Skate-Wear Central

Moto Guzzi

The Automotive Industry

INTRODUCTION:

The automotive industry is a worldwide industry that involves itself in the manufacture of motorcycles, trucks, vans, buses and coaches. There are many companies involved in this industry, including BMW, general motors among others.

In this section I will take a look at the motor cycle’s section of the motor industry.

The motor cycle industry has experienced worldwide growth in production, sales, and also profit margins for the past four years. Almost all industry players including Harley Davidson, Honda, Kawasaki, and Suzuki among others recorded from modest to remarkable sales within this period of time.

Shifts and price elasticity of supply and demand

The responsiveness of consumers to a price change is measured by a product’s price elasticity of demand.  Some products are highly responsive to price changes while others are not.  In some commodities Modest price changes cause very large changes in the quantity purchased,  Economists say that the demand for such products if relatively elastic or simply elastic. For other products Substantial price changes cause only small changes in the amount purchased, the demand for such products is relatively inelastic or simply inelastic.

In the view of the industry the industry products are relatively inelastic; this is due to the fact that many products in this industry are luxury goods. The products have some kind of a ‘snob appeal’ and this is why that even though the prices of products have been rising steadily demand has also increased relatively. A recent survey of the American market showed a statistic trend as the one below.

American market share is as follows:

Harley-Davidson 34.8%

Honda 23.7%

Suzuki 14.6%

Kawasaki 13.6%

Yamaha 10.0%

BMW 2.3%

Ducati .9%

Moto Guzzi .1%

The pie chart below represents this information.

To improve on market share every company uses its own strategy. But in any industry there are four core elements of marketing strategy. These four elements are strategies that involve the product, pricing, promotion, and distribution. All firms within the industry seem to employ a different mix of the four elements in order to achieve its growth or industry projections.

Positive and negative externalities:

An externality is ca cost or benefit borne out of an economic transaction to parties not directly involved in the transaction. In the motorcycle industry some of the positive externalities include an increase in technological advancement not only in the industry but also in other industries. Through increased inventions the technology has become readily available and this has resulted in cheaper products.

In addition there has been a remarkable reduction in transportation costs, especially in china and India where increased use of motorcycles and scooters in transportation has reduced traffic congestions as well as reducing the public expenditure in transport.

In the same context there has been an increase in negative externalities including smoke pollution, noise pollution, and water pollution as a result of industrial waste among others. Due to the increased pollution, The American Motorcyclist Association (AMA) has announced that the review the Environmental Protection Agency “Letter of Guidance” on the issue of motorcycle-emissions rules has been completed.

The AMA had sought clarification of EPA regulations for “kit” and “custom” motorcycles in use within the country. Under the regulations, a person will be allowed only one kit motorcycle in their lifetime that will be exempt from meeting EPA emission requirements. For custom motorcycles, a manufacturer will be allowed to create and sell up to 24 bikes a year that don’t meet EPA emission requirements. In addition these bikes will be specifically labeled that they are exempt, and these bikes will be show bikes that will be rarely ridden.

Wage inequality:

Just like in many other industries the motorcycle industry is faced with the problem of wage inequalities. These inequalities have three dimensions. The first dimension involves different wages for workers in the same firm, e.g. the managers of a certain firm may be paid more than the engineers in the same firm.

A recent example of this was in the Harley-Davidson firm where early this year workers went on a two week strike demanding an increase in their wages, and especially a proportionate proportion of the profit margin commission. On February 2, 2007, upon the expiration of their union contract, about 2,700 employees at Harley-Davidson Inc.’s largest manufacturing plant in York, PA went on strike after failing to agree on wages and health benefits.[1] During the period of the strike, the company refused to pay for any portion of the striking employees’ health care.[2]

The second dimension involves workers being paid less or more depending on the factory location. In this case due to cheaper labor in the third world and china many companies have relocated their factories to these economies so that they end up paying less to their workers. This has prompted many workers especially in Latin America to go on strikes regularly demanding equal pay with their equivalent workers based in Europe and America.

The third dimension involves different wages depending on sectors. In this regard you might find that a certain industry e.g. the motorcycle industry might end up paying less to their workers as compared to another sector like the banking sector.

