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Truck Industry: Oligopoly In The United States

915 Words4 Pages

Imagine travelling across America during the summer for a vacation. The vehicle being used is most likely a truck hauling a camper and all of the supplies needed for the trip. Over the years, this iconic trip still occurs in the United States because of the popularity and demand for pickup trucks. Even though there are various manufacturers and different models being produced, these factors make this industry to be both popular and profitable. Relating this story to an industrial structure, the truck industry most closely resembles an oligopoly producing a differentiated product. An oligopoly is defined as being an industry where there are a select few companies, which have most of, if not all, of the sales for that particular industry. Oligopolies …show more content…

In this type of structure, there are a select few businesses that earn most of the sales for this industry. These businesses are known the center, while there are other firms, or the periphery, earn much less of the sales, as compared to the center firms (Taylor 2017). In the truck industry, some of the center firms would be considered to be Ford, GMC, and even Fiat Chrysler Automobiles (FCA). These three firms alone made up 94% of the sales in the time period of Jan-July of 2016. However, other firms like Toyota and Nissan would be considered to be a periphery firm because they only made up the remaining 6% of sales (Hsu …show more content…

Ford has introduced their new aluminum body and a smaller, more efficient engine, both of which improve the vehicle’s mile per gallon (MPG). Similarly, GMC has started to use aluminum for some body panels to reduce weight and to improve MPG. Finally, FCA has introduced a new engine, which is the most efficient out of the group (Walker 2016). GMC has also started to produce smaller and lighter pickup trucks, to accommodate for the fuel prices, electric powered vehicles, and to possibly attract different clientele. Globally, new markets like Africa and South America are not equipped for the heavier trucks that Ford, GMC, and FCA are known for producing. The possibility of manufacturing these different vehicles creates new opportunities for not only GMC, but also for the truck industry as a whole (Hsu

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