Environmental Challenges Redefining The American Automotive Industry

Environmental challenges facing the American auto industry

American auto industry has a long history that counts since early 1900 and for decades was represented by the three major manufacturers: General Motors, Ford and Chrysler. In today’s world, however, these three manufacturers cannot be viewed as the only players of the industry because the automotive industry of the USA is being influenced by the foreign plants of non-US companies placed on the territory of the States. According to the report Redefining the American Auto Industry (2014) written by the Association of Global Automakers and the American International Automobile Dealers

Association, “International nameplate automobile manufacturers and dealership franchises are

designing,

Moreover,

Tesla company is breaking the conventional rules of selling cars by direct sales that happen in some

US states. Automotive industry has been using dealership stores for several decades which was a

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necessity due to the lack of resources of automotive companies to build and manage the sales of cars.

And in time dealership has become a good source of taxes for the government which is why some states like Texas (Texas says no to Tesla direct sales, Business Insider, 2015) are fighting strong with

Tesla on stopping its direct sales to the customers. However, Tesla’s principle is fair enough when it states that the consumer has the benefit when buying the car from the manufacturer which will not incur additional cost as compared to selling through intermediaries. As Brian Fung suspects in “Why

Tesla keeps fighting for direct sales when it could just work with dealers” (2014, Washington Post),

Tesla in the face of Elon Musk not only wants to “keep control of the company's brand” but

The studies done by US Pirg Education Fund (Millenials in Motion Report, 2014) show that the generation of

Americans born between 1983 and 2000 “are less car-focused than older Americans and previous generations of young people, and their transportation behaviors continue to change in ways that reduce driving”. This study has been a red signal for auto producers to change their strategies for such need. The new challenge for the industry is in making less cars and providing more options to the customer as for the changing environment. Some steps have already started as we observe Ford to start an experimental program called "dynamic social shuttle" which uses an application similar to

Uber and picks and drops 15 passengers in a Ford’s mini bus. Although the car usage is rising year by year, car sharing trend in the conditions of congested traffic and parking issues imposes the biggest challenge for the automotive industry. As Global Automotive Outlook report (AlixPartners,

2015) says that taxi sharing services worldwide account to 5 million people with the forecast of 25 million people in 5 years. How the industry will deal with it – we will see in the near