There are many key factors to consider before looking at the five forces model for the U.S. auto industry. First, the industry structure is an oligopolistic market in which it is dominated by a small number of manufactures. As of 2017, there were 237 existing car models, with an additional 38 new car models offered in the U.S. Market. 6.3 million Passenger cars were sold to customers. As of 2014, around 260 million vehicles have been registered in the U.S. There is a demand shift from passenger cards to larger vehicles. Sales appear to be solid. The average transaction price of vehicles have hit an all-time high of $35,870 for new vehicles, preferable SUVs and crossovers. There is a competitive structure and a high rivalry between the assemblers. …show more content…
Also, due to the technology boom, ” Surviving automotive companies have famously bent over backward to save pennies on every car or component they make. However, the situation is becoming more dire: The cost of capital is unlikely to come down from its already low inflation-adjusted levels, and new capital outlays are rising for advances in, among other areas, connected car and autonomous driving technology´(Parkin, …show more content…
Entering the industry can be just as tough as leaving the industry. Not only would companies like Toyota or Ford accumulate huge losses, they would ultimately mess up the competition if they were to leave. An important factor here is also customer loyalty. Consumer need drives the competitive market with the innovative products that the big players are focusing on. “Since no OEM wants to slip in the rankings, each is doing everything possible to retain each tenth of a point share; including speeding up product redesign or launch programs, while opting to avoid risky product programs that could cause disruption in their product portfolio,” (Lutz,