Automobile Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 252 auto manufacturers in the US sell vehicles to new automobile dealers, corporations, rental car firms, utility companies, and government agencies, and make vehicles available directly to consumers through subscription services. They also sell original equipment replacement parts to dealers, fleet managers, parts wholesalers, and repair and maintenance companies.
Dependence on Economic Conditions
The automobile industry is highly cyclical: an economic boom is generally accompanied by high sales in the automobile industry, while sales usually suffer during economic downturns.
Competition from Used Vehicles
Used vehicles are a direct substitute for the new vehicles offered by automobile manufacturers.
Industry size & Structure
The average auto manufacturer employs about 1,200 workers and generates about $1.2 billion annually.
- The automobile manufacturing industry consists of about 252 establishments that employ about 295,600 workers and generate about $296 billion annually.
- The industry is highly concentrated; the top eight companies account for over 90% of industry revenue.
- Large US-based companies include General Motors, Ford, and Tesla. Chrysler is headquartered in the US, but is a subsidiary of Netherlands-based Stellantis.
Industry Forecast
Automobile Manufacturers Industry Growth
Recent Developments
Nov 14, 2024 - Manufacturing Activity Contracts, Employment Up
- US manufacturing activity contracted in October 2024, marking the lowest Manufacturing PMI registered in 2024, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 46.5% in October, down 0.7 percentage points from the 47.2% recorded in September. A reading above 50% indicates manufacturing expansion. Producer prices for automobile, light truck, and utility vehicle manufacturing rose 0.8% in September 2024 compared to a year ago, according to the US Bureau of Labor Statistics (BLS). Employment and average wages for the industry both grew in September 2024 compared to a year ago. Employment was up 3.9% during the period, and average wages for nonsupervisory employees were up 14% to $37.86 per hour.
- According to a report in Nikkei Asia, the election of Donald Trump as president could raise US auto production costs by $40 billion due to his plans for 10-20% tariffs on all imports and additional tariffs of up to 60% on Chinese goods. The increased tariffs could have a major impact on the auto industry, which has sales of 15 million vehicles per year. Many of the vehicles are imported from Mexico, Canada, and Japan. The tariffs would apply to finished cars and auto parts. Mexico accounted for over 40% of auto parts imported into the US in the first half of 2024. According to calculations by consulting firm AlixPartners, higher tariffs on imported parts could increase the manufacturing cost per US-made car by up to $4,000. It is expected that the tariffs would lead automakers to increase production in the US. While research nonprofit organization Tax Foundation estimates the tariffs could increase US revenue by $3.8 trillion in the long term, it is anticipated that companies will cover the higher costs by raising prices, per the report.
- US new light-vehicle seasonally adjusted annualized sales (SAAR) increased 4.6% in October 2024 year over year, totaling 16 million units, according to NADA Market Beat. Categories performing well year to date in 2024 include alternative-fueled vehicles, which now account for nearly 20% of all new vehicles sold. Average incentive spending per unit increased to an estimated $3,149 in October, which was 70.5% higher year over year. New light-vehicle inventory has climbed throughout 2024. Interest rate cuts in September and November and likely subsequent cuts are expected to boost both new and used vehicle sales moving forward.
- The CDK Global software cyberattack that lasted about three weeks this summer is expected to cost car dealers more than $1 billion, according to a study cited in the Detroit Free Press. The incident shut down systems at about half of the nation’s car dealerships, forcing slowdowns in sales as many dealers had to move to pen-and-paper to complete deals. The estimate from Anderson Economic Group was revised upward to reflect the total direct losses from the estimated 56,200 new car sales that were lost during the period. The estimate accounts for lost earnings in the parts and service department, higher staffing and IT service expenses, and additional floor plan interest charges on inventory not sold, according to the report. Not included in the estimate are any damages to customers, reputational damages suffered by dealers, litigation costs, and other related damages.
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