Monetary and fiscal policies:

In order to promote the industry many governments have adopted different monetary and fiscal policies. There is no single policy that has been adopted industry wise. To improve the sector the South Korean government has encouraged the chaebols’ to specialize their operations in order to be more efficient. In addition the government has ensured that there exists a low interest rate to help the chaebols’ acquire loans cheaply. In other economies like Vietnam the fiscal policy involves deficit financing for the industrial sector in order to maintain the booming economy.

Generally for the development of this sector there is need to have an expansionary monetary policy regime that should be compounded by a contractionary fiscal policy regardless of the geographical location of the specific firm.

CONCLUSION:

The automotive industry is a value adding sector in any economy. This means that the industry is very important for the growth of the economy. Thus its economic importance lies both in its scale and complexity of its direct and indirect interrelationship with other industries in the economy. The economy of a country and of the global village is of ultimate importance to the growth of the industry.

Since the industry produces non-basic goods (luxury goods) it is important that the disposable income arising from productive work in other sectors is sufficient to allow for the public to purchase goods from this sector. In addition the size of the population and its purchasing power is important to the development of the industry. The correlation of the industries e.g. how the other industries supply the industry with raw materials or purchase finished products from the firm goes a long way in supporting the industry.

Economic influences that can affect the industry in a negative way:

There are many economic situations that can negatively impact on the industry. These scenarios may originate from the local economy of where the firm is located or it may arise from the global market. In the local economy, increased taxation of exports, increased interest rates, and changes in the political arena, an unprecedented appreciation or depreciation of the local currency may all negatively hamper on the industry. In addition global depression of the world economy may hamper negatively on the development of the industry.

References:

Mankiw, N. G. (2004), Principles of economics (3rd Ed.), Chicago, ILLIOIS: Thomson South-Western

Philip Hardwick (1982), an Introduction to Modern Economics, Longman, U.K

About the Author

 

Author is associated with SuperiorPapers.us which is a global Research Papers and Term Papers Writing Company. If you would like help in Research Papers and Term Paper Help you can visitEssay Writing and Buy Research Papers or Term Paper Writing

Moto Guzzi MGS-01

Fox Moto X Track Jacket $64.5 Fox Moto X Track Jacket

Fox Moto X L/S Knit $39.5 Fox Moto X L/S Knit

Hart and Huntington Moto Minded Flex Hat – Black $31.95 You got yourself in a little predicament. Do you call Molly, the sweet girl who does no harm, or do you send that text to Brianna, the bad girl who’s always ready to cause some trouble. Tisk tisk, you should know better than that. Runnin’ with two hotties at the same time might give you some cred, but it’ll only scramble and do more damage to your brain than Mike Tyson has. Clear that head of yours and keep your mind on some moto and some moto on your mind with this Hart & Huntington Moto Minded hat. This 210 fitted hat features allover Hart & Huntington printed lettering with brand embroidery offset to the left side and another trademarked logo printed underneath the bill. When the girls find out about each other, at least you’ll be lookin’ like a stud while being punched and screamed at repeatedly.

Womens Fox Hat – Fox Moto – Trucker 2 Hat $23.5 Online Exclusive! Two tone Moto Fox logo on foam front. Black mesh back with two tone stripes. Black adjustable snapback. Flat bill. One size fits most. Imported. 100% polyester.

Hurley Moto YC Gray Long Sleeve Skinny T-shirt $29 Rev up your style and leave the drooling guys in the dust with the Moto long sleeve shirt from Hurley! This super-soft tee features a scoop neck, waterbase print and a rounded hem for sweet and sassy style.

Hurley Moto YC White Long Sleeve Skinny T-shirt $29 Rev up your style and leave the drooling guys in the dust with the Moto long sleeve shirt from Hurley! This super-soft tee features a scoop neck, waterbase print and a rounded hem for sweet and sassy style.

Hart and Huntington Ladies Black Ink Rock Moto T-shirt $23.95 Ladies, let everyone know what your blood runs hot for in the Ink Rock Moto tee from Hart and Huntington. With its printed lettering, star detail and swirled borders, this crew tee has plenty of raw edge.

Fox Kids Moto Is Life Flexfit Hat (Black) $22 Cool kids clothing and accessories from Up & Riding.

Fox Boys Moto Is Life Tee (Yellow) $18 Cool kids clothing and accessories from Up & Riding.

