Project Two

BUS 225 Milestone One Template

Executive Summary

November 14, 2021

Description of 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.

Description of the Current U.S. Automotive Industry

The U.S automotive industry has recently registered negative trends that are observed in the manufacturing sector in terms of the profitability and revenues. The annual growth is -12.6% as confirmed by statistical data from 2015 to 2020. The annual profit for the industry is -36.2% from 2015 to 2020. In 2020, the industry suffered a dip that was triggered by the Covid-19 pandemic with the rate being 38% as compared to the previous year. The U.S has a huge market share that is at 13.1% of the entire industry in the manufacturing sector.

Current Automotive Market Trends

There are new trends in the automotive industry that are evidenced in the shopping styles that customers have developed. Statistics reveal that 59% of the car-purchasing process in the present day is spent on online research. Customers have changed their due diligence processes by utilizing social and non-social media to research details on their preferred car of purchase. The trend also confirms that most potential buyers are always trapped in indecision at the outset of the car-purchasing process. 60% of all potential customers are always willing to explore a variety of options before settling on their final choice. Another important trend is that neutral colors are the most dominant in the top five selling cars. These colors are black that accounts for 22.25%, white with 19.34%, gray with 17.63%, silver with 14.64%, and blue with 9.62%. Another important trend is that the U.S consumers demonstrate an undying appetite for SUVs. Statistics show that 49.5% of the sales of cars in the U.S in 2019 were SUVs.

Description of the New Industry

The products that people use as normal household products reach their stores with transportation of vehicles that use diesel engines. Trucks, trains, military vehicles, and others used in farming and construction activities all have these engines. Diesel fuel has numerous benefits to the users that constitute an excellent performance of the vehicle and great energy density compared to other fuels. The availability of a diesel engine option is great because it provides the customer with the opportunity to use a vehicle that is energy efficient. The company of choice currently uses certified technologies that offer the ability to use fuel that is efficient. Embracing diesel engines also subjects the company to potential excellence in the manufacturing of non-passenger vehicles such as farming and construction vehicles. These vehicles usually rely on different kinds of equipment that are powered by diesel.

Current Market Trends in the New Industry

The current market trends in the industry are geared towards the adoption of fuel options that are efficient. The last decade has seen the growth in interest towards diesel engine vehicles and this made the headway for the segment of passenger cars to adopt a diesel-branded technology. Biodiesel and diesel consumption is, therefore, bound to increase in the coming years due to the efficiency that it produces to the world. It minimizes pollution that other fuels cause and threaten the lives of human beings as well as other living creatures on earth. In the last quarter of 2020 and the best part of 2021, diesel was the fuel that topped the sales. The hugest market for diesel is in the farming and construction industries because most of the equipment is diesel-powered. Tools such as generators are powered by diesel and the popularity of this fuel continues to gain popularity with the principal reason being the preservation of the environment.

Appendix A Explanation from Porter’s Five Forces Analysis of the New Industry

Using the Porter’s Five Forces, the U.S automotive industry shows a promising future in the adoption of small diesel engines. There are numerous car-manufacturing companies that provide different diesel options. However, they are limited to commercial vans, heavy duty trucks and large SUVs. It is evident that the market is open for diesel cars, small SUVs and light duty trucks. The threat of new entrants in the industry is also minimal, which makes it a greater opportunity. Many of the companies that are focused on diesel cars have not yet broadened their business to incorporate light duty vehicle as an extension of its options to customers. The threat of substitutes is also minimal in this industry because suppliers have the ultimate power to dictate their product quality and volume. The bargaining power of customers depends on the economic situation at the time because the diesel prices fluctuate depending on the overall economic welfare. When crude oil increases in prices, then diesel also retails at a more expensive rate than before.

Appendix B Summary of Findings from Porter’s Five Forces Analysis Comparing Both Industries

The comparison on the industry rivals and general developments on fuel, diesel engines are a lucrative business because they offer all forms of efficiency. There is the gas-powered engines’ bandwagon that is also spreading the risk factor in the investment of diesel engines now and in the future. Companies that can manage to offer light duty diesel options have minimal competition. Nonetheless, the opportunity is mainly in specified segments in the market, which are mainly the construction and farming industries.

Appendix A

Appendix B

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