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BERA - Business & Economics Research Advisor - A Quarterly Guide to Business & Economics Topics

Issue 2: Fall 2004 : The Automotive Industry


The sale of automobiles is a large segment of the overall U.S. economy. Just in terms of number of establishments, there are over 122,692 motor vehicle parts and dealers according to the 2002 Economic Census -- up from the 122,633 reported in the 1997 Economic Census. However, their sales tallies are $814 billion according to the 2002 Economic Census -- up from $645 billion reported in the 1997 Economic Census. The 1997 Economic Census, the last that with numbers for the breakdown between new and used dealers, reports that there are 25,897 new car and 23,340 used car dealers with sales of over $553 billion for new car and over $34 billion for used car dealers.

While most automobiles are sold in traditional bricks and morter dealerships, the Internet is playing an increasingly important role the in shopping and purchasing process. Over the last 10 years, the Internet has continued to played an increasing role in the automotive market, and that role is only likely to grow. While new cars are generally sold by individual dealers via the Internet, the biggest market for used cars is through the big services. According to Ward's Dealer Business' 2004 edition of the annual e-Dealer 100 ranking, more than 80% of buyers go to the Internet at some point during their shopping experience with the number of online sales for the top 100 new car dealers at 125,198 -- up from 61,365 in their 2001 ranking. Adding to the overall Interent automotive market, the used car services like AutoNation, Carmax, Sonic Automotive, and others account for a significant amount of all Internet automotive sales.

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Table of Contents

Automotive History
Global Automobile Industry
Automobile Manufacturing
    North American Market
    European Market
    East Asian Market
Company Research
Industry News and Analysis
Electronic Resources

There are three big issues with regard to the sale of cars that need to be addressed. First, is the continuing popularity of SUVs. SUV sales have been and will continue to account for a large segment of vehicle sales even if the growth has been somewhat stalled for new vehicle sales. However, the new growth area in the SUV market are for the smaller SUVs - "sport wagons"or crossovers, that are an increasingly attractive choice for buyers. These models are making inroads for a number of reasons - perceived safety concerns associated with the larger models as well as their more car-like ride. According to an Automotive News article "Sport wagons are driving the industry" in the August 16 issue, "Sales of sport wagons totaled 981,646 in the first seven months of this year, up 18.5 percent from the year-ago period. July sales of 159,206 were up 16.3 percent from July 2003. "

Second, is the desire for hybrid and electric cars. Prompted by high oil prices and a desire to be envirnomentally friendly among other reasons, this market is only likely to grow. While numbers for these types of vehicles are a fraction of the total number at present, hybrids in particular, are growing in popularity. For example, a June 7, 2004 article in Automotive News says that there was a waiting list of 20,000 for Toyota's Prius with an average wait time of five months. Other manufacturers are getting into this market with hybrids in the works or already for sale. Honda has a Civic hybrid, Nissan is coming out with an Altima hybrid and Mazda will have the Tribute and 2005 looks to continue the trend with several new roll outs with Ford introducing the Escape, GM introducing the Chevrolet Silverado, and Chrysler introducing a few Ram pickups. While production numbers for the future models are limited, the numbers are likely to grow. For further information on this topic please see the paragrapahs on hybrid powered vehicles in the Modern Automobile Manufacturing section of this guide.

Lastly, there are the factors that determine automotive purchasing. On top of the obvious pricing and incentive deals, many other local and national/international factors can affect retail sales of automobiles. Local automotive competition, plant closings and other substantial layoffs from local employers, and natural disasters, as well as national and international factors that range from interest rates, inflation, trade issues, oil prices to catastrophic events like 9-11, all of which can inhibit purchases.

There are many sources of material for retail sales information. Some are cited in the section devoted to Automotive History; other appear in the Statistics section, so please see these sections for futher sources. Also, much information on the retail aspect of the automotive industry can be obtained from articles which may be located through searches in portals or full-text databases.

Banks, Clif. "e-Dealer 100. " Ward's Dealer Business, April 1, 2004 v38.
This is a relatively new annual begun in 2001.
Crull, Anna. Electric Vehicle Market : Is Now the Time? Norwalk, CT : Business Communications Co., c2000.
LC Call Number: HD9710.U52 S283 2000
LC Catalog Record: 2003272115
Contains information on the various aspects of electric vehicles from the technical to the general. Dicussions on government influence on development, specific industry participation, market, hybrids, etc. Also includes a glossary.
Directory of Automotive Aftermarket Retailers & Distributors. 2003- Tampa, Fla. : Business Guides, Inc. ISSN: 1545-1488
LC Call Number: HD9710.3.U5 D57
LC Catalog Record: 2003214256
Provides complete company profiles on over 2100 US and Canadian jobbers and retailers.
Finlay, Steve. "3 Big Trends Affect Dealerships." Ward's Dealer Business, April 1, 2004 v38

Fonda, Daren. "The Shrinking SUV: With safety under scrutiny, a fleet of cool crossovers is winning converts." Time, August 30, 2004 v164 p65.

Teahen Jr., John K. "Sport wagons are driving the industry." Automotive News, August 16, 2004 v78 p6.

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