Fox Moto-X Juniors Full Zip Hoodie – White $59.5 A man driving a tricked-out car is one thing, but a man cruisin’ on a motorcycle? There’s nothing like it. Let your knees grow weak and your face get flushed with the Moto-X hoodie by Fox. This comfy zip-up features retro Fox branding printed on the arms and a French terry retro Fox logo embroidered on the chest. Vroom vroom, baby.

Fox Moto-X Juniors Crop T-Shirt – Sea Foam $24 A man driving a tricked-out car is one thing, but a man cruisin’ on a motorcycle? There’s nothing like it. Let your knees grow weak and your face get flushed with the Moto-X tee by Fox. This cropped, heathered top features thick, distressed custom lettering printed around a Foxhead logo and establishment day on the front, and matching lettering printed along the back bottom hem. Vroom vroom, baby.

Hart and Huntington Strappy Moto Juniors T-Shirt – Black $27.95 If you’re craving some more excitement in your life, zest up your wardrobe with Hart and Huntington. This Moto scoop neck shirt features stylized “Ink, Rock, Moto” lettering printed down the front above a winged HH logo and surrounded by fuzzy flocked swirl designs on the front. The fun doesn’t stop there! Crisscross, peek-a-boo details trickle down the entire center of the back and script branding is embroidered at the back bottom right side, so you’ll definitely put off a stunning vibe no matter which way you face.

Fox Moto X Racing Jersey Tank Top – Black $39.5 You love to rock some Fox Racing motocross gear on any day of the week, on and off the track. You’ve been an avid follower of the sport and the team, and now you can rock some vintage Fox garments inspired by the Fox Motocross Racewear fashion of the early 70s like this Moto X jersey tank top. With Fox Head mesh applique on the front, the team’s establishment year embroidered at the back yoke, printed team graphics and contrast-colored side panels, this jersey will give a modern interpretation of the original style that started it all. Fox was there at the beginning, and they are still reinventing core Motocross style today.

Fox Moto X Racing Jersey Tank Top – Grey $39.5 You love to rock some Fox Racing motocross gear on any day of the week, on and off the track. You’ve been an avid follower of the sport and the team, and now you can rock some vintage Fox garments inspired by the Fox Motocross Racewear fashion of the early 70s like this Moto X jersey tank top. With Fox Head mesh applique on the front, the team’s establishment year embroidered at the back yoke, printed team graphics and contrast-colored side panels, this jersey will give a modern interpretation of the original style that started it all. Fox was there at the beginning, and they are still reinventing core Motocross style today.

Womens Fox Tee – Fox Moto – Crop Top $18.99 Online Exclusive! Cropped cut. Printed graphics. Scoop neckline. Soft fabric. 20″ length. 5″ sleeve length. 17.5″ shoulder to shoulder length. 20″ bottom hem length. Measured from a size small. Model is 59″ and wearing a size small.

Womens Fox Tees – Fox Moto – Crop Tank $24.5 Online Exclusive! Crop tank. Large arm openings. Soft light weight fabric. Printed graphics. 20″ length. 8″ arm openings. 11″ strap to strap length. 20″ bottom hem. Measured from a size small. Model is 59″ and wearing a size small.

Womens Fox Shorts – Fox Moto Shorts $49.5 Online Exclusive! Front zipper detail. Frayed hems. Fox button and zip fly front. Stitching throughout. Back Fox patch. Low rise. 7.5″ rise. 2″ inseam. 14″ top hem length. 10″ leg openings. Measured from a size 3.

Mens Volcom Headphones – Volcom Moto Brown Socks $9 Online Exclusive! Black mid-calf socks with gray Volcom detail knitted in. One pair per pack.

Womens Fox Hoodie – Fox Super Moto Hoodie $46.5 Online Exclusive! Front v-neckline. Hooded back. Front pouch. Printed graphics. Soft lining. 23″ length. 25″ sleeve length. 17″ shoulder to shoulder length. 16″ bottom hem length. Measured from a size small. Model is 59″ and wearing a size small.

Womens Fox Tees – Fox Moto – Cutoff Tank $24.5 Online Exclusive! Large arm openings. Printed graphics. Soft light weight fabric. 25″ length. 12″ arm openings. Measured from a size small. Model is 59″ and wearing a size small.