During the early days of the auto industry, the novel idea of driving a car wasn’t an immediate hit with people, even after the first steam car took to the road in France in 1867. With that said, there were several stages of the auto industry which took place in order to get to where we are today as automobile owners.
- The first stage of the auto industry occurred from 1890 to 1920. This was the craft production stage when small enterprises competed to establish a standard product and process. The first cars were steam cars, which ran over 100 years before they became commercially viable. In the 19th century, railways were being built all over the world and people didn’t see the need for automobiles, or maybe, people were just not ready for this new invention. Over time, people obviously started to come around to the notion of driving vehicles as a mode of transportation, but it took a long while to get there.
- The second stage happened from 1908 to 1973, which was the mass production stage. With the help of great industry leaders, like Henry Ford and the moving assembly lines, the industry was able to produce vehicles at a much higher rate.
- The third stage was the lean production stage, which started in 1973 until the present. During this time, a revolutionary management process of product development and production was introduced.
Throughout these time periods, changes occurred and upgrades were made to the way automobiles were, designed, crafted, produced, marketed, and priced. Most product innovation can be contributed to customer demands for speed, comfort, and safety of their vehicles. The year 1909 saw the largest number of automakers in operation — 272 automakers, but in the 1920s many of those automakers closed down or merged with the more profitable companies.
The ability to produce different types of vehicles for different product segments changed the auto industry and gave customers choices. Automotive makers learned to evolve and created the extended enterprise system, which is the concept that a company does not operate in isolation because its success is dependent upon a network of partner relationships.
Since the beginning of the automotive industry competition and rivalry has never stopped. Marketing strategies are often based on what their competitors are doing, which makes this industry, oligopoly. There are two strategic variables which automakers center their marketing around — Product variety and quality is the first variable and the second, transactions and price.
It is an ever-changing industry due to the fact that one automaker could be leading in sales, while others are close behind, but it could all change in an instant. Some makers move up on the leaderboard while others move down and vice versa.
Automakers know the importance of attracting and maintaining a solid customer base and that customer repurchase rates are critical in order to have long-term profitability.
The biggest consumers of vehicles are North Americans and it is no secret that the automobile is second only to a house in purchase value.
The automotive industry plays an enormous role in the overall economy, particularly in industrialized countries. However, the global automotive industry is overcapacity, which has led to the leaning out process of unique parts, number of design and production tools used, as well as, the number of direct supplier relationships.
Changes to automakers and automobiles are never-ending, but the next transformation in the auto industry will certainly come from web-based communications, the internet, and the ever-evolving technologies. We will need to continue to watch and see what the next stages will be in the automotive industry.
