Factors That Affect the Growth of the Automobile Industry

The invention of both automobiles and aircraft had a profound impact on our everyday lives, so much so that it completely transformed the way we live. With the automobile manufacturing industry being both capital and labor intensive, market analysts suggest that the following segments involve the maximum costs:

Labor: According to automobile industry research, even with machines and robots playing an integral role in the manufacturing of vehicles these days, the industry still has to bear intensive labor costs related to designing and engineering of cars. However, a study indicates that whenever an automotive manufacturing facility is located in an urban area, it creates more job opportunities both within the sector as well as within the associated industries. With a job multiplier index of 3.6, for every job created within the auto sector, there are an additional 2.6 jobs created in the associated segments such as the parts supplier segments etc. Even if the facility is located outside the urban setting, it still has a job multiplier index of 2.1 indicating that the sector plays a major role in reducing unemployment issues in various markets.

Materials: For the manufacturing these vehicles, various elements such as steel, aluminum, dashboards, seats, tires etc. need to be purchased from external suppliers, which again means that the auto sector further triggers substantial growth within the associated industries.

Advertising: Lastly, due to stiff competition present in the global automobile industry, it becomes necessary for companies to spend billions on marketing their products and product offerings. Automobile companies are also known to spend large chunks of money on conducting market surveys that are expected to provide a better understanding of consumers’ trends and preferences, allowing companies to design products that meet the market requirements.

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