xylo, Scorpio, Bolero Premier Automobiles Limited: Sigma, RiO San Motors: Storm
Tata Motors: Nano, Indica, Indica Vista, Indigo, Indigo Manza, Indigo CS, Sumo, Safari, Xenon, Aria
Foreign automotive companies in India
Vehicles manufactured or assembled in India
BMW India: 3 Series, 5 Series. Fiat India (in collaboration with Tata Motors): Grande Punto, Linea, Palio Stile. Ford India: Ford Figo, Ikon, Fiesta, Endeavour. General Motors India
Chevrolet (CSPIL): Spark, Beat, Aveo U-VA, Aveo, Optra, Cruze, Tavera. Honda Siel: Jazz, City, Civic, Accord. Hyundai Motor India: Santro, i10, i20, Accent, Verna Transform, Sonata
Mahindra Renault: Logan Maruti Suzuki: 800, Alto, WagonR, Estilo, A-star, Ritz, Swift, Swift
DZire, SX4, Omni, Versa, Eeco, Gypsy, Grand Vitara
Mercedes-Benz India: C-Class, E-Class. Mitsubishi (in collaboration with Hindustan Motors): Lancer, Lancer Cedia Nissan Motor India: Micra. Toyota Kirloskar: Corolla, Innova, Camry. Volkswagen India: Polo, Jetta, Passat. Audi India: A4, A6, Q5.
Škoda Auto India: Fabia, Octavia, Laura,Superb.
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