The Auto Parts Industry

Educational

Nov 25th, 2018

The Auto Parts Industry

The Auto Parts Industry, is it Booming or Falling?

The automotive industry is a large group of companies and organizations that design, develop, manufacture, market and sell automotive parts. Many companies in the automotive parts industry manufacture and produce vehicle parts which include; engines, engine parts, tyres, batteries, body and chassis. The importance of this industry cannot be overemphasized. The rise and fall of the auto parts industry has always being keenly linked to the rise and fall of the automobile industry. If the automobile industry is falling apart, the auto parts industry will definitely follow suit. To check whether the auto parts industry is booming or not, we have to consider whether the automobile industry is on the rise or going through a down time.
The US automotive industry is always going through an unprecedented competition from the automotive industries from other nations most especially the German and the Japanese. Also, there is the burden of fuel economy as well as meeting government regulations on emission safety and control. The US automotive industry suffered massive losses due to the 1990-1991 recession but there has been a tremendous turn around in fortune in recent years. The problem of fuel prices which has a negative effect on the sales of automobiles has drastically been solved through the relatively low fuel consumption cars and electric cars which are being produced.
In 1991 capital spending by the automotive industry in US was estimated at about $17 billion and due to negative cash flow, they had to raise outside capital. It was indeed a bad time for these automotive companies as evident by the credit rating dropping for all these companies making borrowing of loans more expensive and difficult. The history of the US automotive industry may look scary but have overcame a downtime which have set them up for times of booms. After three good years of strong sales the Us automotive market entered this year with a force which have led to a continuous boom in the economy. There are lots of wonderful things that have happened to the automotive industry this year that has led to significant increase in production and consequently an increase in the need for automotive parts.
In this blog post we will critically look at the automotive parts industry and investigate whether this industry is booming or facing downtime.
In December 2017 major automotive dealers in the US recorded a total sale of 17 million car which a little decline from the previous year which recorded a sale 17.55 million car. This sales slide will result in a significant reduction in the sales of automotive parts, the last significant sales reduction occurred in 2009 when a major commercial crisis hit the automotive parts worlds. and it was a horrific period: the US sales market plummeted to 10 million annually and General Motors and Chrysler went bankrupt. If this decline continues till the end of the year, the automotive parts industry will definitely suffer a great downtime.
Automotive parts industry is not a newbie to downtimes, they have suffered bad times and enjoyed the good so, this industry is in a good position to face any challenge being pose by reduction in sales of automobiles.
The arrival of electric cars – this has been a major cause of the decrease in sales of the automotive parts industry. Many car owners now preferred to purchase an electrical car rather than purchase a spare part to fix their old cars. The automotive parts industries are fighting back by pushing more electric cars parts in the markets. Globally, electric-vehicles make up about 1% of the total sales of car in 2017 but this percentage has increased drastically this year. The major companies producing this electric-vehicle are Chevy Bolt, Tesla and Nissan. These companies are investing large amount of money into the automotive parts industry and this is helping the industry to stay afloat. Recently, the Chevy Bolt recorded a huge sale of 50,000 cars globally and this has led to the increase in their spare parts. The Tesla Model 3 is getting a high demand globally, it has already recorded over 500,000 pre-orders this year and this has translated to a surge in the demand for it spare parts therefore, causing the automotive parts industry to boom.
Self-driving cars are on the rise, this previous year was huge for self-driving cars.  The arrival of self-driving cars has led to an increase in sales being recorded in the automotive parts industry. Waymo, Tesla, Uber and General motors have all drive a huge amount of money into the development of this amazing vehicles. Other automotive company are making deep search for automotive parts which will help them develop a brand-new set of self-driving cars. The Cadillac’s Super Cruise which was recently developed required a host of spare parts which cost millions of dollars, others automotive companies are also making moves to spend bigger amount of money to develop the next big tech cars.
Recently, the occurrence of more road accidents has increased tremendously and this can be traced to distracted driving which has become the order of the day. Many drivers now focus on their smartphones rather than the road and this has led to many serious accidents. The question now is “how does this affect automotive parts industry? Automotive parts industry gain from this road accident one way or the other, the more the increased in the number of dented car parts the more the need for spares. More demand for vehicle spare parts equate to a surge in the automotive parts industry. The significant of this may not seem obvious yet we cannot override it.
The sales of automotive parts online – the sales of automotive parts online have led to a significant increase in the sales of automotive parts. It is expected that by the year 2020 the auto motive parts industry in Europe will be earning nothing less than $20 billion dollars from online sales. A company like amazon as played a cogent role in driving up the sales of automotive parts online. Many automotive parts companies have already started online retailing across a large number of digital market such as amazon, craigslist, eBay and some other online stores. These online stores are really working hard to boast the increase in sales of automotive parts.
Automotive parts industry is enjoying a positive increase in sales and revenue so it is safe for us to say they are enjoying a period of great boom.