Indsutry Analysis
Indsutry Analysis
Porter’s Five Forces:
-Competition is intense in this industry despite the growth the industry is currently seeing.
-High Intensity of competition in Storage Costs, Similarity of players, hard to exit industry, and easy to expand.
Rivalry among competing sellers: (Strong)
-Since 40% of the market is controlled by the top three companies there’s intense competition in the automobile industry, also significant pressure on US manufactures since they lost their top spot on global competition.
-Companies are becoming more globalized and are ramping up production and putting pressure on everyone to keep cost low with the increasing in raw materials cost.
-There is a trend also to consolidate companies to keep up with larger companies
Threat of substitutes: (Weak)
-Used cars the biggest substitutes to the new car industry
-With the movement to be environment friendly substitutes of walking and cycling is increasing but not happening on a large scale to change the market
-Sales in the hybrid are increasing fast but the major market players created the “green market”
Threat of new entrants: (Moderate)
-There’s a huge upfront investment to be able to start up in the automotive industry
-The larger companies already have leverage over any new companies with capital and already existing R/D investment.
-Government regulations and standards is another hurdle that a new company would have to invest money into just adding to the fix cost’s that would already be there.
-All of the Distribution channels are already filled up by major companies with recognizable names that have vehicles that are tailored to